A Quick Way To Lose Money [FB Ads]

You are in a dark room, sitting at a conference table that seems to stretch for miles.

In the room opposite of you is the CEO of the largest company in the world.

You just pitched the biggest deal your company has ever proposed.

After a long silence that felt like years, you finally say something.

"Mr. Johnson,

It sounds like all of your concerns have been answered, so let finish this deal.

I will offer my services for $1.2 million a year. "

After a few moments the gruff voice of the CEO loudly exclaims,

"James, you have a deal!".

Then with an outstretched arm he prompts for a handshake.

The rest of your staff is excited from this big win, but they try to not show it in the meeting.

You stand up, and walk towards the man in a 3 piece suit.

But suddenly you stop yourself. Something doesn't feel right...

"No Deal. I will take $200,000 off first. Let's do $1 million instead", you say.

The CEO, shocked that you would make such a blunder and discount on a price he already agreed to can't find reason to say no to a better price.

"DEAL."

You look at his hand again, but stop once more.

"You know what, let's do another 15% off".

The CEO, now flabbergasted, agrees a second time.

Your staff looks at you with a confused look.

"What is he doing?"

We just lost hundreds of thousands of dollars by lowering our price!?

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So what is wrong with this picture?

You were negotiating with yourself! When you had the opportunity to get $1.2 Million, you asked less--twice!

You were essentially beating your own face in, and that can't feel too great...

 

Well that's what happens on Facebook everyday.

How?

Competing Ad Sets and Campaigns. 

I just recently logged into a Facebook Ads account to setup a new client campaign, and what did I see but 5 ad sets with the same audience, same location, same time, and same ads!

So let me jump off my soapbox for a minute and explain why this is WRONG.

Facebook organizes Advertisements by 3 sections: 1. Campaign -> 2. Ad Sets -> 3. Ads

At the campaign level, you choose your objective (e.x. website clicks, brand awareness etc). Here, Facebook will optimize the ad delivery to whatever objective you chose.

Next, at the ad set level, you choose Demographics, daily budget, locations etc. This is where things can get quirky if done wrong.

On Facebook, the ad sets are completely independent of each other. They are in fact unaware of each other's existence.

So if you have 2 ad sets with the same audience/interests/locations etc, then you are doing yourself a disservice.

Facebook will put your ad sets against each other in a bid, and you will compete with your own ads on price!

It's like bidding against yourself at an car auction-- you will win, but you paid way more than you needed!

Bottom Line:

When you are setting up different Ad Sets in Facebook, make sure each ad set is targeting a different audience (whether by location or interests), or else you will continue raising ad cost by your own doing.

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