Are Facebook Ads Worth It? Four Lessons from 11 Years
Are Facebook ads worth it for business owners? My lessons from 11 years: enough margin, a free book, contact details and patient follow-up before the sale.
I run my business in Germany. Monetary examples use euros unless another currency is stated.
For roughly eleven years, I’ve been running paid advertising for my offerings. I’ve invested over a million euros in advertising, generating several million euros in revenue.
So, is Facebook advertising worthwhile? My honest answer: Yes, but only if you adhere to four rules. Without these rules, you’re likely to waste a great deal of money.
Why Paid Advertising is the Fastest Way to Acquire New Customers
There are many ways to reach new customers. You can create YouTube videos, post on social media, write content for Google, contact partners, or send direct messages. Each of these methods can work. Which one you choose depends on your strengths.
However, if you want to grow quickly and reliably, I know of no better method than paid advertising. The reason is simple: when you pay, your ad is seen. A portion of those who see it will click, visit your offer, and a portion of those will make a purchase.
A social media video might go viral, but still generate minimal revenue. With advertising, on the other hand, you can target a specific offer.
Advertising Has Become More Expensive
When I first started running ads on Facebook, a click cost between 1 and 3 cents. I could obtain contact details of business professionals for 30 cents to €1, sometimes hundreds in a single day. That’s no longer the case. Today, a click can cost between 3 and 5 euros, depending on the industry.
At the same time, consumers are more cautious. Ten years ago, I could easily sell courses for 200 to 400 euros simply via email, without a webinar. Today, you need to provide more explanation and offer more convincing arguments. Many people have had negative experiences and are skeptical. Furthermore, some products are less in demand due to artificial intelligence.
Therefore, if you want to make money with advertising today, you need to advertise better than you did in the past. And you need to structure your business in a way that advertising can actually be profitable. That’s why I’ve identified four rules.
Rule 1: Your Offer Needs a Sufficient Margin
You pay for advertising from your profits. Therefore, your offer needs to generate enough margin. A simple example: you build a small table, costing you 300 euros, and sell it for 400 euros. Theoretically, you have a 100-euro advertising budget per table. However, you also want to make a profit. Realistically, you’ll be left with 10 to 20 euros per table for advertising.
The more advertising budget you can allocate per customer, the faster you can grow. This allows you to reach larger, “cold” audiences, people who are not yet familiar with you.
If your margin isn’t sufficient, you may need to increase your prices. Or, you might need complementary products to increase your average revenue per customer. If you skip this step, there’s no point in running advertising campaigns. You might generate some revenue, but ultimately, you’ll just be doing more work.
Rule 2: Never Sell Directly to People Who Don’t Know You
This is the biggest mistake I see. You run an ad for your course, your service, or your product, and you send complete strangers directly to your sales page.
Let’s do the math. You spend 1,000 euros and pay approximately 5 euros per click. Of the visitors, perhaps 1 to 2% will make a purchase. The rest will leave without remembering your name. Even if they want to buy later, they won’t be able to find you. You’ve spent 1,000 euros for one or two sales, or perhaps none at all.
I estimate that only 5 to 10% (at most) of the people who will want to buy in the coming year will make an immediate purchase. Often, it’s only 2 to 3%. Those who sell directly are essentially wasting the rest.
An exception is typically local businesses. For them, a direct ad can sometimes work.
Rule 3: Collect Contacts First, Then Sell
A much smarter approach is to take an indirect route. First, you promote something free: a book, a report, or a webinar. In exchange, people provide their contact details, at least their email address, and ideally their name and phone number as well.
Afterward, you patiently explain what you offer, using emails, videos, text, or podcasts, whatever suits you best. And repeatedly, you say, “If you’re ready now, I have an offer for you.”
Let’s look at an example. Suppose 100 people visit your page, and you earn 100 euros per sale.
| Direct Sales | Free Book First | |
|---|---|---|
| Contacts Obtained | 2 (only buyers) | Approximately 30 |
| Sales in 12 Months | 2 | Approximately 4 |
| Revenue in 12 Months | 200 € | Approximately 400 € |
With the indirect approach, you obtain approximately 28 more contacts from 100 visitors. That’s a significant number. Many of those won’t buy in the first year, but later on. In this example, I estimate that over one to three years, you’ll generate six to eight sales from those 30 contacts. This is how you squeeze the most out of your advertising budget, simply by being more patient.
Even the cost per contact speaks volumes. If two sales cost you 100 euros, you pay 50 euros per sale. With those numbers, you often get a contact for a free book for just 2 to 4 euros.
For me, books usually work best. Reports and webinars aren’t quite as effective.
Rule 4: Promote Content, Not Initial Consultations
Many consultants and coaches directly promote a free initial consultation. While this can be useful for a quick test, it’s almost always wiser to promote content, such as a free report or a book, in the long run. Nevertheless, on the welcome page after registration, you should still invite people to schedule a consultation.
Let’s look at a simple calculation. You have a marketing budget of 100 euros. Directly promoting an initial consultation costs you 50 euros. This results in two consultations and two contacts.
If you use those same 100 euros to promote a book, you’ll reach approximately 30 contacts. Two of them will immediately book a consultation on the welcome page. Of the remaining 28, roughly ten will likely book a consultation within the next six to twelve months. In the end, you’ll pay less than 10 euros per initial consultation, compared to the previous 50 euros.
This difference in margin is significant. In the article about my sales process, I describe how I conduct an initial consultation.
Your Email List is Your Real Asset
There’s another reason to take this approach. If you rely solely on social media, you’re dependent on the platform. The platform could close your account or change the algorithm, eliminating your reach.
Your email list belongs to you. That’s where the real value lies. Some of my subscribers have been on my list for seven or ten years and continue to purchase my products. I may have initially paid just 3 euros for that contact. A genuine email contact is far more valuable than most people realize.
Most people who sign up for a topic will purchase something related to that topic within the next twelve months. If you stay in contact with them, the chances are high that they will buy from you. I show you how to build such a list under Build Your Email List.
It’s important to use the right tone. I don’t pressure anyone. Instead, I patiently offer: “If it’s a good fit for you right now, I can help you.”
Before You Launch Your First Ad
Check these four questions:
- Does each sale leave enough margin for advertising costs?
- Do you have a free offer, ideally a short book, that encourages people to sign up?
- Do you invite people to schedule a consultation or learn about your offer on the welcome page?
- Do you regularly communicate with your new contacts and consistently offer them something?
Also, make sure each campaign targets a specific audience. I explain in the article Define Your Target Audience why this reduces your cost per inquiry.
If you can’t answer yes to any of these questions yet, start there. Only then will your advertising budget be worthwhile.