This Summer’s Effect on Facebook Advertising Budgets

Tomorrow, my wife and I will celebrate our twentieth wedding anniversary. Almost a dozen times this summer, I’ve fielded a question via email or Facebook Messenger that takes me back to the months leading up to when I popped Crystal the big question. Actually, these summer inquiries have been several variations of the same question:

• How much money would be enough for Facebook ads for this auction?
• What Facebook budget would it take to get this stuff sold?
• How much should we budget for Facebook to get good results?
• Can I get a price quote on a moderate Facebook marketing campaign?
• What would you suggest we spend on a property like this?
• How much are we talking to find the buyers we need for this auction?

Before Facebook was invented and before my girlfriend said yes to “Crystal, will you marry me?” I wrestled with a version of this same question. Many of my friends and dorm buddies also wondered what expenditure would be enough—for our engagement rings. We couldn’t have Googled the answer, even if Google were a thing back then. We couldn’t have asked social media, even if MySpace had been online yet. Social convention said we should’ve spent two months’ worth of salary on it, but we were broke college kids. (I hung my wet laundry from the top bunk to dry it just to save the change that the clothes driers required.)

I can’t speak for other dudes, but I wasn’t worried that the value of the ring would change my girlfriend’s answer. I just didn’t want her yes to be in spite of what I handed her. I wanted her to know that I’d done the best I could do and that my best would be the precedent for her life with me. It’s the same for our sellers on every auction campaign, whether the advertising plan includes Facebook or not. We want those sellers to feel like we did the best with what we had, that the highest bid couldn’t have been improved upon. For reserve auctions—proposals where they could say no—we want them convinced they got the best the market could give them at the moment of sale.

So, how much advertising on Facebook or other media is enough to do that?

It depends on the girl. It depends on the guy. I know a coed who said yes over a ring for which her boyfriend went door-to-door in our dorm asking for donations before heading over to Walmart. I also know women who demanded rings worth more than cars currently in my driveway. I tell my clients it’s a math problem and then ask “How many website visitors would it take you to feel comfortable?” I can’t answer that question for them—or for anyone. I can help them only with the math. 

Over the past year, my Facebook campaigns have averaged 9¢ per link click across all asset categories. I usually email the auctioneers asking the questions above a spreadsheet of my past Facebook campaigns so they can see the range of variation from that average. Then, as the 1988 Delaware Association of Christian Schools fourth grade state math champion, I guide them through the equation of multiplying the web traffic they want by .05 and then by .15. That’s the range I typically use for budgeting for many asset categories. 

We can’t know what Facebook will charge in advance. The finite ad spots are sold via automated auction. The cost depends partly on how many other advertisers are vying for the same prospects at the same time. That varies from week to week and definitely from one geographic area to another. Also, the quality of the asset and the photography matter, too. Facebook will end the auctions early in your favor if your content is getting a strong response. The market and its demand for what you’re selling fluctuate, too. You can sell the exact same thing with similar imagery and headlines at a different time and get different results. Prospect density—the number of people within the geographic area who’d be interested in what you’re selling where you’re selling it—is hard to know in advance without a long and recent track record for which you can query analytics. And even knowing how big that radius should be is subjective.

Nobody can tell you in advance what your ads will cost. Not Facebook. Not me. No guru with a series of YouTube videos. What I can tell you is that right now, my clients spend about $770 per auction on Facebook ads (plus my posting fee). That’s down from an average of about $810 pre-COVID. 

I bought Crystal’s ring with the inheritance check I got from a great uncle I never met. On May 17, 1999, she said, “Yes.” On September 9, 2000, she said, “I do.” Seven anniversaries into our marriage, I bought her a serious upgrade package to the ring. Eleven more anniversaries later, I bought her a matching ring for her right hand and proposed to her again. I tell you all of that to say that you can always start modestly and add more budget later. Because we can track all ads in real-time via both Facebook Ads Manager and Google Analytics, we can determine if we want to pour more gas on the advertising fire. 

All that data comes back to your comfort level, especially if the advertising comes out of your commission check. Depending on the asset value, the enigma grows even more uncomfortable. Your seller psyche can influence, that, too. Divorces and 60-year anniversary parties both occur with $200 and $20,000 rings on a bride’s hand. We’ve all seen auctions with thousands or even tens of thousands of visitors to our website that ended in a no sale or embarrassingly-low prices. I’ve seen auctions with tiny marketing budgets or ill-advised advertising result in banner commission days. 

