Facebook Ads: How does it work?

Image Credit: Wishpond.com
Image Credit: Wishpond.com

Facebook Advertising: Do it right, make it big. Do it wrong? Well, you may end up losing a considerable amount of money. Tedeschi et al., (2009) argued that individuals act in such a manner to maximise their benefits gained from social interactions. As you already likely know, Facebook is a platform that can be accessed from almost anywhere in the world, satisfying the social needs of people. This is a double edged sword, as companies can exploit this to advertise their products and/or services and maintain engagement and connection with their consumers. According to Statista, (2016) Facebook is currently the leading social network ranked by number of active users – 1.59 billion monthly active users. As such, it provides a substantial podium for a business to showcase their goods. According to last years numbers, mobile advertising attributed to 76% of its total ad revenue – quantified to $2.9 billion, (Kokalitcheva, 2015). With numbers as impressive as these, there must be a reason why companies continue to use Facebook as part of their advertising. Let’s look into this further…

How does Facebook advertising work?

Image Source: Facebook.com
Image Source: Facebook.com

When creating an advertisement on Facebook, there are a number of variables the user must take into account. For the ad to become visible to the consumer, Facebook uses an algorithm to determine whether or not they have shown an interest in the ‘key-words’ that the creator of the ad uses to define their target audience. The key-words, similar to that of Google SEO, will be words that relate to what the product or service is, the market it is in or possibly even a competitor. As a result, the ad campaign will be highly concentrated towards those who would be potential purchasers (if implemented correctly). The minimum budget in the United Kingdom that can be set is £5.00 daily and Facebook will aim to use up the daily budget in it’s entirety.

Image Source: Facebook.com
Image Source: Facebook.com

The target audience is defined through a number of criteria; for instance target demographic which encompasses current location and X amount of radius, and also that of target age range. In more detail, the number of targeting options one can use is quite vast:

  • Custom Audiences
  • Location
  • Educational Demographic
  • Age & Gender
  • Interests
  • Behaviours
  • Connections

Upon definition of the audience and incorporation of your daily budget, Facebook will calculate the estimate daily reach of your advertisement. As an example, the image above shows a minimum of 1000 people daily on Facebook and Instagram, taking into account the demographic that was selected along with a daily budget of £5.00. Facebook also shows the potential reach; this is the number of people in the entire stated demographic that the advertisement could be shown to.

Image Source: Facebook.com
Image Source: Facebook.com

For arguments sake, let’s assume we have an ad in place which is estimated to reach a minimum of 2000 people daily on a budget of £5.00. The user will essentially be paying Facebook £5 to show the advertisement throughout the day and over the set period to the defined audience, regardless of whether or not they click through to the actual link or promotion etc, (Facebook, 2016). Facebook offers two methods of delivery for such advertisements; Standard Delivery and Accelerated Delivery. Standard Delivery entails that the advertisement will be distributed to someone in the defined target audience evenly over the course of the campaign. Accelerated Delivery is intended for spending your daily budget as soon as possible, removing the pacing element of Standard Delivery. This is often used as arguably a ‘blitz’ style method, perhaps for a soon ending sale or promotion. Resultantly, Standard Delivery is the most used method.

What are the other considerations?

As previously mentioned, just because an advertisement is visible to a consumer it doesn’t mean that they will actually click through to it. Stats from last year showed that in the UK, only 1.15% of consumers clicked through to a visible advertisement, (Reiss-Davis, 2015). This is called the ‘Click-through Rate’ or CTR for short.

Image Source: Salesforce
Image Source: Salesforce

CTR is specifically the ratio of users who click onto a specific link or advertisement, relative to the number of users who viewed it. Using this as a basis for calculation with the aforementioned example reach of 2000 people daily, this would equate to an approximate amount of 23 people accessing the link daily; from the budget of £5.00. It is important to take this into account – especially when numbers of such grandeur are presented to a business. It would be easy to become misled by such figures when the ‘reach’ is so high, but this doesn’t necessarily equate to greater profitability and a return on investment. The correct targeting of an advert and CTR are largely contributing factors as to whether or not an advertisement will be deemed successful, along with the implementation of a suitable budget appropriated to what a business can afford – or more importantly – afford to lose.


Facebook.com. (2016). Help Center. [online] Available at: https://www.facebook.com/business/help/214319341922580?helpref=topq [Accessed 8 May 2016].

Kokalitcheva, K. (2015). Facebook’s Mobile Ad Revenue Is On A Tear. [online] Fortune. Available at: http://fortune.com/2015/07/29/facebook-mobile-ad-revenue/ [Accessed 6 May 2016].

Lukka, V. & Paul T J James, (2014), “Attitudes toward Facebook advertising”, Journal of Management and Marketing Research, vol. 14, pp. 1.

Reiss-Davis, Z. (2015). Salesforce Ads Benchmark: Key Trends Across Facebook, Twitter, LinkedIn. [online] Salesforce Blog. Available at: https://www.salesforce.com/blog/2015/07/salesforce-ads-benchmark-key-trends-across-facebook-twitter.html [Accessed 5 May 2016].

Statista. (2016). Leading global social networks 2016 | Statistic. [online] Available at: http://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users/ [Accessed 5 May 2016].

