• Matthew Hood

Facebook ads: how to create a revenue generating machine

Updated: Nov 22, 2018

Facebook ads shouldn't be seen as a cost. When done right, they are one of the most powerful marketing tools for your business and should be seen as an investment where you can multiply your profits.

As marketers, this is the equation we want to see:

Revenue from Facebook Ads > Cost of Facebook Ads

When your ad revenue is greater than your ad cost, you can start to increase your spend (to increase your audience reach) to multiply your profits. That's why they're so powerful.

Combine this with their unrivalled targeting and retargeting ability and you've got a winner.

This article will show you how to do Facebook ads right and get to the right side of the equation.

1. Set up your Facebook and / or Instagram profile page.

When you run your ad, it links to either your Facebook or Instagram profile depending what platform you run them on. You’ll get people clicking through to see what you’re about so it's important to have them optimised. A few tips:

  • Make sure people know immediately what you’re about from your about / bio section

  • Use a professional profile photo / cover photo

  • Have your branding consistent across all platforms

  • Regular content with quality photos

Download our business booster kit for more tips on how to do this.

2. Create a business manager account and add Facebook Pixel to your website code

Create a business manager account.

Create a Facebook Pixel.

Depending what building platform you are using for your website, Google how to install facebook pixel on [insert platform]. Most will have really straightforward steps on how to do it.

3. Set goals

Why do you want to run Facebook ads? What is the desired outcome?

Is it to make sales? Get new clients? Collect emails? Drive traffic?

This will help you identify your marketing objective when you set up your ad and determine the sales funnel you will need to create.

It will also help direct your who, what and where - the audience you want to target, what your ads will look like and where they'll be placed.

Your funnel

A sales funnel is the process you lead your customers through before they commit to buy. A typical sales funnel takes someone from cold to hot through awareness, engagement and conversion.

The higher priced your product or service is, the higher aversion someone will initially have to buying it. This means your sales funnel will be longer and will include more steps.

For example, a bigger ticket item like selling a web design service for thousands of dollars takes many steps to build trust before the prospect finally commits to the sale.

Whereas, a cheaper product like $25 sunglasses may only need one ad to be seen and its bought on the spot.

This is why determining your goal is so important.

How to build your funnel

There's no right or wrong answer to building a funnel. It'll be purely determined by what your goal is. If it's cheap, keep it simple. If not, you'll need to get building.

The good news is, once you have a guideline to do it, creating your funnel is straightforward.

Selling a web design service example

Step 1

Create ads promoting free content like blog posts you have written relating to web design.

Step 2

Retarget people who have clicked through and read your content from step 1 with freebies that offer more value like free ebooks with a blueprint to building a website from scratch.

Step 3

Retarget those who have downloaded your freebies with testimonials, discount offers or a free consult.

WTF is retargeting?

Facebook ads allow you to retarget specific audiences based on previous actions they've taken e.g. people who have read a blog post of yours.

Retargeting is critical to moving prospects along your sales funnel and putting the right ads in front of the right people.

More on exactly how to do it later on.

Your marketing objective

In this web design service example, each different step in the sales funnel has a different marketing objective.

  1. Brand awareness

  2. Engagement

  3. Conversions

Facebook automatically put your ads in front of the people who are most likely to take this action so use your defined goal to determine your marketing objective.

If you want to collect email addresses (so you can then market for free to your email list), you may only need to use step 1 and step 2 from the funnel example. Or maybe even just step 2.

If you're selling discounted, cheap blow up pool toys, you may just choose a conversion objective and ad.

4. Set up

Step 1

Choose your marketing objective as determined earlier.

Step 2

Give your campaign a name you'll easily identify.

Split testing is a great way to test different ad sets against each other to determine what's performing best. But for now, let's keep it simple.

Step 3

Choose your audience.

On the right you can see a audience size gauge. For most products and services, you want to be specific not broad.

When Noah Kagan started advertising for his businesses AppSumo and Monthly1K, he tried to target audiences with less than 10,000 people.

The more specific you are, the higher your click through rate will be and the better your chances are of converting someone into a paying client down the funnel.


Think of your ideal customer or customers. Our ideal customer's age and location is 30 - 45 year olds in Australia. To keep our audience under 10,000 people we focus on specific cities like Sydney, Brisbane and Melbourne.


Narrowing by interests is the most powerful targeting tool. It's a huge factor in determining whether your ads will be successful or not.

If you're selling a product or service aimed at people who are frequent travellers or one of the other several hundred options in detailed targeting you can pick that.

Browse through and see if there's anything that works for you.

Find your best 5 customers on Facebook

Another way to find use interests is to find your best 5 or so customers on Facebook. Then make a list of all the relevant pages, businesses and people they have liked. Compile the lists and identify what likes keep coming up.

For example if you're selling a growth hacking course online you might find that several of your best customers like Gary Vaynerchuk or Neil Patel or Seth Godin.