You will never eliminate the risk or the guesswork of auction advertising. You can, however, make more educated guesses and better seller presentations based on captured, curated, and comparable data. If you don’t have those statistics, you’re welcome to borrow mine. 

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Stock images purchased from iStockPhoto.com

196: How Much Should You Spend on Facebook Per Auction?

Every week, I’m asked one or more of the following questions:

“How much do we need to spend on Facebook to get bidders?”
“What should our Facebook budget be for this auction?”
“How many people would [dollar figure] get us on Facebook?”

Facebook rookies seem to believe that there’s a set, static amount—or some price grid—that Facebook charges for results; and they seem to think I know where to find that grid. It makes sense: other media are sold that way. Sadly, though, neither of those assumptions are correct. That said, we can learn to make educated guesses. I’ll tell you what I recommend per campaign, but first I want to show you how I arrive at that suggestion.

Algorithm secrecy

First, you need to know that how far your money will go on Facebook does and will change. Its ad inventory is dwindling, as more advertisers transition their dollars from less efficient media. Facebook is constantly tweaking its tools and options either to better target your known prospects or to protect advertisers from taking advantage of their options for nefarious goals. Victim litigation and the fight against fake news have actually caused Facebook to scale back some very convenient options—including some that were available even several months ago. So, we advertisers have to keep experimenting. Then, we must continuously measure and compare our results to plan our next campaigns.

Geographic density

Like Google AdWords, part of Facebook’s ad pricing is determined by an auction system. Facebook offers a finite number of ad spots in a consumer’s Newsfeed. So, advertisers must outbid others who want that same space. Advertising costs vary, depending on the physical area you want to target. Typically, rural areas require far less money to saturate than suburban or urban areas—not just because there are fewer people in those areas but also because many products and services aren’t marketed to the demographic realities of those who live there.

No matter what geographic area you choose, Facebook will always serve your ads first to those most likely to engage with your content. The more you spend, the deeper into the prospect pool you go within the geography you target. The size of your geographic net you cast is thus affected by the distance a prospect would reasonably be willing to travel to purchase an asset or have it shipped. Also, whether or not you offer online, phone, or proxy bidding influences the geographic settings of your Facebook ads.

Prospect accuracy

Connected with physical proximity is interest proximity. Your ideal buyer might not be determined by geographic nearness but by how close you can be with demographic profiling of your perfect buyer. This is especially true with collectibles, niche commercial/industrial items, specialty farming equipment, and some trophy real estate properties. This reality makes harvesting your buyer data so critical.

That data is now even more valuable because of Facebook’s Lookalike Audience tool, which can take your bidder and email subscriber lists and turn them into the kind of targeting data formerly available only to Fortune 100 companies. This allows you to cover large geographic areas without having to pay for saturation. You can cherry pick your most likely bidders—not just in America but around the world.

Holiday proximity

Because of the competition with other advertisers, holiday seasons raise the bidding price for your ads. You’ll notice a rise from the Monday before Thanksgiving until the day before Christmas. Depending on your target audience’s demographics and geographic location, you might also see cost increases the two weeks before both Valentine’s Day and Mother’s Day. If you have large cultural events in a specific metro area at a specific time each year (like the Boston Marathon or Indianapolis 500 of Bike Week), you might see a small impact as well. I’ve not analyzed Facebook ad costs during the Olympics, but it wouldn’t surprise me if advertising rose 5% or even 10% during those weeks.

Content relevancy

Maybe the biggest factor in the cost of your ads is the content of your ads. Facebook, like its advertisers, wants paid promotion to seamlessly blend with the user-generated posts in the Newsfeed. Neither the platform nor its users want interruptions; instead, they connect with products, services, and stories that are truly interesting or valuable. They don’t want ads that make audiences flip to a different app or site. So, Facebook rewards ads with high interaction rates with lower cost per click (or other desired action).

Thus, the more your text ties into consumer desires, the cheaper your ads. The same holds true for photo quality, video brevity, and the perceived value of the asset (or service) at hand. Beauty is in the eye of the beholder, but the beholder that determines your ad costs is not you. It’s the viewer. The less you think and act like a traditional auctioneer, the more potential bidders you’ll reach for the same money.

