Advertising on Facebook | Chidi Erike

So the one thing that I also want to say, and I think both John and Cliff touched upon this, is you have got to know that when you use these hacking tools to grow your accounts, you're going to get leads. You can't just leave those leads and hope for the best, right? So one thing that they both mentioned was Holler. I have Holler on my Twitter and my Instagram. So I have a company called 7AM, which is a personal development education platform, right? And I have people hit be up like, oh hey, what's up? I just got your message. I want to be a contributor. Because on Holler, you can basically, if you pay for it, you can get it for free and then it'll say like Holler on it, which doesn't feel as personal. People are like, is this automated? But if you actually pay for it, then you can put a very personal message on it. And then all of a sudden you've got these leads coming to you and you have to make sure you respond to them. Because I've got so many leads now, you guys. I'm like, I'll be like, just email 7 AM. And then I just forget about them. So you have to make sure that you absolutely engage with those leads or else they will fall off. So that's something I definitely want to emphasize to you guys. All right. So next up, we have somebody very special because I have definitely— I feel like I've got Instagram down, Twitter, I'm pretty solid. But Facebook, I'm like, what is going on? Like, stop taking my money, you guys. So I think that this is a treat for you guys. Chidi Arike. He is the optimization lead, so advertising optimization lead for Facebook, and he's gonna really dive into what it takes to actually generate leads on Facebook and monetize those leads. All right, so can you guys please welcome Chidi to the podium?

Thank you, thank you. So John, I know you did a little picture for your mom. I just want to give a shout out to my mom real quick. First time on the West Coast, so she came all the way out here to be here. Thanks to Sequoia. Sequoia, thank you. Appreciate it. So we usually require an NDA agreement to look at everything, and I see you taking a picture. I ask that if you do take a picture and you're that fast, because I'm going to go through the slides really fast so you don't take pictures, Okay. that you don't share them, alright? All right, so Facebook. We make 25 trillion decisions per day, right? I'm sorry about this slide, it's a little— it's going to be a little wanky on this screen. But 25 trillion. A lot of people ask, okay, why do we make so many decisions? The reason why we make so many decisions is we do everything possible to protect the user experience, right? So some people ask, okay, what happens when you go from a business account to a personal account or vice versa? What's that dynamic look like? Well, when we're showing ads in general to our users, you essentially get a subsidy if you have a really good ad, right? So if you have a quality ad, you're paying less than what we call an auction. So to give you an example of what that looks like, there are companies out there that have almost unlimited budgets. So they say, you know what, I'm going to show XYZ to everybody and I'll just pay up for it. You know, I have unlimited budget, I don't care. What happens is we say, well, we're going to charge you a lot to actually show these horrible ads to every user on our platform. And if your ads are that bad, what we say is, well, we're not showing it to anybody because we know that we have other advertisers that are actually willing to invest in their creative and show them to people that actually want to see them, right? So I'm going to skip around pretty fast here. So my mom was a math teacher. She'd probably appreciate this equation. So this is a lot of what people don't necessarily understand. A lot of people think about Facebook think about Instagram, you think about Twitter on the personal user level. But how many people here want to one day start a business or already have a business using digital media platforms? Right? Several people. It's a huge difference between understanding Instagram and Facebook on a personal level and understanding it on a business level, right? And we're going to go into why that is. So as you can see, objective value times objective probability plus relevance That's the formula that Facebook uses when it's trying to connect users to advertisers. That last piece, relevance, is the piece that nobody knows about. That's the piece that if you took a picture of, I'd probably get in trouble. It's like, what is relevance? Relevance is what we call a quality score. It's what we think is the likelihood that somebody engages in your advertisement.

Right?

If that makes sense. So we see an ad, we compare it to a whole bunch of different ads, and we say, well, this is how people typically engage in these ads. is somewhat similar, so we're going to make the assumption that people are likely to engage in your ad X amount of times. If that's a really high number, then naturally you get a subsidy, you pay less to reach every individual. And then the reverse is true as well. So the reason why I say that is let's say you open up a cookie shop in Oakland, right? If your creative is not good, then you're not going to get that much engagement because we're not going to show your ads to anybody because your ads are not good, and it's going to sacrifice the quality of the experience that people are seeing on Facebook's platform. But let's say you do a cookie shop and it's amazing milk cookies in the picture and everybody likes them and you're getting a lot of engagement, then what's going to happen is we're going to show everybody your ads for a really low cost, right? So that gives you an example, that's a simplified example of it's not everybody's the same, right? It depends. So if you're seeing that you have a small business and a lot of people like your small business and you're not that profitable, a lot of times it's because of your creative, right? So most of you guys know what this is. When you go into Facebook and you try to start up a marketing campaign, you see this. These are the objectives that we offer to any given advertiser. So just real quick, awareness, for those of you guys who don't know, is what we call brand awareness, upper funnel, right? Awareness is you're trying to tell somebody what you produce or what your service is.

Awareness is when you're trying to get people to know about you.

On the other side of things, we have what we call conversions. That's lower funnel. That's actually trying to sell something and trying to get profit. There's a lot of people in a lot of different communities that I speak to that they don't focus too much on conversions. Why? Because conversions require you to have a pixel. A pixel is real simple code that goes into your website. It's extremely important if you have a business on Facebook or Instagram to have a pixel. Why? Because if you don't have a pixel, then we can't tell you who's most likely to buy whatever it is that you're selling, right? So for us, it's more of a guess. It's like, oh, okay, well, we know the demographic you're looking for, so we'll show it to this particular person. But if you have a pixel, we'll actually optimize towards that individual person, right? So let's just say that you're selling hats and you think that the person buying your hats are people between the ages of 30 and 50, and 90% of them are women, right? That's what you think from your market research, maybe because you would use Twitter's platform to get that research. On Facebook, we have a different demographic. Somebody asked a question earlier, okay, how do you know what platform to use? Well, each platform has a different demographic, right? Twitter's platform oftentimes skews to a younger audience. Facebook, a slightly more mature audience. Instagram, a more visual audience, right? So those things, those are obviously important things to know when you're actually divvying up your marketing. So these are some of the things that we calculate. As I mentioned, it's all about engagement. It's what we think your engagement is. Once we find out what your engagement really is, then we fast— fastly adjust what that number is, right? So we could be wrong. We could say this ad sucks, it's not going to get that much engagement. Once we show it to everybody here, everybody's engaging, then we'll put it up to the top of the list and say, well, we should be discounting this ad to show it to other people. This ad is real similar to organic ads that people would naturally see in their feed. So you're not just showing ads to people who are engaged in the conversation, So what does it mean by organic, right? Let's just say you have a Facebook account and it's your birthday. Usually when it's your birthday, 5 times more people engage in your profile to say happy birthday or to see how you're doing, etc. Well, as somebody who's an advertiser, you want to make sure that you're getting to people while they're actually looking at one's platform for their birthday, right? Because— so we're going to charge that advertiser more. We're going to charge that advertiser more because we know it's 5 times more likely that somebody's going to look at their profile that person's profile and say happy birthday, right? That's actually extremely important to understand because if you have— you're selling pretty much anything, right? You're selling cakes or hats or whatever the situation is, it's all about numbers. It's a numbers game. Take a step back. Facebook has 1 point— I believe the number is 1.7 billion people on the platform, all right? So there's a lot of people here that they might have a small business, brick and mortar, that's a different situation because obviously you want to focus on that specific area that your business is in. But for everybody else, we have 1.7 billion people on the platform, which means that you should be opening up your target market to other countries, other markets, etc. And I'll talk more about that as we kind of go through this deck.