A study of

Submission date: Submitted to: Submitted by: 06/02/2012

Joseph A Egan A00180004

This project / assignment is submitted in part fulfilment of the degree in business studies, part of the Customer Relationship Management subject in fourth year, at the AIT.

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This is a research about Facebook Advertisement, behaviour of the advertiser and behaviour of Facebook user. I focused in start-up and in technologies business relative to the Italian environment. My objective is to give an actual analysis about Online advertising and, in particularly, Facebook Advertisement. I want to find out the relationship among the various people involved. My research is a mix between primary research (according to my survey and an interview with an Italian startupper) and secondary research from the web and general analysis. The results are surprising. Facebook Ads is a tool hugely used by advertisers. Nowadays, we can say it’s essential to promote an online business. Numbers are not even big like Google Ads, but the trend is extraordinary and in few years it can reach Google revenues from advertising. Interrelated to this research there is an analysis about Facebook user’s behaviour. They are the power of Facebook! My recommendation is to take this research like a first analysis of the Facebook Advertisement environment. You can take one’s cue from my valuation and deepen with other similar researches. If you’re new about the issue, this is valid guide to introduce you in the Facebook Advertisement world.

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I hereby declare that this submission is my own work and to the best of my knowledge it contains no plagiarised material. I declare that all material presented is my own work, or fully and specifically acknowledged wherever adapted from other sources.

This work contains no materials previously published or written by another person, nor material which to a substantial extent has been accepted for the award of any other masters degree, degree, diploma or certificate at any other educational institution, except where the acknowledgement is made in the work by means of the Harvard referencing system.

Any contribution made to this work by others, with whom I have worked with, is explicitly acknowledged in the acknowledgements page.

I understand that if at any time it is shown that I have significantly misrepresented material presented, any award to me on the basis of that material may be revoked.



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I would like to express the deepest appreciation to Professor Joseph A Egan who has the attitude and the substance of a genius: he continually and convincingly conveyed a spirit of adventure in regard to research and scholarship, and an excitement in regard to teaching. Without his guidance and persistent help this work would not have been possible.

I would like to thank

Gabriele Costamagna, Personal interview (Chapter 17) Roberto Demaria, New campaign on FB (Chapter 20) People give me feedback in FB groups (Italian Startup scene and Indigeni Digitali) Participants who completed questionnaires,

I would like to thank my family providing me with the financial means to complete this work. And finally, thanks to my numerous friends who endured this long process with me, always offering support.

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Dedicate to all the people help me to make progress in my life. First of all to my friend Claudia Xhelali, she really help me to believe in myself. Andrea Buffa – classmate in Politecnico di Torino and in UIC (Universitat Internacional de Catalunya) Victor Kuppers – professor in UIC Claudio Carnino – Entrepreneur Brian O’Toolan – professor in AIT and all the people I meet every day and they give me inspiration.

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Advertiser: People advertise on Facebook Foundraising: is the process of soliciting and gathering voluntary contributions as money or other resources, by requesting donations from individuals, businesses, charitable foundations, or governmental agencies.

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FB Facebook FB Ads Facebook Adverts CPC Cost-per-click CPM Cost-per-thousand-impressions

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Table of Contents


TITLE PAGE .......................................Errore. Il segnalibro non è definito. EXECUTIVE SUMMARY .......................................................................... ii DECLARATION OF AUTHENTICITY .................................................... iii ACKNOWLEDGEMENTS ........................................................................ iv DEDICATION..............................................................................................v GLOSSARY ............................................................................................... vi ABBREVIATIONS ................................................................................... vii TABLE OF CONTENTS .......................................................................... viii 3) INTRODUCTION AND BACKGROUND - COMPANY PROFILE ......1 4) MOTIVES FOR SHOPPING...................................................................4 5) STORE CHOICE .....................................................................................6 6) CUSTOMER RETENTION……………………………………………..9 7) TECHNOLOGY .................................................................................. 122 8) BUILDING A CUSTOMER FOCUS ....................................................15 9) CONSUMER_BEHAVIOUR ................................................................18 10) EVALUATION AND ANALYSIS OF THE COMPANY ....................21 11) RESEARCH & LINK FINDINGS TO OTHER RESEARCH ..............24 12) REFERENCES .....................................................................................26 13) QUESTIONNAIRE DESIGN ...............................................................30 14) QUESTIONNAIRE RATIONALE .......................................................35 15) SAMPLING / RE-CODING / VALIDITY............................................39 16) PILOT TESTING .................................................................................40 17) OTHER RESEARCH ......................................................................... 439 18) CONCLUSION ....................................................................................47 19) THINK OUTSIDE BOX.......................................................................49 20) EXTRA ................................................................................................64

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WHAT IS FACEBOOK? FB was born the 4 th of February of 2004 FB describe itself on its Fan Page:
Millions of people use Facebook every day to keep up with friends, upload an unlimited number of photos, share links and videos, and learn more about the people they meet.

