Now, for the fun part: the results.

Facebook Ads have very low click-through rates.

During the life of my campaign, approximately two weeks, my Facebook CPC campaign received 44,715 impressions, and 43 clicks. That’s a click-through rate of 0.10%. Even my lowest performing Google AdWords campaign has an all-time CTR of 0.69%, seven times the click-through of the Facebook campaign.

What surprised me is that I thought that the highly targeted Facebook audience I chose, combined with the ability to place a photo on the ad, would result in more clicks and more interest in my ad. Instead, it doesn’t even seem like my ad was noticed by anyone, even though Facebook had me excited about the fact that my ad audience would be interested in my ads through interest and demographic targeting.

Facebook doesn’t put your ads in front of engaged users.

One of the key ways to run a successful pay-per-click campaign is constant experimentation and improvement of ad copy and keywords. Since Facebook Ads didn’t send me a significant number of clicks, it made if nearly impossible to make adjustments and tweaks to try to improve the metrics. When running Google campaigns, I have the impression that if I wanted to go completely broke driving traffic to my site, I would be able to, since Google has more traffic than I can ever possibly afford. However, Facebook seems to be another story.

If you look at the graph of clicks that my ad received, for some reason the number of clicks was reasonably high (if 15 clicks is high) for the first full day of the campaign, but the traffic completely flattens as time progresses. When trying to figure out why, the only theory I could come up with is that targeting such a specific group of people who use Facebook on a regular basis means that there are only a small number individuals who will ever see your ad.

Since Google is a search utility, it’s easy to expect that lots of different people will be searching on a daily basis, but a social utility like Facebook that people check in with daily is a different story. When someone logs onto Facebook, he or she is not actively searching for something, which is Google’s key strength. If someone is looking for a Burberry purse on Google and they see your ad selling Burberry purses, you’ve found a potential (and active) match. However, if someone is checking to see what their friends are up to on Facebook and they just happen to like Burberry or purses, they are not in an active buying mode, which means your ad has to work much harder to get their attention. It’s like trying to get someone to buy a car at a family reunion, as opposed to a car dealership. This, in my opinion, is this product’s downfall.

Facebook Ads don’t drive up conversion significantly.

I would be willing to accept the lower click-through rate (after all, I’m only paying for the clicks) if the conversion rate were significantly higher for Facebook Ads than Google AdWords. However, this simply isn’t the case. In my GetBurberry.com example, a conversion means that someone who visits the site clicks on a product, which sets an eBay cookie and gives me a 7-day opportunity to earn money from their purchases.

My AdWords-driven conversions for the case study time period have an average conversion rate of 39.8% over 304 visits to my site, while my Facebook Ads campaign converted at a rate of 38.24% over 34 visits. I would consider the conversion rates to be about equal, even though Google did slightly better. The real problem with the Facebook Ads campaign was my inability to draw a large amount of traffic, but conversion-wise it seemed to be a wash in the end.

In the end, I think I’m going to continue to spend more of my time focusing on Google AdWords. That doesn’t mean that I won’t revisit Facebook to try new ad campaigns, and I also plan to continue experimenting with the free, socially-driven site promotions capabilities of Facebook, but for the amount of effort involved, it seems that Google AdWords will continue to allow me to test ideas and iterate on campaigns at a far faster rate, and in my mind, that’s what this business is all about — experimenting quickly to find out what works, and focusing on that.

Goal: Find the highest conversion rate per click. My definition of a conversion in this case is that someone goes to my site and clicks on any product. If they end up at eBay, they receive a cookie with my affiliate code for 7 days, meaning that I have an opportunity to make money from any successful purchase that they make.

Metrics: Since I began my campaign on Google AdWords on January 19, I’ve had roughly 682 clicks, with a conversion rate of 30% meaning that 30% of those paid clicks actually sent someone off to eBay to receive my tracking cookie.

Question: With its more granular targeting of specific user interests and demographics, can Facebook Ads get a better overall conversion rate at a comparable cost?

Getting Started

To get to Facebook’s ad purchasing system, visit Facebook Ads, where you’ll be guided through a 4-step wizard that allows you to target your ads, write them, and set up your first campaign. For now, I’ll select the web page option and enter the URL of my niche site, GetBurberry.com. There are a few more interesting options for advertising, but I’ll cover those in a later article.

Choosing Your Audience

The second step, “Choose Audience”, is where the uniqueness of Facebook’s PPC model really begins to shine. When I’m placing ads on Google, I generally can only target users by location and the keywords that they’re searching for. Facebook’s audience targeting options allows you to narrow your ad impressions by general demographic information like age, gender, and location, but the magic is really in your ability to target by additional fields like interest keywords, education status, and even political views. These options let you get insanely specific.

I’m sure the wheels are already turning in your head about how you could target very specific segments of people for advertising in your own niches. Chances are, if someone thinks it’s important enough to include in their Facebook profile, they’re likely to be interested in something relevant that you have to offer. For the case study, I’m going to target college-educated women who like purses, fashion, handbags, or Burberry.

Writing the Ad

Now, I get to write my ad. Facebook allows you to associate a thumbnail image with your ads, which is a fun way to grab someone’s attention beyond simple text ads. For my case study, I’m trying to sell Burberry umbrellas, so I’m choosing to use a photo of an orange one, since I think it will “pop” more. Facebook doesn’t divide ads into specific lines of text like Google does, so you can write more free-form ad copy without worrying about how long the lines are, which is a big plus. You have 25 characters for the headline, and 135 uninterrupted characters for the body of your ad.

Another option is the ability to “Add social actions to my ad”, but that requires having Facebook pages or applications set up for your business, a topic which I may go into at some point in the future.

Setting Up the Campaign

Finally, I get to set the pricing for my campaign, including my daily budget and how much I’m willing to pay per click. I also have the option of paying for ad impressions instead of clicks. One thing that’s tricky is that the estimates for clicks don’t feel as rock-solid as Google’s. Facebook’s explanation of the numbers is, “The suggested bid range shows you what other advertisers are currently bidding for users in your ad’s audience.” This seems vague to me, and I also don’t have the ability to improve my price per click by improving my ad relevance in the same way that I do when running AdWords ads. I think it’s fair to say that Facebook’s first attempt at an ad pricing system has room to become more advanced in the future.

With that, I’ve got my targeted ad campaign running on Facebook. Will it perform with better conversion rates than my Google AdWords ads? What kind of click-through and impression rates will I get? I’ll reveal the results of my case study in part 2.

I want to make money while I sleep. I want my money to make money while I sleep. The internet is full of information about topics like SEO, article marketing, pay-per-click advertising, affiliate product promotion — but quite frankly, a lot of it is crap. You see, everyone has an agenda — driving people to read their “squeeze pages”, buy their “special reports”, or register for their newsletters — but very few people are documenting the process of figuring out how to wade through all of the noise.

I was inspired to begin blogging about my own experiences in getting started after getting a swift kick in the butt from Paul Borque’s new site, S.eriously.com, which shows gigantic checks and earnings statements from the big guys — hundreds of thousands of dollars in earnings from AdSense and affiliate networks. Since I’m new to the whole online marketing game, I haven’t earned a space on the site yet, but I plan to be there before you know it.

I’ve been having to dig through mounds of blog posts, forums posts, podcasts, and PDFs just to find enough information to get started, so hopefully a record of my learnings will be useful to somebody else. I have a long way to go, and this is my invitation to you to join me.