Target competitors

Another way is to target your competitors. If you sell sportswear, you could target anyone who like ASICS on Facebook.

Step 4

Choose your placements.

Choose Edit Placements. This way you can choose where your ad will be placed.

Depending on your target audience, you will need to choose whether you want your ad to be shown on Facebook or Instagram and where exactly on those platforms.

For simplicity I'd recommend just using Facebook. Within Facebook just start with feeds. This will place your ad in someone's feed when they scroll.

You can also choose device type i.e. mobile and / or desktop. Make this decision based on your needs. We use both for Banni ads.

Tip: Don't use both Instagram and Facebook. If you want to use Instagram placement, create another ad set and different ads.

Step 5

Choose your budget.

Start low. Even $2 or $5 a day until you start seeing results. There's no point spending lots of money on ads when you don't even know they work yet.

Once your equation is on the right side i.e. revenue from ads outweighs cost, then increase your daily budget.

Step 6

Create your ad.

Choose format

Videos have higher engagement than single images. So if you have relevant, professional and high quality videos to use then go for it.

Images are however easier to get right. I'd recommend choosing single image.

For single image ads, Facebook recommends:

  • Image size: 1200 x 628 pixels

  • Image ratio: 1.91:1

  • Use little or no overlay text to maximise delivery

Choose / create image

I've found images to be one of the most influential factors in ad success. Make sure they're colourful, high quality and eye capturing. Photos of people work really well.

You can split test your ads (or create multiple ads) by changing only the photo, keeping the rest of the ad the exact same and seeing which ads perform best.

Look at the difference between the images used in these two ads from my personal Facebook feed.

See the Foundr Magazine ad uses someone's face along with colours and minimal overlaid text. It gives it a personal touch and makes it more engaging.

Whereas the Udemy ad uses a generic stock photo of an Instagram logo. While the colour are bold and draw attention, it feels like the image has been screenshotted off Google Images making it look tacky.

Write text

Remember you are trying to bring value to someone whether it's through free content, a special offer or something that's going to help them in some way. Write your copy accordingly.

  • Text: Your text appears above the image and looks like a normal Facebook post. You could ask a question or add social proof. You want your ad to appear as seamlessly in someone's feed as an organic post so don't be too formal when writing your text and keep your audience in mind.

  • Website URL: Add a link to the destination you want to take people, whether it's a blog post or landing page. Try and keep your ad and destination link consistent so someone clicking it doesn't feel like they've been taken to another planet.

  • Headline: This is where you tell people what your ad is about. What is someone going to get out of this? Add value!

  • Call to action: Use the 'learn more' button. AdEspresso found the 'learn more' button had a 22.5% higher click through rate than 'sign up'.

  • News feed link description: Add additional information here to reinforce your copy. An example from the Foundr ad above is "100% risk free guarantee".

See a breakdown of one of OkDork's most successful ads below.

Finally, make sure you ad your Facebook Pixel for conversion tracking.

Your ad is ready to be published!

How to retarget

Most funnels will require a few ads to be run using retargeting to get yours ads in front of people who you have moved down the funnel.

Using the Facebook Pixel you can retarget anyone who:

  • has visited your profile from anywhere between 1 to 180 days ago

  • has visited a specific page on your site

  • haven't visited in a certain period of time

If you are using a funnel like the Banni Digital web design service example above, you'll want to retarget people who have visited a specific page.

In audience, select 'create new'.

Then select 'website traffic'.

Change to 'people who visited specific web pages' and add the URL.

Refine as much as you need and you have created your new audience for retargeting.

5. Test and measure

Once your ad is published, you need to track how it's going. If you're testing different ads with changing variables like image and copy, determine what is generating the most leads for the smallest cost by looking at 'cost per lead' in ads manager. Once determined, direct your ad spend from less performing ads to the best performing.

Revenue from Facebook Ads > Cost of Facebook Ads

If the goal is to have ad revenue greater than ad cost, we need to calculate our revenue from the ads.

Most funnels should be simple enough to work out. Calculate average revenue from sales (tracked through Facebook Pixel) and subtract cost of ads.

To track return on investment for email subscribers:

Say we're using ads to collect emails, who we can then market to for free.

E.g. it costs $3 per email sign up and each new customer equals a profit to us of $500

  • Profit = $500

  • Cost per email = $3

  • $500 / $3 = 167

So if we turn 1 out of every 167 email subscribers into a client, then our ads are profitable.

The wrap

Facebook ads can be a revenue generating machine when done correctly. Key takeaways:

  • Prepare for your ads by optimising your profiles and installing the Facebook Pixel.

  • Set ad goals to give your ads direction.

  • Create eye catching ads that add value to the viewer.

  • Use specific targeting and retargeting to move the right people down your funnel who are going to buy from you.

All the best with your advertising!

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