Tedeschi, J.T., Schlenker, B.R. and Bonoma, T.V., (2011). Conflict, power, and games: The experimental study of interpersonal relations. Transaction Publishers.

Gamification for Digital Marketing: What’s the score?

Image Credit: JIB.ca
Image Credit: JIB.ca

Gamification: using elements of game-playing (i.e. point scoring, competition etc.) to other areas, like online marketing, as a technique to increase engagement with the consumer.

So, what’s it all about? Palmer et al. (2012) stated that Gamification merges the activities of marketing and the thinking of a business manager with tools and creativity possessed by a game designer. Gamification is different to that of actual commercial gaming, as it offers an end-to-end customer service experience for the consumer whilst engaging on a company’s website and/or app.

How is this achieved?

The Gamification of a product or service is not only clever but appealing towards consumers. Gamification takes the core aspects of games; fun, play and challenge. This is then harnessed towards business objectives as oppose to providing pure entertainment value. If executed successfully, a company can develop unique customer loyalty through the use of a game design which changes a customers experience and behaviour with a product and/or service. The appeal however, is exactly that. The game design and offering needs to provide novelty and creativity, sparking interest and engagement. The aim is essentially not to lose the consumers’ interest over time, (Conaway & Garay, 2014). Moreover, consumers can be sustained through effective engagement of products and services, along with receiving forms of rewards or discounts for example. In the UK, Thorntons did just that, offering a gamified version of their chocolate factory and a chance to win a free tour.

How is it sustained?

Palmer et al, (2012) outlined the four key elements of Gamification, in order for it to be successful. These four elements encompass a range of different theories, such as game mechanics, behavioural aspects and the overall user experience, as demonstrated below:

  1. Progress Paths – this involves using challenging and evolving scenarios in the completion of a task. More often than not, the complexity of a challenge will increase over time, with rewards correlating to such complexity and completion. This is an effective way of keeping a user engaged with the game, offering options for novices but also the ability to become a more advanced user.
  2. Rewards and Feedback – this can be by way of virtual rewards (i.e. vouchers or coupons etc) or in-fact monetary rewards (i.e. £5 off your first shop). Part of the challenge is selecting and designing the right reward appropriated to the business. For example, different users will vary in motivation, some more concerned with more traditional monetary based rewards or vouchers, whilst others will be more engaged with the game; looking to be able to increase their ability or be able to master a level for example.
  3. Social Connection –  gamification provides the opportunity to network with friends. In turn, this creates competition and a platform for sharing support. Especially over an Internet connection, users can now instigate a dialog with one another instantly, whether that be desktop, mobile or tablet device. Resultantly, the levels of interaction and engagement will increase.
  4. User Experience and Aesthetics – following significant advancements in video game graphics and design, along with the possibility of cross-platform integration, users today are increasingly demanding with their expectation with technology services. This presents challenges for businesses with limited resources, but also allows for the opportunity to provide competent gamification of a product or service that will appeal to consumers. A perfect example of gamification is the creation of Doritos Crash Course for Xbox Live, found in this article.

Successful Implementation

Following on from the Doritos Crash Course example and trailer above, let’s dig a little deeper. Doritos Crash Course was (as now a new Xbox console has been released) a side-scrolling platform advertising game that was released on Xbox 360’s Live Arcade service. Not only was this example of gamification launched on Xbox as a free download, the development of the game was part of a competition for amateur game designers whereby the winner was awarded $50,000 and tasked with designing the game. Furthermore, the game covers all the elements needed in successful gamification. There was a single-player mode, online multiplayer to play against friends live and a leader-board for each circuit which showed those with the best recorded times of completion. Not only did this promote engagement and social competitiveness amongst users, but there was no actual form of monetary reward, whether that be a voucher or otherwise. In spite of this, the game had around 1 million downloads on Xbox Live, (Fahey, 2010).

Concluding Statements

As seen with Doritos Crash Course, if executed correctly, gamification can provide a unique way of engaging with consumers and sustaining interaction with a brand for prolonged periods of time. Moreover, it can be incorporated in a manner which allows a brand to connect with other communities and stakeholders, for instance that of the amateur game designers. With such reach and cohesion, if the resources are available to a firm for gamification, it is hard to argue against.



Conaway, R. & Garay, M.C. (2014), “Gamification and service marketing”, SpringerPlus, vol. 3, no. 1, pp. 1-11.

Fahey, M. (2010). This Is The Best Doritos-Themed Xbox Live Arcade Game Of 2010. [online] Kotaku.com. Available at: http://kotaku.com/5720504/this-is-the-best-doritos-themed-xbox-live-arcade-game-of-2010 [Accessed 6 May 2016].

McCarthy, J. (2016). Thorntons accelerates its digital marketing with gamified Ultimate Guide to Easter Eggs hub. [online] The Drum. Available at: http://www.thedrum.com/news/2016/03/01/thorntons-accelerates-its-digital-marketing-gamified-ultimate-guide-easter-eggs-hub [Accessed 27 Apr. 2016].

Palmer, D., Lunceford, S. and Patton, A. (2012). The engagement economy: How gamification is reshaping businesses. [online] Deloitte University Press. Available at: http://dupress.com/articles/the-engagement-economy-how-gamification-is-reshaping-businesses/ [Accessed 27 Apr. 2016].