For B2B SaaS companies, conventional wisdom says that Facebook advertising is not a viable customer acquisition channel. This probably has to do with the misconception that people on Facebook are either not business users or not in a “business” mindset when using Facebook.
But the data contradicts that intuition. Facebook has 2 billion users who spend 50 minutes using FB per day. Over a fourth of the world surely includes many business users, and it’s unlikely those users are not in a business mindset since the average Facebook user spends so much of their day logged on. And in addition to macro-level data, our own experience managing Facebook advertising for several B2B SaaS companies indicates that driving results with Facebook advertising is very much possible.
But the long sales cycle and complexity of the customer journey for most B2B companies makes it very important to have a strategy going in. To that end, we wanted to share our guide to Facebook advertising for B2B SaaS companies. The following post is an excerpt of our recently published eBook: Paid Acquisition for B2B SaaS Companies: The Definitive Guide. To read the post below in a clean PDF format (including the rest of the guide), please click here.
Part 1: Audience Targeting
Audience building is a critical aspect of Facebook advertising. Audiences allow you to target prospects who are in different stages of your funnel with a different ad or message. Audience building also allows you to segment your existing customer base into tiers based on quality and use those audiences to find new prospects.
Audience targeting on Facebook can be separated into two general categories: prospecting and remarketing. Each category requires a different approach.
Prospecting audiences are audiences who are “net new” to your marketing funnel and have not yet visited your website or interacted with your content. For B2B SaaS companies, there are a number of possible options for prospecting across the various paid social and display advertising channels. Below are the most effective methods to reach new customer prospects.
Facebook Lookalike Audiences
The Facebook Lookalike algorithm can almost be described as magical, both because it does its job extraordinarily well and because how it works is something of a mystery. Lookalike Audiences allow you to reach a large audience that Facebook determines to be similar to a smaller source audience that you provide. In our experience, this is a very effective prospecting method.
The source audience Facebook uses to build a Lookalike is simply a Facebook Custom Audience built using personal information that you have available about your customers and can be matched to Facebook user profiles. This information can include names, email addresses, phone numbers, and more. Alternatively, you can create a source audience using events that you’ve setup within your website funnel using the Facebook Pixel. The quality of the source audience will determine how successful your Lookalike Audience will be.
Lookalike Audiences are typically the best performing prospecting audiences on Facebook when the right source audience is chosen. Building an effective Lookalike Audience relies on choosing the right balance of quality and size for the source audience.
In general, the best way to create an optimal source audience for a B2B SaaS company is a CRM list of paying customers. Going a step further, using only the highest LTV customers will give Facebook more data to work with to find the best profiles possible.
It’s important to use an optimal source audience size in order to generate a qualified Lookalike Audience. You need a minimum seed audience of 100 members to create a Lookalike, but in our experience the optimal range to aim for is 2,000 – 5,000 of the best audience members possible. Outside of this range, the Facebook algorithm can have too many or too few data points to build a strong enough pattern to create a highly qualified Lookalike Audience.
Note that for source audiences based on non-Facebook Pixel data such as email addresses or phone numbers, the likelihood of Facebook being able to match the data you have to a Facebook profile is relatively low for B2B SaaS companies. This is because most B2B SaaS companies have work email address and phone numbers, which people don’t commonly add to their Facebook profile. For this reason, you will need to use a larger source audience to achieve the 2,000 – 5,000 range of matched audience members.
Other Prospecting Options
Other than Lookalikes, 3rd party audience targeting is another way to target a highly qualified audience for a B2B SaaS product. 3rd party audiences come from companies like Acxiom, Datalogix, Experian, and TransUnion – and provide targeting based on job position, company size, vertical and other key business traits.
Behavior targeting under the “B2B” targeting options will also allow you to target company size, industry, and seniority based on Facebook data. You can also target job role with behavioral targeting.
Note that the 3rd party audiences tend to be more qualified than those built on self-reported job data from Facebook (the opposite is true of LinkedIn, where self-reported job title, position, company, vertical, etc. is often much more accurate).
Beyond this, there are broader and less qualified options like interest targeting, but it’s generally best to test these only after the above targeting options have been exhausted.
Unlike prospecting, remarketing audiences are those audiences who have already interacted with your brand online. Remarketing audiences are likely to be the most qualified audiences. As with Lookalikes, remarketing audiences are built from custom audiences based on either online pixeled conversion events or offline conversion events reported in a CRM.
