If you’ve wondered how Facebook ginned up such a high-profile, high-dollar IPO last week, it’s worth taking a close look at how advertising works on the site — and how such advertising can play a role in your Dallas Internet marketing strategies.

Even if the site underperformed compared to Wall Street’s astronomical expectations, it still carries enormous advertising possibility. The site only earned $3 billion last year in global ad sales (TV ad sales totaled $68 billion in the U.S. alone), but investors are betting that it will soon turn into much more.

It might seem like a stretch. In fact, to fully reach its potential, 10 percent of all advertising dollars spent anywhere in the world will have to be spent on Facebook. But looking at the ins and outs of Facebook advertising, you begin to see the vast potential.

For example, the Planet Money podcast recently followed the experience of a local pizza joint in New Orleans buying its first Facebook ad. The story highlighted both the strengths and limitations of Facebook advertising.

The possibility of Facebook advertising — similar to Google — lies primarily in two features: 1) social connections and 2) the ability to target ads to highly specific demographic.

The pizza joint, called Pizza Delicious, sells New York-style pizza — a rarity in New Orleans. So Facebook allowed Pizza Delicious to target Facebook users who were already connected via friends to the restaurant’s own Facebook page. They also targeted Facebook users who listed various connections to the Big Apple in the hopes of tapping into a homesick customer base longing for a big, cheesy slice of home.

Their first idea was to target the friends of people who already liked Pizza Delicious on Facebook. But that wound up targeting 74 percent of people in New Orleans on Facebook — 224,000 people. They needed something narrower.

The Pizza Delicious guys really wanted to find people jonesing for real New York pizza. So they tried to target people who had other New York likes — the Jets, the Knicks, Notorious B.I.G. Making the New York connection cut the reach of the ad down to 15,000.

Pretty ingenious, right? Amazingly, this didn’t do the trick — and after 12 hours, the ads hadn’t received a single click. But a third strength of Facebook advertising is the ability to adjust on the fly:

Facebook doesn’t make money till people click on the ad. If nobody clicks, Facebook turns the ad off. They’d struck out. So they changed the target to New Orleans fans of Italian food: mozzarella, gnocchi, espresso. This time they were targeting 30,000 people.

The tweak worked and the ads went viral. Facebook reposts ads that receive significant traffic, and pretty soon the ad showed up more than 700,000 times and got twice the typical number of click-throughs. Furthermore, Pizza Delicious saw nearly 20 times the number of users become “fans” of the restaurant’s own Facebook page — significantly building its lucrative social media marketing presence for future campaigns.

facebook ads results
Facebook Ads Results for Pizza Delicious

All this for just $240.  Compare that to what posting a highly targeted ad in a newspaper of magazine with a circulation of 700,000 would cost.

Our Dallas interactive marketing specialists would love to help your company tap into such marvelous potential. Contact us to learn more.