I'd recommend looking up All Facebook on Facebook and "Likeing" their Business Page as well. That way you can keep up to date on the next great thing.
We cover a number of Facebook marketing and advertising strategies, however there are plenty of people who don’t understand many of the terms that we use in our articles. To make sure you can follow along with all of our guides, we have created the following dictionary which will help you as you become a Facebook Marketing expert! If there are any terms that you see that are missing, feel free to reach out to us!
Actions
Within Facebook advertising, there are various types of action links. This can be the user clicking “Like” within the ad to like your page, or “RSVP” to attend an event.
Ads
Facebook provides marketers with a platform for promoting events, Pages, applications, and external websites through their site. Marketers are able to create advertisements (or “Ads”) which consist of an image, ad copy, and an ad title. Advertisements can also include “actions”. The image to the right explains all the components of a Facebook advertisement.
Applications
If you’ve been on Facebook for more than a few months, there’s no doubt that you have at some point interacted with an application. Whether it’s one of the popular games like Farmville or Mafia Wars, or if it’s one of the less popular applications, these apps add a layer of interactivity to Facebook which goes beyond Facebook’s core features. When they launched in 2007, Facebook applications became the center of any brand’s Facebook marketing strategy.
Since then, applications have become less important as the emphasis has shifted to Facebook Pages. Applications are now much more focused on expanding the functionality of a brand’s Facebook page via the use of a custom tab (as defined below). While large brand advertisers occasionally partner with Facebook application developers, the majority of ad spending has shifted to Facebook Ads and Pages.
AR
AR stands for “Action Response”. It’s the percentage of users who are exposed to your ad who complete some form of action. Ultimately, not all advertisements include an action. If you happen to be promoting something on Facebook (group, event, or Page), you will most likely have an action though. Monitoring your AR is useful for measuring the effectiveness of your individual advertisements.
Bid
Facebook advertising operates in an auction-like system. The advertiser bids on the opportunity to have their advertisement displayed. However in contrast to eBay and other similar auctions, you cannot see what other people are bidding on that opportunity. The only thing you can view is how your ads are performing via other metrics (such as CTR, and AR) which will be highlighted in this dictionary.
CPM
CPM is a term that has been around all types of advertising for decades. The term literally means “cost per thousand impressions”. The M represents the roman numeral M which stands for thousand. An impression is a single “view” of your advertisement. In theory it’s the number of times people were exposed to the advertisement. While they may not have actually seen the advertisement, it was at least in their periphery.
The cost of advertising is typically measured on a CPM basis. Any large Facebook advertiser which runs Facebook Ads, measures how much money is going directly to Facebook based on their CPM. Also monitoring the CPM will help you determine the likelihood of your ads being displayed. Low performing ads (those ads which generate low CPMs) tend to be displayed less. That’s because wants to generate as much money as possible from each page impression on their site.
CPC
CPM stands for “cost per click”. While your advertisement may have 50,000 impressions, it could have only been clicked once. When you run Facebook ads you can choose between CPM and CPC advertising. I tend to use CPM advertising to test an ad’s performance (explained in this Facebook advertising tips guide). This is because the CPM is what Facebook uses to determine which ads are displayed.
While CPM can be used to determine how effective your ads are, CPC is what matters to the actual advertiser for the most part. The lower the CPC, the cheaper each “lead”. The more that you can reduce this cost, the more effective you are at advertising!
Sample Calculation
You’ve paid $40 for 72,000 impressions and 276 clicks.
CPM = total spend / (impressions / 1000) = $40 / (72,000 / 1,000) = $0.56 (we’ve rounded up from $0.555)
CPC = total spend / number of clicks = $40 / 276 = $0.14
CTR
CTR stands for “Click through rate”. This is the percentage of people who see your advertisement and subsequently click on it. This is the most important metric when monitoring the effectiveness of your ads. The higher your click through rate, the better your ads. High click through rates also tend to mean that your ads will be displayed more often, especially if you have bid on a CPC basis. The reason for this is that the more often Facebook can get your ad to generate a click, the more often they can generate revenue for their business.