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Its growth was extraordinary and, nowadays, it’s one of the most important company around the world. FB revenues in 2011 were about 4 billion dollars, and about 90% they come from FBAds. In last 3 years there was an incredible exponential increase.

FB is a great opportunity to promote own business. We can choose to promote the business in a free-way or using Facebook Adverts. The most important characteristics of FB is that users share all the interest they have. This allow to the customers to find other people with the same interests and find a lot of information about.

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For the company this is a very useful tool because they can exactly individuate people behaviour and interests and, so, they can sell the perfect product to them.

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Principally, motivations for an advertiser, to start a campaign, could be 5 reasons: Brand campaign Offline campaign Sales Registration Events When company want build a brand campaign on FB, first of all, they have to build a fan page and, then, redirect all the traffic from Facebook Adverts to its page. In this way they increase brand awareness and the effect is exponential on this campaign because the friends of the people that click our adverts can see this and are more motivated to choose that particular brand. No other online tools are so effective.

Promoting offline campaign, it allows companies to increase the number of their potential customers. The problem could be that customers are spending time on Facebook; they have to go out to their home and go to buy, so that campaign becomes profitable. Companies need to motivate them.

It’s an effective way to find potential new customers. Thanks to Facebook “likes” we can identify people are really interested in our product and we can sell them the product in a quick way. Despite to this, there is even a problem; if they are interested in our product it doesn’t mean they want pay for it. Advertisers need to encourage them creating the need for our product or service.

Registration is a very useful tool for the advertisers. In this way they can create campaign of lead generation and promote a lot of products/services. It’s immediate and

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customers get not solicited to buy immediately a product or service that probably they don’t know or don’t trust it really.

In the case of events, advertiser can reach a great number of potential customers and through the Facebook, people can share their campaign. This is an important leverage to achieve great results.

Facebook Ads, using the data all customers fill on FB, they can focus just in people really interested. The problem is that in FB usually they don’t look for opportunities; so it’s more difficult that they click on the ad.

USERS MOTIVES FOR SHOPPING In FB customers can buy FB credits. These are for Game apps. Actually revenues from FB credits are growing faster than revenues from FB ads; according to a research conducted by eMarketer in 2011 they achieved $ 470 million, with an increment respect to 2010 over 200%.

People play in Game App to relax themselves and to challenge with their friends.

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ADVERTISER Prior to 2005 the majority of revenue was from 'flyers' which were mostly purchased by students or small local businesses for $10-$40 per day who wanted to target an ad to a specific college campus. Then FB Ads were sold to other companies like Apple and Victoria's Secret. First big ad deal at Facebook was a user-acquisition buy by Party Poker, which brought in $60,000 per month (but was dropped due to online gambling regulations). in August 2006 FB signed a three year deal with Microsoft to provide and sell ads on their site in return for a revenue split. In September 2006, FB was opened to all the people over 13 years old. That was an important strategic decision, because the market was open to everybody. In November 2007 was born Facebook Ads to allow companies promoting their business in the social network.

Nowadays, companies around the world spend 4 billion dollars in FB Ads. The process is completely automatic and easier respect to Google AdWords. It allows to everybody to implement a campaign in just 5 minutes. The only limitation is the budget: it can’t be more than 5 thousand dollar per day.

CUSTOMERS Looking at the customers, FB until 2006 was open just for student of some universities in USA, Canada and Europe. In September 2006 was open to all the people over 13 years old with a valid e-mail account. That was a great revolution and millions of people could join the Social Network.

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The rapport between FB and his customer has been very strong as of the beginning. Customer choose FB because is the fastest way to connect with all friends and to know everything about them. It’s very intuitive and people don’t need informatics knowledge.