Unlike for consumer-facing companies, for a B2B SaaS company it usually doesn’t make sense to build a remarketing audience of customers who have already converted.b However, it certainly does makes sense to target people who have entered your website funnel – and possibly even become a qualified lead – to help move them through the funnel. By definition, these audiences are very low-funnel and thus are more likely to convert than a higher-funnel prospecting audience.
Part 2: Account Structure
In general (across all channels), building an account structure is a balancing act between breaking out audience segments based on variable performance and consolidating audiences to accumulate enough data to base decisions on.
It’s important to break out audiences and themes that are likely to have meaningful differences in performance so that you can optimize and drive efficiency for the channel in question. But it’s also important not to spread your data too thin across too many campaigns and ad sets, as this will be an obstacle in making optimizations.
This is especially true for B2B SaaS advertisers. Since revenue-driving conversion events like purchases and subscriptions will be very infrequent, it’s important not to get so granular with your account structure that you won’t have enough conversion volume to calculate the conversion rates and LTV data for a given campaign (which you will need in order to make meaningful optimizations, as we discussed in the previous section).
On Facebook, audience targeting is king. Intent can differ widely between different audiences, and so can performance. As a result, audiences form the basis of Facebook account structure but just make sure that you are building your account structure out to the level of granularity that’s feasible given the volume of conversion data you are achieving.
Each campaign should be built around a major audience. This will allow you to easily control budget for each audience, as well as set a Campaign Marketing Objective specific to each audience. The campaign marketing objective you choose will determine which placements and ad formats are available for the audience in question (see the Facebook ad units section below).
Ad Set Level
Although each campaign should be based on a major audience, audiences can be further subdivided at the ad set level for more granular tracking and optimization.
For example, you may want to subdivide a remarketing website visitor audience by age and gender, since you know that certain demographics perform better than others and you want to bid more aggressively for higher value demographics. Most B2B SaaS companies, for example, will probably not have many paying customers under the age of 18.
Placements are also a good way to subdivide your audiences since performance can vary across the various placements that Facebook offers. There are 8 possible placements on Facebook: Desktop News Feed, Mobile News Feed, Instant Articles, In-Stream Videos, Right Column (right-hand side), Instagram Feed, Instagram Stories, and Audience Network.
Performance will vary from placement to placement. Click-through conversion volume for right-hand side ads, for example, is often very low relative to News Feed ads, while view-through conversions are more common.
This difference means you will want to optimize differently for each placement (depending on how you happen to weight view-through vs. click-through conversions). For a full assessment of the pros and cons of each placement, see our guide to the various Facebook ad types.
Facebook Account Hierarchy
On Facebook, different audiences are likely to have audience overlap, and you want to ensure you set up exclusions to prevent yourself from unintentionally targeting the same user with more than one campaign at a time.
If you don’t set up an account hierarchy, you risk bidding against yourself to show ads from different campaigns to the same Facebook user. You also risk saturating a user with ads from multiple campaigns, which may not have coherent messaging or may be redundant.
To see how much audience overlap could potentially impact your campaigns, you can compare audiences using the audience overlap tool in Facebook Ads Manager, which can be accessed by selecting two or more audiences in the audiences tab and selecting “Actions” > “Show Audience Overlap”, which will bring up a window that looks like this:
In the above example, there’s a huge amount of overlap between the two example Lookalikes, Audience 1 and Audience 2. Since Lookalikes are built as percentages of the total population of a country, any two Lookalikes from the same country are likely to have a high degree of overlap.
Overlap will exist between smaller prospecting or retargeting audiences too. A lead submitted retargeting audience, for example, will likely have a high degree of overlap with a site visitor audience.
To avoid bidding on the same user in multiple campaigns, use audience exclusions based on a tiered account hierarchy.
Account hierarchy should look like an inverse marketing funnel:
At the top should be campaigns targeting the best performing, highest quality audiences. These will typically be either retargeting audiences that are furthest along in the marketing funnel, or Lookalikes built off high quality seed audiences (like a CRM list of your top paying customers).
You will want to avoid serving these audiences with ads geared towards audiences higher in the funnel, and so they should be excluded by all lower-tier campaigns.
The lowest tier campaigns should have the most audience exclusions so that they achieve marginal reach without double-targeting higher quality audiences.
Part 3: Bidding
In general, when an account is starting out without any historical data, it’s best to start with manual CPC bidding. For starting bids, use the target CPL and multiply it by the expected conversion rate. This will ensure that your bids are set based on revenue as well as on the efficiency of the campaign. From there, adjust as needed to work towards the CPL target for the ad set in question.
