Facebook Ads – The Math behind the Magic             www.adparlor.com
Hussein Fazal – CEO, AdParlorAds API Partner – manages ~1 Billion daily impressions on Facebook
What works on Facebook? Intent (search versus Facebook) Deep Conversions   o Does education, insurance, flowers work on ...
Some Basic Terms   CTR – Click Through Rate   CVR – Conversion Rate   CPM – Cost per 1,000 impressions   eCPM – Effect...
Ad Server Fundamentals Any ad network wants to choose the ad with the  highest eCPM   o This is true for Facebook and amp...
The Importance of CTRDifference in eCPM based on the CTR [hold CPC bid constant] Impressions          CTR            Click...
Seeing the Effect on Facebook
The Importance of CVRDifference in eCPA based on the CVR [holding cost constant] Cost           Clicks      CVR           ...
Understanding Ad Optimization   Don’t talk to me about pricing unless you    understand CTR and CVR      High CTR = chea...
Quick Tangent - Sponsored Stories “Something that would appear on a users news feed – turned into an ad unit”
Why do Sponsored Stories get you cheaper fans (technical)?Higher Click-Through-Rate (CTR)        Higher Conversion Rate (C...
Why Do Sponsored Stories get youcheaper fans (high level)?   Because it is a story – not an ad.   Remember - “Something ...
If the Ingredients are PerfectSuper Targeted                     $.08                   Able to achieve 0.29%Fan Acquisiti...
Groupon’s Goal is to get sign-ups
Groupon          Generic Ads               Constant creative rotation          Deal Specific Ads               Combining...
Generic Ads It’s all about testing & optimization
Deal Specific Ads
Deal Specific Ads   Integrate with Groupon Deals API   Pull deals as they go live at    midnight in local timezone   Ma...
Bringing it all together
hussein.fazal@adparlor.com    www.adparlor.comwww.facebook.com/adparlor
Hussein Fazal, SMASH Summit NYC
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Hussein Fazal, SMASH Summit NYC

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Hussein Fazal's (CEO @ AdParlor) presentation at SMASH Summit on 7/26 in NYC

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Transcript of "Hussein Fazal, SMASH Summit NYC"

  1. 1. Facebook Ads – The Math behind the Magic www.adparlor.com
  2. 2. Hussein Fazal – CEO, AdParlorAds API Partner – manages ~1 Billion daily impressions on Facebook
  3. 3. What works on Facebook? Intent (search versus Facebook) Deep Conversions o Does education, insurance, flowers work on Facebook? o Definitely not if you treat it like search! Shallow Conversions o Playing a Facebook game o Liking a Facebook fan page o Registering for a web site via Facebook connect
  4. 4. Some Basic Terms CTR – Click Through Rate CVR – Conversion Rate CPM – Cost per 1,000 impressions eCPM – Effective cost per 1,000 impressions CPC – Cost per click CPA – Cost per acquisition 4 Clicks from 10,000 Impressions = 0.04% CTR 2 Acquisitions from 4 Clicks = 50% CVR 4 Clicks * $0.30 CPC = $1.20 Cost $1.20 Cost / 2 Acquisitions = $0.60 CPA
  5. 5. Ad Server Fundamentals Any ad network wants to choose the ad with the highest eCPM o This is true for Facebook and amplified by their focus on user experience A high CTR means you can buy cheaper clicks A high CVR means you get more conversions for those clicks
  6. 6. The Importance of CTRDifference in eCPM based on the CTR [hold CPC bid constant] Impressions CTR Clicks CPC Bid eCPM 1,000 1.00% 10 $ 0.50 $ 5.00 1,000 0.10% 1 $ 0.50 $ 0.50 1,000 0.05% 0.5 $ 0.50 $ 0.25 1,000 0.01% 0.1 $ 0.50 $ 0.05
  7. 7. Seeing the Effect on Facebook
  8. 8. The Importance of CVRDifference in eCPA based on the CVR [holding cost constant] Cost Clicks CVR Conversions eCPA $ 5,000.00 10,000 40.00% 4,000 $ 1.25 $ 5,000.00 10,000 50.00% 5,000 $ 1.00 $ 5,000.00 10,000 60.00% 6,000 $ 0.83 $ 5,000.00 10,000 70.00% 7,000 $ 0.71
  9. 9. Understanding Ad Optimization Don’t talk to me about pricing unless you understand CTR and CVR  High CTR = cheaper clicks  High CVR = more conversions for those clicks Create thousands of ad, learn in real- time, and optimize CTR and CVR By optimizing on CTR/CVR you are essentially driving down your CPA
  10. 10. Quick Tangent - Sponsored Stories “Something that would appear on a users news feed – turned into an ad unit”
  11. 11. Why do Sponsored Stories get you cheaper fans (technical)?Higher Click-Through-Rate (CTR) Higher Conversion Rate (CVR)gets you cheaper clicks gets you more for those clicks
  12. 12. Why Do Sponsored Stories get youcheaper fans (high level)? Because it is a story – not an ad. Remember - “Something that would appear on a users news feed – turned into an ad unit” Before sponsored stories: o More Fans = More expensive for the next Fan Since sponsored stories: o More Fans = Cheaper for the next Fan
  13. 13. If the Ingredients are PerfectSuper Targeted $.08 Able to achieve 0.29%Fan Acquisition CTR and 81% CVR through life of campaign Campaign Effective Cost Per Fan
  14. 14. Groupon’s Goal is to get sign-ups
  15. 15. Groupon Generic Ads  Constant creative rotation Deal Specific Ads  Combining the Groupon deals API with the Facebook Ads API
  16. 16. Generic Ads It’s all about testing & optimization
  17. 17. Deal Specific Ads
  18. 18. Deal Specific Ads Integrate with Groupon Deals API Pull deals as they go live at midnight in local timezone Machine learning to determine who to target Set Facebook Ads live within minutes of deal going live!
  19. 19. Bringing it all together
  20. 20. hussein.fazal@adparlor.com www.adparlor.comwww.facebook.com/adparlor

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