Facebook efficacy

Finally, all of the above assumes that Facebook is the most effective and/or efficient way to reach your target audience. That’s not always the case. There are still some audiences whose demographic factors are not available selections to advertisers on Facebook. This makes these folks less likely, or at least less efficient, to reach there.

So, here’s my standard answer when auctioneers ask me how much they need to spend: “I would spend 25% to 75% of your auction’s advertising budget on Facebook, depending on what your Google Analytics reports show you.” If you’re tracking every medium you use—both online and offline—in terms of the traffic they drive to your auctions’ pages on your website, your Google Analytics will answer that question better than I can.

To shorten this post, know that you can use this method to determine what your overall auction budget should be. You can take that information and drop it into this formula to determine how much of the overall budget to spend on Facebook. If you don’t yet have that data, I would incrementally start shifting more of your budget to Facebook until you reach a point where you don’t get more bidders or higher relative sale prices from more Facebook spending.

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Stock images purchased from iStockPhoto.com

181: How to Know What Your Auction Advertising Budget Should Be

Click on any of the illustrations below to enlarge them.

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If you read business news, you run into the term “big data” on a regular basis. I used to associate it with corporations mining our transactional histories to extract scary quantities of data for creepily-predictive advertising.

After teaching part of the Auction Marketing Management course for a couple years, though, I get inspired to help small businesses use the same processes with the information they already have.

Auction companies, in particular, have some incredible, free knowledge. With a few minutes’ worth of work, that knowledge can become predictive power; and that power can help you convince more and better sellers that you are their best option. It just takes asking a few questions and recording those answers.

How many buyers did you have in your latest auction?

Along with that, how many bidders did you have in that auction?

Divide the number of bidders by the number of buyers. This will tell you how many bidders you needed to get to each buyer.

Divide this number by the number of lots in your auction. This will tell you the average of how many lots per buyer you needed to get everything sold.

How much did you spend in advertising on this auction?

Divide this number by the number of bidders at the auction. This will tell you the average cost per bidder.

Of course, it’s easy to then compute your average cost per buyer.

How many unique visitors did this auction’s page on your website generate?

Divide this number by the number of bidders. This will tell you how many unique visitors to your website it takes to get a bidder.

A quick formula will compute how many website visitors it takes to get a buyer, too.

If you’re curious, you can divide your advertising expense by the number of unique visitors to see what your cost per website visitor was.

Now, keep track of these fields for every auction this year. (It should take only five or ten minutes per auction to fill in the blanks.) To make it more accurate for predictive value, I would keep separate spreadsheets for each asset category. If you operate in multiple states, you might find value in an extra column for that notation, too.

Maybe at the end of the year, all you’ll have is something to pique your curiosity. There’s a decent chance, though, that you’ll have actionable data from seeing patterns.

Like one of my friends, you might be able to tell the auction manager approximately how many bidders to expect based on your Google Analytics numbers the morning an auction closes. Or you’ll be able to tell that the bidder registrations were an anomaly. If there’s post-auction seller discussions, you can show them their results versus your typical results.

When a potential seller asks why you picked the budget figure you did, you can explain, “For the asset type or the number of lots you have, we’ll need to get roughly [x] number of buyers. To get that many buyers, we’ll need to attract about [x] number of bidders, which cost us on average $[x] each.”

If you don’t think that would be valuable information, skip these questions and recommendations. If you think there’s merit to them, I can send you the formula-driven Excel sheet I used to create the illustration above. Just click here to email me, and I’ll send you a free copy.

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Stock photo purchased from iStockPhoto.com

174: How to Get National Advertising on a Local Budget

Have you ever been asked to market anything that had a national appeal, but the asset value didn’t allow a national advertising campaign? It happens to my clients on a regular basis. My advice for that situation has recently changed, as a burgeoning technology helps solves part of that problem.

Let me give you an example.

One of my high-volume clients just booked a deal to sell the furniture, fixtures, and equipment from a two-year-old frozen yogurt shop near Buffalo, NY. Having limited experience with this niche asset category, John called me for ideas on how to attract the most amount of bidders to assets that together were worth only about as much as a new pickup truck. (I had zero experience with this asset type; so, I actually had more questions for him than he had for me.)

