Facebook Ads Success Story: 90% Cost Savings
Thomas Meloche of HomeSchoolAdvantage.com sells a software tool for accelerated learning. He budgeted $20,000 for advertising on Facebook and getting beta testers. But it only took $2,000 to get the results he wanted – 90% less than he thought.
In this interview, he gives away his $5,000 “Spaghetti Sauce” principle (and yes I agree, it really will turn into a $5,000 tip for some folks!) and explains the difference between Google ads and Facebook ads.
Thomas refers to Malcolm Gladwell’s TED talk, which I’ve included here. Watch Gladwell’s $600 million Spaghetti sauce story. It has a LOT to do with Facebook ads and successful marketing in the 21st century:
Transcript of my Facebook Ad interview with Thomas Meloche:
Perry: Hi, this is Perry Marshall. I’m here with Thomas Meloche. He’s the CEO of Homeschool Advantage and he’s been a
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customer of mine for quite a long time. I just wanted to get him here and talk to you about his success on Facebook.
There’s a lot of people kind of beating their head against the wall with Facebook out there, because it’s a little mysterious to a lot of people, but he understands how to use it. Thomas, welcome!
Thomas: Thank you very much, Perry. Yeah, I’ve been a customer of yours since I think you first started the company. I think we were your very first customers of the Google AdWords Definitive Guide, and have never looked back since.
Perry: That’s great. I really appreciate that, and we really do like long-term customers. We hope they stick around and keep learning stuff.
Thomas: I’ve been waiting for your announcement that you’ve released Facebook information, so I’ve actually been very excited this week as well.
Perry: Good! So tell me about your zigzag. You can start with Google if you want.
Thomas: I will, because I’ve had so much success with Google. I’ve built and sold a company using Google AdWords, and had so much success with your fundamental strategies that I hope people are already familiar with.
It’s about a quality product, it’s about a quality landing page, a quality funnel, and then leveraging the advertising tool into all of that. Really, Perry, I learned all that from you.
Perry: Thank you.
Thomas: The nice thing about it is those fundamental principles don’t change, even when the advertising tool changes, so it’s very important that people understand that process, and I was already there.
I have a new product that I was launching in January of this year called Homeschool Advantage. I was a homeschool dad and had homeschooled my children. During that process we ran across specific issues about homeschooling that I wanted to address in the product.
I’ll begin with a warning. Nobody should ever do what I’m trying to do right now, which is build a software product from the ground up and create a totally new service that no one’s ever thought of before, and try to sell it.
Every night I’m like, “Maybe I should just find cute little cameras on the web and try to sell them.” Doing all of it from beginning to end is absolutely insane, but there I am. I do that sort of thing.
I had a landing page and was getting ready to advertise on Google, and actually raised a fair amount of money to do a launch of some advertising. I had a bank of about $20,000 or $30,000.
So I start up on Google AdWords, and Google is doing all of the Google tricks, right? “Oh, you want a click? That’s $2-3.” After a time that comes down to $1, then $0.50, but then they’re trying to give me a quality score.
I’m using all of my Perry training to improve my Google AdWords campaign, and I have an online web service, so almost all of my really good content is behind the firewall. It’s behind the login, so the Google bots can’t see it.
I’m looking at my quality score going, “Well, I know how to raise my quality score. I can put all sorts of articles and all sorts of other things in front of the firewall, drive up my rating and let them know that I’m active with a busy site and over time raise my quality score, or I’ve been on Facebook. I could try this new Facebook advertising thing and see how it works.”
I had this very recognizable keyword, so I sort of lucked into my success on Facebook because my keyword was homeschool.
I don’t know if people have done your survey. You have a little 10-question analysis for how good is Facebook for you.
Thomas: Yeah, I took that and I scored a 8 or a 9, depending on how I answered one of the questions. That’s sort of your evidence in retrospect. I was a really good fit for this audience. I stumbled onto that accidentally.
I put up my first ad, drove them to my existing landing page, which wasn’t optimized for Facebook at all, and immediately saw all sorts of clicks coming in, and coming in for less than I was paying on Google, but I wasn’t arm wrestling the system to drive the clicks. [laughing]
Perry: That’s good!