In the pattern, a brief resume about tools available in 2005 and tools available in 2011. The evolution allowed FB to improve his service, but the most successful things there were in 2005, yet. E.g. Wall, Picture, Friends and Network. Now, the experience is complete and in the future is possible new function will be add to FB.

In the scheme above, there is a confront between FB and Google. User experience is completely different. In FB people communicate each other and generate demand. In Google user are like buyer in a little shop. They enter in the website, “buy” what they need and leave. They Fulfil demand. Time spent in the website is seven times more for FB, but actually the users didn’t achieve Google users. Probably in one year or two FB will overtake it. The biggest advantage for Google is that every user generate than times more ______________________________________________________________________ Page 7

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revenues that a FB user. The scissors is huge. Looking at the final results of 2011, we can say that the difference is decreasing, but still incredibly big. Last confront it’s an important tool for the advertiser. Actually FB Ads is cheaper than Google Ads. Advertiser have to take advantage of the situation.

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The key success factor is that people come back after the first campaign in FB. First possibility that FB offer is a diary budget that allows companies spend a predetermined budget per day. This could be for eternity. But probably companies after a period, they want drop down the campaign and implement another campaign. So, it’s important they come back to FB for the next campaign. There are no incentives about price if they continue to make campaign on FB. There is a system about bid for the adverts. Probably a parameter should be if the advertisement comes from a loyal customer or from a new customer.

FIRST CONTACT First contact with customers is online. There is no a direct contact with human people, but we can consider a relationship 1-to-1. FB try to be very clear and give all the explanation about a campaign and FAQs are complete.

THE WAY IT SERVICES It services just with a webpage. It can be considerate rude, but it’s probably the only way to connect with a lot of people. Customers they choose this service get use to this situation, because also the other online campaign don’t have a direct rapport.

REPUTATION FB had a good reputation among customers. There are no complains in the forum, like with Google Ads and the last decision about remove a lot of accounts. It’s just in the last 2 years that FB became a great advert seller, so there aren’t great ______________________________________________________________________ Page 9

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problems, yet.

CUSTOMER LIFETIME VALUE Consider the lifetime value for each customer is very difficult. FB Ads is just in the beginning, so it’s difficult an accurate analysis. We can do a forecast about this year, but we can’t assure precision. FB try to maximise value from customers. The most important thing is that they carry on with the FB campaigns.

CUSTOMER SERVICE Customer service is not very developed. There are no all the services that Google Ads can offer. This is a problem for the customers, but the R&D of FB is working to improve the experience for the customers.

Customer retention is the most important success factor for FB. Usually, people join the social network don’t let it and even if they let it, probably they come back to use it. It’s highly addictive and more people use it, more it’s addicitive.

FIRST CONTACT People have to sign up to FB. The process is completely automatic and require just few information to open the account (1 minute). When the account is opened, first of all FB try to connect you with the maximum amount of people that you know before in other social network or in your mail list. After you can start to create your personal profile and in few minutes you are a FB user.

THE WAY IT SERVICES Contact between FB and users is through a webpage. FB is just the mean to connect users. FB do it in the best way.

REPUTATION ______________________________________________________________________ Page 10

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It had a great reputation about users. People fall in love with it and they speak about it with family and friends. The only problem is that there are a lot of discussion about the data and how FB keeps user data. Usually, people think FB had a equivocal behaviour. In the future, it can become a big problem, if someone will cause a scandal to break. It could completely destroy the trust among users.

CUSTOMER LIFETIME VALUE Revenues of FB are about 4 billion dollar in 2011 and there are around 800 million users; so we can calculate that the average is 5 dollar per user. This is just an approximation; the situation is not easy foreseeable. First of all, there are different kind of user, there are people that they never log off or people that they check their page once a week. Then FB incomes are principally from Advertisement, so we had to analyse before how much time each kind of customer spend on FB and how many times he click on an Advert.

CUSTOMER SERVICE There is no a personal customer service. Every rapport with users is completely automatic. This could be a problem because, if FB deletes accounts or groups, we don’t have the possibility to get back all our information. There is a guide and FAQs that, pretty much, they fulfil all the queries of the users. Generally, we can say the customer service is not the focus of the company. Focus of the company is keep connected people.

