Welcome to the final part of our Facebook for Dealerships series. Today we will get into the nitty-gritty of Facebook Ads including their auction system, who and how to target people, and ad types. Advertising on Facebook might not work for every dealership, but it could be useful for yours, so stick around and you might learn a thing or two.
Targeting & Lookalike audiences
The great thing about Facebook is that you have the ability to target your audience with very specific categories. The most basic targeting options are age, behaviors, connections, gender, interests, languages, and location. However, using these categories is a bit of a double-edged sword. The more categories you use, the fewer people you will be able to target. This is because it narrows down the number of people who will see your advertisement down to only the specific group of your choosing. However, this is also helpful because if you do your research and target the correct demographic, you know you’ll be placing your advertisements in front of the people who are most likely to buy a vehicle from your dealership.
After choosing your target or source audience, you can start to create lookalike audiences. These lookalike audiences take the common qualities of your source audience and place your ad in front of other audiences who display similar qualities. The larger the size of your lookalike audience, the wider your potential reach will be. However, doing this will also negatively affect the similarity levels of your lookalike and source audiences. So, if you’re a smaller dealership that is just trying to reach customers in your area, you might be better off using a smaller-sized lookalike audience that better matches your original target audience. It’s important to note that before you can create the basis for your lookalike audience, you first need to have at least 100 people from one country. Finally, one source audience can be used to generate up to 500 lookalike audiences.
Ad Types
Facebook has four basic ad types to choose from; image, video, carousel, and collection ads. Each of these provides a different experience for your audience, so it’s important to choose the right one to showcase your dealership. The best part about Facebook is on their business page, they show you how each ad will look depending on where you decide to place it, i.e. directly in the news feed, in stories, or in people’s messenger inboxes. Carousel ads will probably be the most effective form of advertising for your dealership. This is because it allows you to place several listings on one ad and gives the viewer the prices and can take them right to your website or Marketplace. You really can’t go wrong with choosing any of these ads for your dealership. If you just want to showcase one vehicle at a time, image ads will be a good choice. If you want to give a quick tour of your lot or a particular car, utilize the video ads. Finally, collection ads are just a little different. Typically, they’re used to showcase clothing or accessories. However, if you want to try to use it for your dealership, I would recommend using a photo of a vehicle and then include additional parts that your dealership sells such as new wiper blades, a certain kind of oil, or even air fresheners.
Bidding Strategies
Your dealership has three bidding strategies to choose from; spend-based bidding, goal-based bidding, and manual bidding. With spend-based bidding, you can focus on the lowest cost or the highest value. The difference between the two is the lowest cost focuses on the amount of delivery and conversions you can get without spending too much or you can use your money to get the highest value purchases. Goal-based bidding is separated between cost cap and minimum return on ad spend. You can either limit the cost of your optimized results or select a minimum return on ad spend for individual bids. Bid cap is just what it sounds like - you’re setting a cap on your bids across all auctions, instead of giving Facebook the ability to bid dynamically according to your cost and value goals.
The Bidding System
Next, let’s get into auctions on Facebook, because they’re a little different than the typical bidding you do at a regular auction. When an open ad spot is offered up on Facebook, a real-time auction takes place right away. However, the difference between this kind of auction and others is that the highest bidder is not always the winner. Three major factors go into picking the winner; bid, estimated action rates, and ad quality. The better your advertisement is set to perform, the more likely your dealership is to get an ad spot. Not only do you have to be a high bidder, but you have to create a high-quality ad and analyze your ad relevance diagnostics too.
Ad Relevance Diagnostics
The three diagnostics used to evaluate the relevancy of your dealership’s advertisements are quality ranking, engagement rate ranking, and conversion rate ranking. Quality ranking means comparing your ad’s perceived quality to other ads (and businesses) that are competing against yours for the same audience. Engagement rate ranking takes the expectations of your ad’s engagement rate and compares it to the engagement expectations of other ads fighting for the same audience. Finally, as you can probably guess, conversion rate ranking is focused on the expected conversion rate of your ad and how it compares to other ads that have the same optimization goal and are competing for the same audience as your dealership. You’re likely going to be going up against ads that other dealerships are running, but you may even be competing with other businesses in general. Because of this, you want to make sure you are closing analyzing these diagnostics.