Thomas: I’m spending all of this time and energy building a new piece of software, so I want to put my energy on responding to my customers, not trying to arm wrestle with Google. So I turned Google off six months ago and I haven’t turned it back on yet. It’s still part of my long-term strategy, but I haven’t had a reason to turn them on yet.
Perry: It’s nice when you have more than one thing that you can do, because only having one option is a bad situation.
Thomas: And I’ve targeted my strategy now. I’ve had such joy in working with the little banner ads that you can so easily produce on Facebook, off to the side and with the little images.
I talked with another person who’s very big in the homeschool community and they’re like, “Images of children work really well,” so I have a picture of a child and then the text under it, leading back to what’s still a very boring landing page and funnel, but they drive the clicks in, and they drive the clicks in at a reasonable rate.
If I drive in $50 worth of clicks in a day, I have an opt-in service where they pay about a month later and it generates about $100 worth of revenue a month later.
Again, nobody should be as crazy as I am to build a website where you need to drive in beta testers, but for me it was just beautiful because I could drive in 10-15 testers a day against a real offer with real revenue, and I could easily throttle it up or down, depending on if we were having issues with the site.
If we were having issues with the site, you go on and hit Pause and nobody’s being added to the site that day. You turn it back on, you up the daily payment, and it’s golden.
Here’s the things I’ve noticed, and I wonder if other people have noticed as well, but to me they were a delight. For me anyway, with my keywords and my basic ads, I was no longer sweating the copy of the ad.
When you’re immersed in AdWords and someone’s typing in a keyword search and you’re trying to get them to match on that immediately, and your ad’s coming up to the side and you’ve got one really good chance at that individual, you’re split testing left and right and you’re doing everything you can to finesse that ad to get that one shot at that one individual.
In Facebook it’s not that way at all. People are living inside of Facebook. It’s their community and they’re spending a lot of time going back and forth between pages, and every time they go back and forth between pages Facebook says, “Oh, another opportunity to serve them an ad.” Even when they refresh their wall it’s another opportunity to potentially change their ads.
So when I look at my statistics, and I’m looking at them now, I’ve spent around $4,000. Something I had budgeted $20,000 to do, I accomplished with $4,000 in Facebook. It’s cashflow-positive.
Here’s like the really interesting data. For $4,100 I have 15.5 million impressions and 11,000 clicks. I was trying to figure out why it was really hard to make a bad-performing ad, and this is sort of my motivation for people to really follow your advice and just get out there and get in and get it working.
Again, performance on Facebook – and you cover this – is not the same as performance in AdWords. These are very low percentages to drive all of these clicks. My average is 0.073. Now I have ads that perform at like .124, but because I didn’t need to go in here and optimize all that much, I wasn’t even optimizing all that much. I let four or five ads run.
When I made small changes to copy, changes to headlines, things that would really dramatically change my ad conversion in Google, I wasn’t really seeing a difference in Facebook. It took changing the picture to begin to see bigger differences.
Perry: Pictures make a big difference. There’s a lot of testing to be done.
Thomas: Yeah, it’s wonderful! For me, the interesting thing was I work with another guy who’s been doing Google with me since 2002, and he sent me all these pictures. There was one that really caught my eye and I didn’t like it at all.
I called him up and I go, “Yeah, I really hate this image. I think we should use it,” because it was a picture of a crying child. That, by the way, is the one that has our best clickthrough rate. [laughing]
Perry: [laughing] Okay. That’s a good piece of information.
Thomas: I’m so excited about this tool, and I’m really so excited that you’re promoting it. I’m a little disheartened that you’re promoting it.
Perry: Yeah, I know.
Thomas: It’s been fun being in here alone. [laughing]
Perry: You know, Thomas, I could truthfully say that there’s a part of me that sort of likes the idea of educating a certain number of customers about stuff, and then not educating so many that they’re all competing with each other.