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EDGERANK In the news feed, users can only see a small fraction of all the content being posted by friends at any given time. In order to determine which items should appear within the news feed, Facebook grades all content posts according to what it thinks user level of interest with each of them is likely going to be. The mathematical formula is known as Edgerank. WHAT ARE EDGES AND OBJECTS An “object” refers to a post or status update made by a user; a piece of content. The term “edge” describes any user interaction with an object; a “like”, a comment, a tag, a “share” and the action of creating the content itself. THE EDGERANK FORMULA

U - the affinity score between viewing user and edge creator W - weight score for this edge type (create, comment, like, tag etc) D – time decay score based on how long ago the edge was created The principal idea is: The higher the combined value of the affinity score, weight score, and time decay score, the more important an edge will be. Likewise, the more edges, and the higher their total scores, the higher an object’s EdgeRank. If an objects get a higher EdgeRank, it appears more prominently within people’s news feeds on Facebook.

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Affinity is the value Facebook assigns to an object’s creator relative to other Facebook users. The more a person comments, likes, or interacts with own posts, the higher their affinity to the user, and the greater the probability that own posts will show up in the news feed.

WEIGHT SCORE The weight score is a measure of the combined value of all an object’s edges. The more edges an object has the higher its weight score will be. Not all edges hold an equivalent weight on Facebook. E.g. A comment usually holds more weight than a like or a simple click or a “like”. The more interactions a content post has on Facebook, the more prominent it will be in other people’s feeds. A post with 5 comments and 13 likes will appear in people’s news feeds more prominently than one with few or no comments and few or no likes.

TIME DECAY SCORE Facebook give priority to the freshness of content. Newer content and interactions hold more importance and have a higher possibility of being published in your news feed.

BUSINESS VISION When we’re promoting a campaign on FB, we need to assure content be interesting for our audience. Content that advertiser share, it has to be able to draw attention of the users and to connect it with your message. Every time advertiser share content in FB, it’s a free opportunity to get your message out.

EDGERANK FOR FB ADS CAMPAIGN Like the news feed, users don’t see all the Advert that people promote. There is an algorithm to manage this situation. It depends the competition that there is about a particular campaign. The ranking for the adverts take several variables in consideration. First of all, FB analyse the price of the bid, then the quality and the Ad performance. ______________________________________________________________________ Page 13

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FACEBOOK INSIGHTS FB Insights is FB’s version of web page analysis, which allows a user to keep track of information such as page views, unique views, fan statistics, wall posts, video and audio plays, photo views,... The addition of Insights has allowed page operators, application producers and domain administrators to better understand the user trends for their pages, which can aid content management. Information is gathered on a daily basis, allowing an administrator to view daily or monthly statistics.

TECHNOLOGY TO CREATE AN AD CAMPAIGN When advertisers have to create a campaign on FB, they can simply identify a specific market using the interest of the people (“I like”) and the localization. Using this data they can select people will see the advert.

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The customers of FB Adverts are entrepreneur and enterprise. How does FB connect with them? When FB was a little social network there were a direct rapport between FB and customers they did campaign on the social network. Nowadays is everything automatic. Every customer can implement a campaign in FB in few minutes. They just need a credit card or an account on Paypal. The process is very easy (in chapter 20 there will be a video dimostration). FB want customers campaign be successful. It built appropriate pages to get learn the new customer about all the tools in FB.

The strategy is Win-2-Win. FB sell a product and they’re happy. Customers buy the product and are happy, because they know it will be a stepping stone for their business.

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In Italy, he created Facebook Marketing Italia, to connect entrepreneurs and FB. In this page there are information about how to start to advertise on FB and some successful stories of other companies. There is the international version (Facebook Marketing Solutions) it got about 700,000 “like”. In my research I found Facebook Marketing Middle East and North Africa, Facebook Soluciones de Marketing (country where Spanish is official language) and Facebook Marketingkonzepte (Germany). This is an important tool for all the entrepreneurs, they can confront with other people, find new solution and see how other people get success with a FB campaign.


The traditional advertisement is useful to build a brand awareness, but we need a great amount of money for the first investment to be effective. We can’t know precisely the results of our campaign and it should be useless if we want achieve a specific market with specific needs.

ONLINE ADVERTISEMENT The trend In 2011 online advertisement in US overtook newspaper advertisement, and we assure it will increase more and more during the next years as we can see from this report

In this market the top player have the greatest share of the market. Actually 70% of the total revenues come from the top 10 ad-selling companies. Characteristics A great advantages using FB respect to the others, It’s that promotes word-of-mouth among people and increases exponentially the results of our campaign.