Before John called me, he had reached out to our mailing list guy and found a list of thousands of frozen yogurt stores in the country. National List Research was able to split the list into chains and independent operators and even provide the name of an executive for many of them. The bad news: a mailing even just to the independent operators would break his budget.

After a couple phone calls, we hatched a plan.

First, John bought the full mailing list of just the independent frozen yogurt shops along with their phone numbers. At 13 cents per person, that was a small expenditure.

Next, John uploaded that direct mail list to Facebook to create ads to those independent operators. Facebook matched about two thirds of those prospects. John could reach that complete national list of matches for about $20 per ad. So, we planned for a series of ads with different photos and headlines.

Then, John created a lookalike audience of Facebook users who demographically looked exactly like those independent operators.

Using a free Facebook pixel, he also created a list of Facebook users who visited that auction’s page on his website. Then, he had Facebook build a lookalike audience of people who looked just like the people who came to that page on his site. All three of these additional audiences got Facebook ads served to them—again for a small outlay. (John creates these three audiences for almost every auction.)

This YoBerry shop was in a Buffalo suburb; but the Northeast doesn’t have anywhere near as many frozen yogurt shops as the South does. Texas, especially, is chock full of them. John’s budget didn’t allow him to mail to the whole national list, but he didn’t know where the biggest demand would be. So, I recommended he run the first round of Facebook ads and then use Facebook’s and Google Analytics’ geographic reporting tools to see the aggregate data for those who visited the auction’s page on his website. That would tell him which states to select from his list for direct mail reinforcement.

The plan worked. John ended up mailing the postcard I designed to 253 of the 3,000 or so purchased names, saving thousands of dollars in printing and postage. Hundreds of people visited the auction’s page. Grafe Auction found scores of registered bidders from multiple states.

So, here were our takeaways from this low-budget experiment:

• Skip newsprint, unless it’s an asset only with local value.

• Use Facebook to help you sort your direct mail list.

• Leverage lookalike audiences to find the people that list brokers don’t have in their database.

• Implement a Facebook pixel to re-market assets to the original prospects and/or to serve ads to people who look just like your early investigators.

• Follow the data, not your instincts or industry status quo.

This complete process may not work for you, if you don’t offer online bidding of some sort. The individual tools we leveraged, though, are tools we use every day for live and online auctions. In concert, they solve a problem auctioneers regularly face.

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Stock image purchased from iStockPhoto.com

173: 6 Things That Make Your Facebook Ads More Expensive

I regularly get asked to estimate the cost of a potential Facebook campaign off the top of my head. That can be difficult because the cost of advertising on Facebook can vary greatly depending on a multitude of factors. (Even in the same campaign, some ads are drastically more expensive than others.) Because what my clients and I advertise ranges greatly in category, value, and geographic market, the audiences vary accordingly.

Facebook advertising is billed in terms of cost per click (CPC), but that price isn’t uniform. CPC is determined by algorithms and invisible auctions. Ads compete for eyeballs, as Facebook allows only a certain number of ads during a user’s time on the service. Facebook wants ads to be appeal to its users, so that they aren’t annoyed off the platform. Because of this, the world’s largest platform wants paid content to match user interests as much as possible; and engaging ads are rewarded with lower cost per click.

But enough with the ambiguous factors, here are six specific reasons some of your Facebook ads cost more than others.

Unattractive asset

Let’s face it, you wouldn’t buy what you’re selling. You’re just crossing your fingers it sells. Or maybe the item at hand is less attractive to its local area (like a snowmobile in Orlando) or in the current season (like a motorcycle in December). If someone is less likely to purchase something, they are less likely to click on an ad for it. This isn’t a matter of asset value—just asset appeal. I’ve seen ads for small, rural estate sales significantly outperform expensive commercial real estate.

Unappealing copy or photos

You might have a fantastic asset, but the ad copy doesn’t evoke interest in potential buyers. The fault can be the wrong message, too many words, or a missing call to action. Also, the photography could be unprofessionally captured or otherwise underwhelming. It’s not that all images have to be snapped by commercial photographers; they just need to appropriately match the current, reasonable expectations of the consumer public for that asset.

