How To Waste Money Advertising On Social Media

By Robert Hand
September 7, 2022

advertising on social media can burn money

OK, Boomer. If you advertise your business name to 845,000 people, would you think one or two people might call you? Not especially, and this article explores why. If you own a business, you have to leverage social media to promote your business and let people know how you can help them; however, not all businesses are helped by advertising on social media. Recently, Louisiana Commerical Realty spent $11,000 to test an advertising campaign using several media channels: Facebook, LinkedIn, Google and the business publication CityBusiness, and the results were surprising.

The Lingo of Advertising on Social Media

First, you will need to know the terminology of social media advertising:

  1. Impressions: how many times the ad was shown, no matter if it was 5 times in the same news story, or at the very bottom of the article.
  2. Unique Clicks: how many times the ad was clicked on for more information by a unique person. Remember, one person can click on ad several times, but that only counts as one unique person.
  3. Total Clicks: total number of times an ad was clicked, without regard to one person with multiple clicks.
  4. Cost Per Click: Total cost for that ad divided by the number of clicks, without regard to one person with multiple clicks.
  5. Click Thru Rate: Clicks divided by impressions. Determines popularity of ads when the click thru rate is compared to several ads in the same media.

The Results

advertising on social media comparison

The chart above compares four different media channels and two variables: the amount spent on an ad and how many unique people clicked on the ad for more information which takes them to a website where we can engage visitors and promote our business so they can call or email us. If the orange line in the chart crosses at the top of the blue column, that means for every $1 spent, we get one unique person that clicks on the ad and then visits the website. Results show Google was the most productive and CityBusiness was a bust, delivering only 178 unique clicks for $4,000 spent. What the numbers don't show is that 178 CityBusiness readers might be more valuable than 4,500 Googlers.

cost per click of advertising on social media

Since different ad campaigns had different budgets, we compared the 'Click Thru Rate' of each in order to reduce the bias of spending more on one media than the other. The chart below shows Google and LinkedIn were tops in visitors who were the most responsive to our ad. But notice even the highest ‘Click Thru Rate’ was Google's 1.07%. That means money spent to reach the other 98.93% was wasted. To be effective, advertising has to either reach lots of people, or a smaller number of very valuable people. The chart also compares the 'Cost Per Click' which was 90 cents for Facebook and Google but $22 for CityBusiness. If your business is trying to connect with local people interested in business, then $22 each may be a bargain.

keywords for advertising commercial property on social media

The most valuable test is the 'Keyword Search' which shows what words Googlers search for that causes them to click on the ad and drives traffic to your website. The surprise is that a small change in wording can drive almost 5 times more traffic to your website. For example, using 'commercial real estate for lease' rather than 'office space for lease' as the search keyword generates a 26% Click Thru Rate versus 5.78%. Of the 74 keywords we tested, only 2 had a Click Thru Rate over 10% and only 14 of 74 scored over 5%.

Does Advertising on Social Media Work?

After spending $11,000 on advertising that displayed 845,000 ads that got the attention of 1,762 people but generated zero emails and zero phone calls, the conclusion is that advertising in social media doesn't work for every type of business, but you don't know until you try it. Run a test first to find out what works best for your business.

Louisiana Commercial Realty

Commercial Real Estate Experts
Robert Hand, MBA, CCIM, SIOR
Licensed in Louisiana & Mississippi
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