In 2023, Facebook lead generation ads also known as leadgen ads) remain a vital tool for businesses looking to acquire leads and fill up the pipeline. To make the most of this powerful advertising platform, it's essential to understand Facebook ads' targeting and strategies. (Hint: that's exactly what I cover in this video)
Lead generation is essential for businesses to survive and grow, but we must also emphasize that lead generation value is not limited to only 1 important factor. Businesses should prioritize lead quality and lead velocity over metrics like cost per lead or conversion rate, as generating too many leads that can't be properly handled can be a problem.
Businesses should approach lead generation strategically, with a focus on generating the right kind of attention and converting those leads efficiently. I cannot emphasize the importance of proper measurement and optimization to achieve success with lead generation. By analyzing data and adjusting their approach based on results, businesses can continually improve their lead generation efforts and drive growth.
To improve the effectiveness of lead gen ads on Facebook, it's important to focus on the unit economics of the business, which involves understanding the value, volume, and cost of the leads. Categorizing leads as bad, good, or great based on certain criteria and passing that information back to Facebook can help in creating custom conversion events for each category. This enables businesses to evaluate their creative concepts based on the value of the leads they generate and organize their ad campaigns accordingly.
To improve the conversion rate, it's essential to understand the unit economics of the business. Businesses need to evaluate the cost of acquiring a lead, the value of the lead, and the volume of leads needed to achieve their desired outcome. By categorizing leads as bad, good, or great, businesses can budget their spending, organize their creative testing strategy, and optimize their ad campaigns to attract the types of attention that lead to high-quality leads.
Ultimately, the key to improving the conversion rate of lead gen ads on Facebook is to understand the unit economics of the business and to optimize the ad campaign to attract the types of leads that provide the most value. By using Facebook's advanced targeting options and custom conversion events, businesses can create highly effective lead gen campaigns that generate high-quality leads at an affordable cost.
We must understand the unit economics of a business and how it relates to lead generation. Unit economics refers to the financial metrics that apply to individual units or transactions of a business, such as the cost to acquire a customer, the value of a customer, and the revenue generated from a customer.
It's important to understand the value of a lead, which is determined by the conversion rate of leads to actual customers. With an AOV of $100, for example, if one out of 10 great leads buys, that means the value of that lead is $10, whereas if one out of 20 good leads buys, that means the value of that lead is $5. This is important because it allows businesses to prioritize which leads to invest in.
Another example would be: if a business can reduce its cost to acquire a great lead by 20%, but experiences a 10% decrease in conversion rate, it's still a good investment because the business is getting a higher volume of great leads and can offset the drop in conversion rate.
We must run the lead generation process like an investment portfolio, with the primary objective of spending every dollar efficiently, without any downtime or missed opportunities for lead generation. By understanding the value, volume, and cost of leads coming from different sources, businesses can work on improving specific aspects of their lead generation mix.
Sometimes it's more efficient to invest in making bad leads worth a little bit more instead of focusing on more expensive, higher-quality leads that might inhibit overall profitability. For example, if a business has unlimited capacity to handle leads, investing in making a bad lead worth $2 instead of $1 might be the best strategy.
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