Compressed time frame

Because ads compete for space, forcing them into a small window of time means that Facebook has to push your ads ahead of others with longer timeframes. To win the auction, you have to outbid every other advertiser. So, cutting line costs more. Sometimes, it’s very much worth it, if you are advertising to people at an event: say during the Super Bowl, a car show, or even a competitor’s auction.

Highly-competitive time frame

Certain times of year attract more advertising, because more retailers are advertising their wares. Think: Black Friday. I haven’t tested it, but I would imagine the week of Mother’s Day and Valentines would be more competitive. If you’re going hyper local in a metro area, there might be more advertising during festivals or perennial times of tourist activity.

Your prospect pool and its Facebook habits

Some desired audiences don’t interact with Facebook as often as others. That might be a factor of age, Internet availability, population density, or something else. Or you might be chasing a frequent Facebooker from a specific demographic or geographic area that a lot of marketers are chasing. Either way, supply & demand will make getting in front of them more expensive.

How the ad is optimized

Facebook offers multiple formats for your paid content to be presented. Each is inherently optimized by Facebook for different types of interactions—only one of which is getting people to your website. Also, even those intended for website traffic can be optimized for largest viewing audience, multiple views per prospect, or people most likely to click on links. So, even premium content can be more expensive from a cost-per-click standpoint due to how that content is ordered.

While we should all pursue more relevant ads, it’s important to note that efficiency is a secondary goal to effectiveness. Regularly, in my Facebook reports to clients, the ad that is most effective (got the most clicks) isn’t the most efficient one (lowest cost per click) we used in a campaign. Again, I regularly have huge swings in cost per click in the same campaign, using the same images and headlines.

Some audiences are worth their heftier cost. It only takes one click from the right person to have a buyer and two website visitors to have an auction.

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Stock image purchased from iStockPhoto.com.

154: Why Businesses Advertise Backwards

When someone says “Super Bowl commercial,”  your mind probably imagines one of the whacky or sentimental spots that Forbes reports costs $5 million per 30 seconds in this year’s Super Bowl. This creative ad, though, won’t be shown Sunday night. It’s a commercial about Super Bowl commercials.

The moral of this short story is that Super Bowl commercials are big gambles for the vast majority of brands in our country. Most of us get that; so, the ad plays as an inside joke.

That said, I regularly see auctioneers fall for the same line of thinking: that a bigger audience is a better audience. I’ve seen auction marketers try to hedge their bets with the assumptions that a bigger mailing list is better than a small one, that a metro newspaper with 300,000 subscribers trumps the local paper with fewer than 5,000 weekly readers, or that a boosted Facebook post to everybody in a radius beats a demographically-targeted post to 1,200 people.

Maybe sometimes. Not usually, though.

Media is typically sold to advertisers using a measurement called “cost per mille.” The basic idea is to take the cost of an advertisement and divide it by the quantity of potential audience impressions. So, if you pay $500 to reach 10,000 subscribers, you’re looking at cost of $50 per thousand.

In the auction industry, my clients are regularly marketing to smaller audiences.

So, I like to take that one step further and determine the cost per person. In the example above, you as an advertiser would be looking at an investment of $.05 per person. This number can be helpful, when budgets are tight; and you’re looking for the most efficient media possible. We all want the most bang for the buck.

The problem with both cost per mille and cost per person, though, is that they distract from a more important metric: cost per prospect. Cost per mille asks, “How many people can I reach with my money?” Cost per prospect asks, “Who are my most likely buyers (or sellers)? What will it cost to reach them?” Cost per mille promotes scale. Cost per prospect promotes efficiency and effectiveness.

Size of the audience is less important than relevance of the audience.

Whether it’s a mailing list or a publication, a website or a social media platform, the primary question marketers should ask is not, “How big is its reach?” but “Are these the right people?” It’s the difference between spectators and participants. (Helpful tip: we want participants.)

Once you know you have the right people, divide your budget by the number of those prospects to determine what you can spend per potential client. If you don’t have a budget big enough to make a good impression to all of the prospects, maybe sift those prospects down to a quantity you can. Some auctioneers work it the other way, cutting the size or impact of the media. So, they send a postcard instead of brochure or an email instead of direct mail.