I realize that progress is progress and the world’s got to move forward, but I know what you mean actually. [laughing]
Thomas: Well, my long-term goal for my product is not to be doing the direct sales myself. It’s ultimately to be selling to other homeschool people. So if somebody else ultimately figures out this homeschool audience and gets the list, I really want them to rep the product.
Perry: Okay, that’s fair enough.
Thomas: I’m happy to share it. I’m also just compulsively inclined to share things, because I’m a compulsive teacher. I can’t stop giving, even if it’s against my best interest, but there’s a lot of room to play.
By the way, Facebook is already getting harder. I think I mentioned to you just in an email. I said, “I had my first ad rejected this week, ever.” I don’t think they ever looked at them before really.
Perry: That can very much depend on the individual person who happened to look at your ad, and that’s always been true at Google too.
Thomas: Yeah, and it was a duplicate of an existing ad. I was just directing them to a new URL, so somebody’s paying a bit more close attention.
Perry: I think it’s worth pointing out that what you said about people are constantly going to different pages and refreshing and seeing different ads, the number of ads that Facebook could be showing you compared to the number that you actually see is actually quite small.
I think Facebook could sell four, five, or six times more ads than they sell right now before things really do start to get crowded, so this is a real opportune time to be doing this. You only have to be reasonably competent at this to be much better than everybody else.
Thomas: And it’s a great time to be doing it, because I think I’ve been posting on your blog from time to time. “Hey, what about Facebook?” You’ve probably seen them.
Perry: [laughing] Yup.
Thomas: I really started playing with it in October, and I started using it because I launched my service in January, but it was obvious to me in October that this is a game-changer.
Perry: Yeah, it is.
Thomas: So I’ve been waiting for you to cover it. I’m glad you spent a year doing research, or a year and a half, however long it was.
Perry: Yeah. We were very quiet about it. We just felt like, “Okay, there’s all this noise out there,” and I really believe that when the hype starts to die down is approximately when the real opportunity is, and I think that’s right now.
Thomas: I’m going to give you for free “Tom’s $5,000 strategy for Facebook.”
Perry: Okay, let’s hear it!
Thomas: There’s a famous author who writes the books – I’m totally drawing a blank now on all of them – The Tipping Point…
Perry: Oh, Malcolm Gladwell.
Thomas: Gladwell. There’s this wonderful speech he gives, and you can find it as a TED talk, on spaghetti. The research on spaghetti sauce done in the 1970’s was, “Find us the best spaghetti sauce.” What the researcher found out was there isn’t a “best spaghetti sauce.” There’s five best spaghetti sauces.
If you’re trying to reach people in the audience according to their tastes or interests, you don’t offer one, you offer five. You offer one with big chunks of mushroom and vegetables. You offer one that’s thinner. You offer one with garlic and onions. What appeals to the individual person is the spaghetti sauce they purchase.
I suspect in Facebook we’re dealing with that same thing, in terms of effective banner ads. Because they’re willing to display the ads so much, it’s not about trying to find the one ad that works. It’s about trying to find the ads that appeal to your different demographics, and recognize that it’s maybe five ads.
Although you can spend the time, you don’t necessarily have to figure out which ad is working with which demographic to begin using multiple ads simultaneously to draw in just lots of clicks.
Perry: I can confirm you’re absolutely correct, because I do the same thing on the content network. Facebook is comparable to the content network in some ways, and yes, that’s right. I have Google campaigns where one ad group literally has 50 ads, and they’re all on the content network and I’m catching people from all kinds of different angles.
In a Google search, there’s usually a small number of sweet spots that the people searching really have, and on the content network your ads might be shown a million times a day. There’s no one thing, so you’re completely right, Tom, and it’s true on Facebook too. That’s a $5,000 tip for somebody, literally.
Thomas: Yeah. For one, you keep lots of ads performing and you quit trying to look for the best one. And secondly, it’s just really easy. You’re no longer sweating over every line of copy, because on Google, at least on the AdWords network, every line really, really matters.
I’ve used all the Perry tricks. One of my favorite tricks you taught me years ago was the fourth line is part of your ad too, so test URLs. I’ve done everything on that side to make that work.