Over time your CTR will decrease and will ultimately result in less impressions. Additionally, if you have bid on a CPM basis, your actual CPC will increase over time. This is because your ad will be displayed to your entire market. In Facebook advertising, your CPC will increase overtime as your ad becomes less effective. While it’s not necessary to understand the economic forces driving this decreased effectiveness, it’s important to keep this in mind as you could quickly find out that your ad campaign cost a fortune.
Engagement Ads
Facebook’s engagement ads are targeted directly at large brand marketers. They are the advertisements that show up on the homepage and enable users to interact directly with a brand. Most recently, the vast majority of engagement ads have been targeted at increasing the number of fans to a brand’s Facebook Page. Engagement ads come in the form of “event ads”, “video ads”, “poll ads”, “page ads”, and general website ads which promote something off Facebook, but also provide users with the ability to comment on the content. If you are looking to run these types of ads, you better be ready to spend a minimum of $50,000 a day (although we hear that number is rising rapidly).
Events
Events are another integral component of Facebook marketing. Facebook events enable event producers to create a central location from which users can RSVP to an event. Event details, including photos and videos, can be posted within the Facebook Event. Facebook also has an “RSVP Action” within Facebook advertisements that are used to
Fans
Fans are simply the people who “Like” your Facebook Page. In theory these people are potential customers or simply people who are fans of your brand. Increasing fans has become the primary objective for many marketing campaigns within Facebook. While not necessarily as effective as email, Facebook also provides an opportunity for reengagement of fans through the feed. This reengagement opportunity is exactly why companies continue to pour money into fan acquisition.
Feed/Stream
The feed, which is also known as the “stream”, or “news feed”, is the primary thing you see when you start Facebook. It is the compilation of feed stories from your friends and Facebook Pages that you are following. Whether it’s a story that your friend is now in a relationship, or a link to a breaking news story, the feed has become the central distribution mechanism for all communication on Facebook. While there are other communication channels (notifications, requests, inbox, updates, and application counters), the feed has become the center for most activity on Facebook.
In addition to the homepage feed, which you view every time you load Facebook, there is also a feed on every profile (previously called the “wall”). Each feed story within a profile will eventually be displayed within the primary/homepage feed a user’s friends. The model for determining whether or not a feed story will be displayed within friends’ homepage feed is called the “news feed algorithm”. Understanding this algorithm is critical for any expert Facebook marketer or advertiser.
Groups
Groups are another place for organizations to organize its members. There are a number of differences between groups and Pages, primarily that groups can send inbox messages (up to a limited amount) and groups don’t have the ability to create custom tabs. To learn more about the differences between groups and pages, you can read our article “Facebook Page or Group: which should you use?”
Inbox
The inbox has had a varied history with Facebook marketing. Many guerilla marketers used to message numerous users directly in the past, however Facebook has blocked spammers and overtime the inbox evolved. For a period of time, Facebook messages were actually an integral part of the Facebook Platform, the system on which all applications operate. However Facebook eventually killed off extensive integration with the inbox. As we described in the “Groups” definition, groups have the ability to message users directly to their inbox up to a specific limit (that limit is always changing, however I believe the most recent limit was 5,000 members).
For the most part, any brand should use a Facebook Page over a group for managing their Facebook presence. This is simply the best rule of thumb to follow.
Instant Personalization
The “Instant Personalization” program is a somewhat controversial product that was launched by Facebook at their 2010 f8 developer conference. The feature, which functions with select partners, enables partner sites to display a user’s information the moment they visit the site. The only information that the site has access to is the user’s basic information (which is also public), however it’s useful as site owners are able to identify who is visiting their site the second that they arrive.
The “Instant Personalization” program is mostly for developers and owners of destination sites on the web. Developers need to contact Facebook directly in order to participate in this program.
Insights
Facebook Insights is the company’s primary product for monitoring Page and Application activities. It’s essentially Facebook’s analytics platform. It tracks user activity within Pages and Applications. While there are still plenty of weaknesses within Facebook’s Insights products, it’s probably one of the most robust tools for monitoring Facebook Page activity. You can see a screenshot of a Facebook Insights chart below. You can also access the product here.