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FB allows to create different types of advert. The principle difference is between Sponsored stories and Adverts.

Sponsored stories: Adverts sponsored by a friend or friends Facebook Adverts: Adverts no sponsored by a friend or friends

HOW DOES MY ADVERT APPEAR? Page like story: My fan page is the background of my advert Page post like story: A post of my fan page is the background of my advert

CUSTOMERS Customers are the only reason for the success of FB. All the decision, they make, take in consideration this factor. FB is changing continuously, but every time they notice a problem in the customers for a change, they come back or find another solution. There are no milestone that they can’t move. Every decision is analysed by customers and they decide, if it’s a good idea or not. e.g. Two years ago, one of the most important problems was the chat (people hated the chat), FB worked hard and now there are no problems, it add video calls (Skype technology) and group chats. Another example are the notifications sent by mail. Until 2011, they sent a lot of notification, but when they knew customers got boring about, because their mail was full of FB messages, they allow to stop notification by mail. A customer focus, it doesn’t mean they do everything customers want and everything customers expect. They know they have to find out new solution to make more interesting FB. In last year there were a lot of new solution, the most important is the timeline.

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I’m going to analyse the consumer behaviour using the black-box model. Thinking about Marketing stimuli, the product FB offers (FB Ads) it’s unique in the market. It allows advertisers can find a highly targeted market, like nobody in the market can guarantee. The price is competitive respect to other online adverts like (Google Ads). CPC is lower. It’s in the worldwide web, so everybody is likely to connect with him and FB is the website where people spend more time than any other website. There are no special promotion to implement a campaign on FB, but probably the edgerank for the adverts could considerate how much money people spend in FB campaigns. Considering the actual environment, we’re living in the biggest economic crisis from 1929 in the developed countries; contrary to this, there is an incredible growth in the developing countries (e.i. BRIC). Online Advertisement is growing up all around the world, so the trend is positive in this sector. Technology is moving to web. Software are web-based. FB is the centre of this revolution and it created a platform where developers can programs new app. FB probably is becoming important like Google, maybe even more in the next few years.

There are political problems, because FB is not available in some countries, the most important is China. This could be a great problem in the future because China is the second largest economy in the world (and in few years will should become the first one). Cultural awareness considers FB a “waste of time”; useful just for gaming or to chat with friends. Actually, this vision is slowly changing, but there are still great problems, e.g. FB is banned in the most part of the workplace. ______________________________________________________________________ Page 18

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There are demographic limitation about FB. It’s widely popular in the under 30 population. Conflicting to this, people over 50 don’t usually use this tool, so there is an important age limitation. Advertiser can’t think to implement a campaign for over 65 in FB, nowadays, it’s unlikely. We can define Buyer characteristics of FB Advertisement as follows. They’re visionaries, because fine a new way to promote their business; maybe in the last months also people start a campaign to follow the trend and sometimes without knowing exactly how the business is working. The motivation, they had, is to improve the “social” factor. Mostly of the people perceive FB like the new great opportunity and they don’t want to lose it. To implement a campaign on FB, people need to be intimate with all the tools about online marketing. Due to this, big companies outsource this service to obtain the best quality.

The Decision process about implement a new campaign, it usually start because advertiser want to acquire new customers. There are a lot of possibility like using traditional tools (TV, newspaper,…) or Google Ads, direct mails, Youtube advertisement or they can use FB adverts. If they choose the last one, It’s because they can identify a specific target market and promote it in the most important social network. After the purchase decision, usually they share the experience in blogs or pages. If the experience was positive, this is free promotion for FB Ads. Analysing Buyer’s response we find out they have two possibility between Sponsored stories or Adverts. Timing it could be very short from the old campaign to the new campaign. Campaign on FB last few days, particularly if they are a sales campaign; brand campaign should last someday more. The amount is interrelated to the size of the company, but it can’t be more than 5000€ a day each campaign. Briefly, I’m going to analyse user customers and why they choose FB. ______________________________________________________________________ Page 19

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The product is not unique in the market, service it offers are not exclusive, but it’s in Top Of The Mind of the customers. E.g. Tuenti offers pretty much the same services, but even in the country where it was leader, it has been overtaken by FB. The price is not relevant. All the most important social networks are free. Customers have to pay just for secondary service like game apps. The place of FB is everywhere. It’s likely to connect from PC, laptop, smartphone and tablet. This allows to customers never log off. Promotion of FB is through Word-Of-Mouth. FB has been able to create a trend about itself. So, Newspapers, television, magazines speak about it and promote it free. Customers are happy to be part of a successful social network and can share this experience with friends.