It was just a pleasure coming into Facebook, and at least for the last year – and I suspect we have another good year where Facebook isn’t going to be that hard – you can just hop into Facebook and begin to play and see those results coming in right away.
So I was doing sort of a pure old-style Perry play, because you’ve indoctrinated me well, and I was driving people to a page and offering them a free white paper for an autoresponder.
Then at some point I woke up and said, “I have a software service. Why don’t I just give them a free month on the service?” so that was one of the last changes I did to my landing page, and I haven’t even played with it. I need to go back and continue to optimize it, but it was just so easy turning on Facebook and driving in traffic.
Again, I scored an 8 on your table, so it’s easier for me than it probably will be for other people, but anyone who’s scoring 7 or above on your survey, if they’re not hopping on with you this week and turning it on, they’re really missing an opportunity.
Perry: I agree. When we made that survey, we did not attempt in any way, shape, or form to skew the results to give people that really should’ve had a 4 to give them a 6 or anything. Believe me, it would be easy enough to do that, but we didn’t.
It’s an honest assessment, and I think if you’re more than about a 5 or a 6, you need to pay close attention. Whether you’re a 5 or an 8, what that really affects is what percentage of more traffic you can get.
I think if you’ve got a 5 you could probably get 10-15% more traffic on Facebook. If you got an 8 you could probably get 20-50% more traffic on Facebook than you’re already getting. Who wouldn’t be interested in that?
Thomas: Oh yeah, if you got an 8, after you’re done listening to this you should be turning on your Facebook ads. If you got a 5, you’re definitely going to be wanting to study more with you and other experts on how to optimize that experience.
Perry: Right, and to use it to learn about your audience, because that’s a whole other dimension of it, where there’s things that would cost you thousands of dollars of focus groups and different things like that, where if you use some of Facebook’s capabilities you’re going to learn things that are real valuable.
Congratulations to you for making this happen, and I appreciate your willingness to share, because not everybody wants to tell everybody what’s been working if it’s your secret fishing hole, you know?
Thomas: I’m delighted. I’ll make only one request, which is if anyone listening is a homeschool mom or dad, they actually come and visit www.HomeschoolAdvantage.com.
Perry: I think we actually have quite a few. People don’t know that home-based businesses are just the business version of homeschool. [laughing]
People always say – and I don’t know where they get this; it must just be in the air – I say I’m a homeschooler and they go, “Well, how do you socialize your kids?” as though you bring your baby home from the hospital and you go, “Honey, how are we going to socialize this homo sapien?”
They say that and they’re concerned that my kids aren’t getting enough socialization, and that’s sort of like being concerned that people with jobs in big companies don’t get enough corporate politics. [laughing]
Thomas: Well, I can’t make the promise for users of our site, but my 18-year-old daughter who’s homeschooled is now a junior in college studying biology. You also realize as a homeschooler that we waste a lot of time in the teenage years that actually could be more effectively spent on academics.
Perry: Yeah, I agree.
Thomas: I actually believe every parent in the next 20 years, because of technology, will be homeschooling some reasonable percentage of the time, because technology’s going to make it so powerful to do it that way.
Perry: Yeah, I think you’re right.
Thomas: When I talk to a lot of homeschoolers they sometimes don’t realize it, but I think we won.
Perry: Yeah. My sister-in-law was homeschooling in the 80’s. It was tough then.
Thomas: Yeah, so visit the website if you’re inclined, and hopefully I’ll catch somebody on one of your Bobsled Runs as well.
Perry: Tom, thank you very much. I really appreciate it. Have yourself a great afternoon.
After our interview, Thomas sent me this kind note:
Your materials turned cold calling Coca-Cola into them calling us and being excited to talk to us! When we visited Coca-Cola for a sales call, we turned it into a consulting event and charged them 4k – for 1/2 day! :-) You were a part in all of this, just through your materials.
Your materials were directly responsible for my last $500,000 net income year. I reached, at one time, master status in Adwords, and I owe the key ideas, tactics, and strategies all to you. Of course, I did all the heavy lifting