Lifetime Value
While not all Facebook advertising campaigns are measured based on the lifetime value of a customer, many small businesses must use this metric to determine how much they should spend on advertising. While not always the case, most small businesses will find it valuable to spend up to the present lifetime value of a customer for all Facebook advertising campaigns. While break-even is not always the best situation, all online advertising requires testing, and as such, a minimum budget of the lifetime value of the customer should be allocated to test how much each new lead will cost. You can read more about this calculation in our guide to developing a Facebook advertising budget.
Likes
Likes have become the central currency on Facebook. Whether it’s a user liking a post on your Facebook Page or “liking” the page (“becoming a fan”), likes are Facebook’s model of creating a connection between a user and an object. It’s a form of “vote” for an object in a way that’s similar to a link on traditional websites. While there are numerous implementations of likes, the primary thing that marketers need to know is that more likes tends to also mean more exposure.
Notifications
Notifications are a feature that were once critical to applications but were eventually removed as application developers were abusing the channel and users were getting frustrated. Now notifications are limited as a communication channel which is automated by Facebook. Every time a user’s friend likes something they also commented on, or comments on one their profile feed stories, a notification will show up at the top of the site. Notifications also extend to Facebook’s other services, including mobile applications. For example, users who have installed the Facebook for iPhone application will receive alerts every time a Facebook notifications arrives.
Pages
Facebook Pages are the home for any brand on Facebook. While users have profiles, brands, organizations, celebrities, and others can create Facebook Pages in order to interact with users and to build their own community on Facebook. On this site we have covered (and continue to cover) Facebook Pages extensively. You can learn more via our Facebook Page strategy guide, or our 30 Days to 3,000 Fans eBook. Sometimes called a “public profile” or a “Facebook fan page”, they have been defined by Facebook as follows: “A Facebook Page is a customizable presence for an organization, product, or public personality to join the conversation with Facebook users. The Page focuses on the stream of content posted by the Page administrators. By leveraging the real connections between friends on Facebook, a Page lets Fans become brand advocates. Posts by the Page will start to appear in News Feed, giving Pages a stronger voice to reach their Fans.”
Places
Facebook Places is a new product from Facebook which adds a new layer of functionality to the site. Places essentially enables users to “check in” to any venue around the world. Right now the product is limited to users in the United States, however the company plans to expand the service internationally. Small businesses are the primary benefactor of Facebook Places as they can merge their Facebook Page with a place and display the individuals who have visited their store in the past. The product was just launched and will continue to evolve, however if you are looking for more ways to integrate with your small business, check out our guide to Facebook Places for business.
Platform
The Facebook Platform enables anybody to build social applications on Facebook and on the web. First launched in 2007, the Platform functions as a central way for developers to interact with users. There are numerous ways that marketers can leverage applications, most specifically through Facebook Page tabs. While some brands have ventured into the “branded applications” space, most activity has taken place within Pages. Branded applications should still be part of a Facebook marketer’s arsenal, however it’s not the most critical. Instead, custom applications should at a minimum be used to expand the functionality within Facebook Pages.
Social Plugins
According to Facebook, “Social plugins let you see what your friends have liked, commented on or shared on sites across the web. All social plugins are extensions of Facebook and are specifically designed so none of your data is shared with the sites on which they appear.” The social plugins currently include the Like button, Activity feed, Recommendations, Like box, Login button, Facepile, Comments, and the Live Stream.
Tabs
By default, Facebook Pages have a “Wall Tab” (which is where the Page stream is displayed), an info tab, photos tab, and discussions tab. These tabs provide all the interactivity within Facebook Pages. For companies looking to increase their presence through Pages, custom tabs are an excellent way to more significantly increase the interactivity on the page. Whether it’s a simple reveal tab, or a more robust feature such as quizzes, polls, or other functionality, custom tabs should be used to develop a more unique presence.
Updates
Updates are the second type of message that Page administrators can send. While updates are significantly less effective, they are an alternative messaging feature which show up next to a user’s inbox in a second tab called “updates”. While some users still view these updates, this is less effective than sending direct messages, something that Page administrators are unable to do. For more information on sending updates, you can view our article How to send Facebook Page updates here.
Reveal Tab
Reveal tabs are an incentive based marketing tactic which aims to “get Facebook users over the hump of liking your Page” (as first described in our reveal tab article). Reveal tabs can be used as a way to explain to a user why they need to become a fan of your Facebook Page right now.
