What are Performance Based Facebook Ads?

By Sameer Shah

You might have heard this term bandied around…so what does it mean, and how can it grow your business?

Simply put, the name says it all. Performance based ads are those for which a client only pays when they succeed. Let’s say you have an ecommerce site, and you’re trying to sell a branded clothing product or perhaps a shelf-stable food item. Facebook and Instagram ads can be VERY effective at driving those types of sales, especially through platforms like Shopify or Big Commerce which have built-in social media integration points. But in a traditional ad model, you would pay a monthly retainer to an ad agency to run the ads for you. You might even be asked to pay a percentage of your ad budget to the firm. That’s most common with very big advertising agencies, but I’ve always found it to be a bit out of whack. After all, my objective as your advertiser should be to drive sales, not just push more ad spend, right? If I were the client, I wouldn’t want the advertiser running up my ad budget…UNLESS it was generating a return.

With performance based ads, we only get paid if you make money. As sales grow, we take a percentage, like a commission. This arrangement ensures that our incentives are aligned. We have every reason to spend your money wisely, and to make sure the ads are working…continually tweaking and managing them.

You might be wondering how we know if the ads are succeeding. We take advantage of Facebook’s tracking capabilities which will tell us exactly how many sales are generated through the ads, and how much it’s costing you on every single sale. Once we’ve shown you that we can generate profitable sales, you can feel comfortable pouring money into the ads and ramping up your business.

In some cases we will run performance based ads at no initial or setup cost to you, but to do that requires that you have some successful ad history in the past. If you’re starting from scratch, there is often an initial setup fee. In most cases the fees evolve from fixed fee to performance based over a few months, as we validate the product or service’s viability. 

Sound interesting? Interested in growing your business? Let’s talk.