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FB is acting extraordinary. Its revenues are incredible increasing and it seems they carry on in this way in 2012 and it’s preparing itself for an IPO of $ 10 billion dollar, it means a valuation of the company around $ 100 billion dollar. Customers are happy to use FB Ads because they find an amazing way to promote their business. Targeting is considerably higher than other online adverts.

FB had a great amount of information about everybody (more than CIA); he can use this to propose to the customers the best service. It’s a young company; they grew up very quickly and maybe there are some lacks in some part of the company.

FB is the most important website in the world. People spend a lot of time. Ha can turnover Google like Search Engine. People probably don’t want change page if they’re looking for something in the Web. In the future, it can expand in continents were is not at the top, like Africa and South America; it should implement new services, like a professional e-mail. Google+ or Youtube can become a threat for FB; but it’s pretty unlikely because in the Web, usually the first is the winner. The great threat can be a new service that it will ______________________________________________________________________ Page 21

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turnover FB.

LEGAL: There were a lot of problems about the legality of FB and how FB keep the data. There are a lot of causes about Privacy. POLITICAL: Its growth has been so fast that, actually, politics aren’t aware about the importance of FB. In some countries (e.g. China), FB is forbidden. ECONOMICAL: The world situation is unclear, doubts about EU and Euro crisis are very big. Despite to economic crisis of the last 3-4 years FB had increase in an impressive way and It’s one of the biggest company in the world. SOCIAL: The impact on the life of everybody is extraordinary. FB is everywhere. You can connect everywhere from Mobile Phone, Tablet, Laptop and everybody is connected. FB changed life of millions of people. TECHNOLOGICAL: Last technologies, like smartphone and Tablet, allows connect everybody with everybody everywhere and everytime.

5 FORCES by Michael Porter
THREAT OF NEW COMPETITION Nowadays, it seems nobody can enter in the Social Network market. It looks like saturate with FB, LinkedIn and Twitter. Even Google, with Google+, don’t achieve great results. However, we have to consider it, because also MySpace 5 years ago looked like the only possible Social Network, but now is completely disappeared. Advertisement in FB is a monopoly, just FB can advertise on FB. However, we have to consider companies could find a way to promote their business in FB, without using FB Ads.

THREAT OF SUBSTITUTE PRODUCT OR SERVICE This could be a great threat. Actually, it seems there isn’t any website it can’t substitute FB. If people will get boring with FB other services can substitute it. ______________________________________________________________________ Page 22

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BARGAINIING POWER OF CUSTOMERS Costumers are the milestone of FB. If they leave, FB is died. They have a great power. FB had to assure them, always the best service.

BARGAINING POWER OF SUPPLIERS There is no bargaining from suppliers. It’s a website, so just who offer the server. If we speak about the content in FB, customers are the supplier of the information. So Customers are fundamental for survive.

INTENTSITY OF COMPETITIVE RIVALRY There are other Social Network that have a quite great successful around the world. They are hi5, Orkut, Tuenti, MySpace, MXit (Africa), Qzone(China), Gree (Japan), VKontakte (Russia) and Habbo. Nobody of this can face FB; actually FB is stooling users from this Social Networks.

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2011 SOCIAL MEDIA MARKETING INDUSTRY REPORT by Michael A Stelzner This is the executive summary directly from the report:
This study surveyed over 3300 marketers with the goal of understanding how marketers are using social media to grow and promote their businesses. On the following pages you'll discover: • The top 10 social media questions marketers want answered: We analyze 2278 openended responses and summarize all the major questions that marketing pros want answered. • The time commitment: We examine the weekly hours marketers invest in their social media efforts. This analysis will be helpful for marketers just getting started or seeking support staff. • The benefits of social media marketing: This rather beefy section reveals all the major advantages marketers are achieving with their social media efforts. We also look at how time invested, business size and experience affect the results. • Commonly used social media services: Discover which tools marketers are using and how their usage is changing this year. We also examine which tools experienced marketers are using. • Social media sites people want to learn more about: In this section, we examine the upand-coming tools (like geolocation and Groupon) that marketersare most interested in learning about. • Other analysis: We also examine social media outsourcing and how marketers plan on using other forms of marketing. In addition, we take a look at how business-to-business (B2B) companies differ from business-to-consumer (B2C) companies and whether the size of a business has any bearing on results. We also highlight significant changes since our 2010 study. How to use this report: Regardless of your experience with social media marketing, there's something here for you. If you're a beginner, take a look at the time commitment, benefits and tools that your peers are using.