As a reminder, this is how to calculate target CPL:
- Divide average LTV by desired LTV-to-CAC ratio to get target CAC
- Subtract sales, marketing, & other costs (other than ad spend) from target CAC to get target CPA
- Multiply target CPA by lead-to-customer conversion rate to get target CPL
After an ad set has proven conversion volume of at least 15-25 conversions over the last week, it’s a good idea to switch to oCPM bidding using your CPL target, which typically performs better than manual CPC bidding once the minimum conversion volume threshold has been met. oCPM optimizes bid towards your target CPL automatically. You will likely need to adjust your oCPM bids beyond simply setting your bid equal to your CPL goal as Facebook’s ad auction dynamics change rapidly so be sure to monitor performance closely.
Part 4: Choosing Ad Units
Facebook offers a lot of options when it comes to ad units, but only a limited number of them are likely to be relevant for a B2B SaaS company (for a full explanation of how ad units on Facebook work and a walkthrough of all available ad types, please see the Complete Guide to Facebook Ad Types).
To start out with, we recommend that B2B SaaS companies test lead ads (lead generation campaign marketing objective) and standard link ads (conversions campaign marketing objective).
Choosing the lead generation campaign type in Facebook Ads Manager will allow you to create Lead Ads on Facebook (LinkedIn recently released an analogous “Lead Gen Forms” ad product that shares many of the same features. See the LinkedIn section below for more on these). This ad unit offer a couple of advantages:
- When a user clicks a lead ad they’ll be taken to a lead generation form popup within Facebook itself, reducing the friction of being taken out of Facebook to a company’s website as with standard ads.
- Another advantage of Lead Ads is that Facebook will auto-populate user data into the form from that user’s Facebook profile – so fields like name, phone number and email will automatically be filled when the user opens the lead form. This reduces the number of fields the user has to enter manually, again reducing friction.
Lead Ads also include the following options for the CTA button which are specifically relevant to lead capture:
When the user clicks the CTA button, they’ll be taken to a lead form which you can create within the Facebook Ads Manager UI, which looks like this:
The lead form contains two mandatory screens – the question form and the thank you screen – with an optional welcome screen.
The question form automatically includes fields for full name and email, and you can add additional customer questions if you require more information about your lead (job title, company, etc.). The “thank you” screen includes a CTA button which leads to your website.
Lead Ad Performance
All in all, the lead form is fairly customizable and has lower friction for lead capture than a form on an external landing page. For these reasons we have seen generally high conversion rates for Lead Ads on a click to lead basis.
But a big drawback of Lead Ads is that it seems to produce lower quality leads (lower lead to customer conversion rate). So far, we have noticed that there tends to be a drop in the quality of leads coming from Lead Ads compared to standard website conversion ads driving to a self-hosted lead form.
Part of this observed quality difference we attribute to not having enough historical data on Lead Ads relative to standard link ads, thus limiting optimization insights. Since Lead Ads are a relatively new ad offering and we have years of testing data to optimize the standard link ads we run. We also believe the quality difference can be explained by the lack of friction involved in filling out a Lead Ad on Facebook, allowing anyone to submit a lead with very little effort.
As a result, ad copy testing, creative testing, and testing for the different components of lead ads should be conducted to optimize the lead quality.
Facebook Lead Ads are definitely worth testing (especially now that Facebook rolled out a CRM integration for Lead Ads). But while doing so, make sure and keep a close eye on the quality of leads you drive with this ad type. If they aren’t converting into paying customers, then you may be wasting ad spend on unqualified leads.
Conversion Link Ads
The conversion campaign objective allows for the creation of standard link ads. These ads are designed to get clicks through to a landing page on your website, where the desired conversion event will take place.
In general, conversion link ads are the most commonly used ad units on Facebook, and typically they have good relative performance.
The obvious disadvantage of conversion link ads relative to Lead Ads is that there’s greater friction for the user having to click through to an external site and manually enter their lead information, as opposed to simply submitting an auto-fill form from within Facebook.
Link ads also require resources for landing page optimization, because an inefficient landing page will lower conversion rates and lessen the effectiveness of all ads driving traffic to the page in question.
But the big advantage of standard link ads compared to Lead Ads is that link ads usually produce leads that are much more qualified. Leads will have interacted with your website before submitting their information, meaning they probably have a better understanding of your product offerings and what your business is all about.
Another advantage of link ads is that you can customize your landing page to have whatever call to action and conversion event you want, whereas a lead generation ad is best for capturing leads only.
So depending on your business objectives and available resources, both standard conversion objective link ads and lead generation ads are both worth testing to start out with.