For company promotion, I’d keep sifting until I can make an impression that can’t be ignored. It’s not uncommon for me to spend $150 to $500 of my time and resources per potential client I pursue, but I only work for 15-30 auction companies per year. I’ve helped auctioneers spend hundreds and even thousands of dollars on a single proposal presentation to a single client. The nuclear company in my area probably spend tens of thousands of dollars to convince a power company or municipality to buy one of their eight- and nine-figure reactor systems. Your effort should be proportional to the value of their business.

That might mean you’re looking at mailing a package instead of a postcard, arranging a free seminar instead of an advertorial in the business journal, or drafting hand-written notes instead of form letters. Discover what would impress a client; then do it.

A media sales representative can’t tell you your cost per prospect.

Only you can do that. Whether you’re actually taking a calculator or spreadsheet to it is less important than operating from the prospect mindset. Start with the audience and work backwards. If you’re going to gamble, improve your odds. Work to find the valuable few instead of the risky many. No matter how many people see your advertising media, you want the ones who do interact with it (1) to relate to the content and (2) to be impressed.

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Feature image purchased from iStockPhoto.com.

The Most Important Mailing List (That Auctioneers Aren’t Using)

For years I’ve preached that the most important mailing list for an auction company to use is their list of past bidders. But I’ve been wrong—at least partially.

The line of thinking was that the most qualified prospects are those that are familiar with the auction process and have shown past interest in a specific asset category. Also, with Facebook’s Lookalike Audience tool, you could leverage the email address column of this in-house list to find tens of thousands of similar people just like your bidders (in any geographic region). For one of my clients, that Lookalike Audience technique has led to a noticeable increase in his average quantity of registered bidders.

Here’s the problem, though: if you do enough auctions, that list is going to become unwieldy—too large to efficiently send direct mail in the entirety. I’ve worked for a handful of auction companies who regularly mail 6,000 to 10,000 pieces to in-house lists; and I’ve consulted auction companies that mail tens of thousands of pieces per auction. I’ve regularly been asked how to sort a proprietary list down to the best candidates.

You can sort that by recent participation or number of auctions to which they’ve registered. If you specialize in personal property, you could also sort by expenditure levels. The problem is that there’s no way to tell—outside of maybe the art/collectibles or charity/benefit markets—if someone who bought something in the past wants to buy more of the same.

We can’t know who the satiated buyers are on our lists. If a past bidder was searching for a specific asset at a specific time, there’s a good chance they found what they wanted at the auction and/or somewhere else between then and now. This is especially true of lists I’ve seen auctioneers curate for a decade or more—something they not only often do but also advertise as a selling point. Because of this high probability of satiated buyers, our in-house lists have only a slight advantage, if any, over a purchased mailing list or Facebook’s Lookalike Audience tool.

There’s one direct mail list I would trust more than both a purchased list and a generic “past bidders” list. Other than time, it should cost nothing to capture. It’s a list of possibly the most motivated and qualified candidates for your next auction of a similar asset.

Your recent runner-up bidders.

I don’t think I’ve ever talked to an auction company that recorded that segment of their buyers. Online bidding platforms keep this information. These bidders shouldn’t be too hard to discover at on-site auctions, either—especially real estate ones. These folks are already in your clerking software. All it’d take to pull this data is an extra column in your database to indicate that they came in second.

This list will be relatively small in comparison to your whole list.

Maybe these prospects get a bigger postcard or brochure, while everyone else gets a cheaper teaser piece. Or maybe they’re the majority or entirety of your direct mail recipients, while everyone else gets emails and Lookalike Audience ads on Facebook (and now Instagram).

Facebook just announced last week that it’ll now be better able to match our mailing lists, as it opened up its tool to search by names and addresses—not just email addresses and cell numbers. Theoretically, that means we will be able to build Lookalike Audiences from smaller lists than those it currently needs. So, small lists of backup bidders might now be large enough to have their own Lookalike Audiences.

It’s a lot harder to unsubscribe from direct mail than email. So, even a list of people who’ve signed up for your mailing list could no longer be as full of interested parties as you think. If those prospects aren’t turning into bidders anyway, how much is that one-time indication of interest really worth?

Past bidders are a better guess than the general public, but those that left with money and without an asset are even better.

At the very least, it’s worth A/B testing your mailing lists to see which ones generate the most bidders and buyers. Best case scenario: this slice of your in-house database could free up a lot of marketing budget.

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Stock image purchased from iStockPhoto.com