One unique thing about paid social media advertising is user engagement (likes, shares, comments, etc.). User engagement is considered positive feedback by Facebook’s algorithm and this improves the relevance score of an ad.
Better relevance scores lower the cost of winning an ad auction, so positive engagement can directly impact your advertising efficiency by lowering costs. It can also indirectly make your ads more efficient by providing social proof.
A great way to ensure you accumulate as much engagement as possible on each Facebook ad is to use dark posts. Dark posts are newsfeed ads that Facebook calls “unpublished page posts”, and they allow you to consolidate your social proof for an ad across all campaigns and ad sets it’s running in.
Let’s say you’re running ads A, B, and C in campaigns X, Y, and Z. These ads are identical in all campaigns (same creative), but since they’re standard ads (not dark posts) they each have their own reaction, comment, and share counts.
A dark post would allow you to run the same ad (with the same social proof) in campaigns X, Y, and Z, aggregating the engagements across audiences so that you’d have 3 times the number of reaction, comments, and shares for that ad while being able to target 3 different audiences with it at the same time.
For a full explanation of how dark posts work and how to set them up, see our guide to dark posts.
Part 5: Conversion Tracking
Lack of proper conversion tracking is one of the most common issues we see companies have with their paid channels. Earlier in the guide we discussed how to use URL parameters or CRM integrations to track down-funnel conversions. But it’s also necessary to get on-site conversion tracking set up, and this is often done incorrectly
Fortunately, in-platform conversion tracking for Facebook is very robust and easy to use, with a pixel that is able to track both URL-based and event-based conversions.
Setting Up The Facebook Pixel
The first thing you’ll need to do when setting up conversion tracking for Facebook ads is to install your pixel code. You can do this with a third-party integration/tag manager or by manually inserting the pixel code snippets on your website, as it says below:
Facebook will walk you through the pixel installation process. Note that the pixel base code will track URL-based conversions. A technical note on URL tracking: anything after a ‘#” within a URL cannot be tracked or used for audience building by the Facebook pixel. Facebook can’t see beyond a hashtag in a URL. For example, growthpilots.com/#example-URL will only register as “growthpilots.com” for Facebook.
For event-based conversions, there are 9 standard conversion events you can track using Facebook’s event codes, in addition to custom event codes that you define yourself. You can also add parameters to standard events to further customize.
This screen within Facebook Ads Manager lists these 9 standard pre-defined events and a description of how to use them in addition to the code itself for you to copy and paste onto your site:
Below this screen there is a section including the code to create a custom event:
After you’ve pasted the event code on your site, you’ll want to make sure and check that it’s properly installed using the Facebook Pixel Helper..
After you’ve installed the pixel code snippets on your site and verified that they’re working, you’ll be able to use the pixel to create a custom audience for remarketing or to use as a source audience for a lookalike.
Here’s what the audience creation window looks like – note that the red dot indicates that the selected pixel has not been properly installed:
You’ll also be able to track performance against the pixel-tracked events back to the campaigns, ad sets, and ads that generated a given conversion. This reporting will let you optimize against on-site conversions, which may be necessary while you wait for a given campaign to generate down-funnel conversions.
Part 6: Ad Copy Messaging
Let’s say you’re targeting the mid-level financial services marketing manager persona on Facebook in the “don’t know they have a problem” stage of the funnel. Knowing where she lies in your funnel will help you figure out the right messaging to use for her.
For example, instead of serving her an ad with messaging like:
Headline: Top Email Marketing Automation Software
Post: Get The Email Marketing Automation Solution That TechCrunch Called ‘The Most Effective Software On The Market”. Sign Up For A 30-Day Free Trial Now!
which would make better sense for someone in the “actively looking” stage, knowing she’s in the “don’t know they have a problem” phase you’ll know to go with something more like:
Headline: Struggling With Low Open Rates?
Post: 80% Of Email Marketers Lose Out On Open Rate By Sending At The Wrong Time. Find Out How To Optimize Your Sending Schedule For Higher Open Rates.
This messaging calls attention to a problem that she might not have been thinking about as solvable or urgent. It draws awareness to the problem and promising a solution in a way that is designed to motivate her to click through and learn more.
However, she would be much less likely to click the first ad since she’s not yet in the market for email marketing automation software, since she probably doesn’t yet realize how it might benefit her. Tailoring messaging to each audience in this way can make a big difference in performance.
We hope you enjoyed this guide to Facebook ads for B2B SaaS companies. To check out our guide to other channels, including LinkedIn and AdWords, download the full eBook here.