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If you've been at this for a while, compare yourself against other marketers, see what tools they're looking at next and see whether you're achieving the same benefits as your more experienced brethren. If you're a social media guru, there's tons of material here to help you develop lots of “how-to" products. You'll want to pay close attention to the top 10 questions section.

Other important research has been published by Guardian and BBC about Google, the biggest competitor of FB in online Advertising. Reading this reports (and the balance sheet of Google of the last 3 years) we can state online enterprises make money thanks by advertising. This probably will be the future of FB; actually the only big online company is acting differently is LinkedIn. Its revenues are mostly from premium accounts.

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About first Ad in FB, (2011) When was the first ad sold on Facebook and what was it advertising?, available: [accessed the 06th of February of 2012]., (2011), Facebook loses earliest remaining employee, Kevin Colleran, available: [accessed the 06 th of February of 2012]., (2006), Facebook – The complete biography, available: [accessed the 06th of February of 2012]. FB revenues, (2011), Facebook revenues will reach $4.27 billion, Emarketer says, available: [accessed the 06th of February of 2012]. Print and online advertisement (2011) Trend in online advertising in 2011 in the United States, available: [accessed the 06th of February of 2012]. Facebook Ads born (2007) Facebook, ecco la pubblicità “virale” Gli utenti diventato fan dei brand, available: [accessed the 06th of February of 2012].

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Facebook Ads vs. Google Ads, (2012) INFOGRAPHIC, The power of $100 in Google vs. Facebook, available: [accessed the 06th of February of 2012]. Ad spending more than print spending (2012) Online Ad spending to surpass print for first time in 2012 [Study], available: [accessed the 06th of February of 2012]. How to setup a FB campaign (2012) How to setup a Facebook Ad, available: [accessed the 06th of February of 2012]. FB Insights (2012) Help centre search “Insights”, available: [accessed the 06th of February of 2012]. CPC Facebook (2012) Campaign cost and budgeting, available: [accessed the 06 th of February of 2012]. Microsoft raised in 2007 . [accessed the 27th of Jenuary of 2012]. Social networking around the world (2011) 5 huge social networks you may not know about, available: [accessed the 06th of February of 2012]. Social network analysis from Cambridge Cambridge university press (2011) Exploratory Social Networks Analysis with Pajek, ______________________________________________________________________ Page 27

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available: +network+research+2011&ots=shFq0SbZOt&sig=2fLkfbxD5c8ViwtPUvvCovQj4E#v=onepage&q&f=false. [accessed the 06th of February of 2012]. FB Algorithm (2011) The Facebook edgerank algorithm, available: [accessed the 06 th of February of 2012]. FB Insights (2011) Facebook Insights, available: [accessed the 06th of February of 2012]. News Feed (2012) Facebook begins news feed Ads Rollout, available: [accessed the 06 th of February of 2012]. Report about new Ads in FB and data (2011) Facebook’s new advertising model: you, available: [accessed the 06 th of February of 2012]. Accel partner invested in FB (2005) Accel Partners invests in, available: [accessed the 06 th of February of 2012]. History of FB (2006) Facebook – The complete biography, available: [accessed the 06th of February of 2012]. Timeline of FB (2012) . [accessed the 27th of Jenuary of 2012]. ______________________________________________________________________ Page 28

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Revenues from FB credits (2011) Facebook credits revenues now growing faster than its ads, available: . [accessed the 06th of February of 2012]. Social Network analysis (2011) Facebook strategy analysis 2004-2011, available: [accessed the 06th of February of 2012]. FB complains about privacy (2010) Millions against Facebook’s privacy and layout redesign, available: [accessed the 06th of February of 2012]. Valuation of FB (2012) Facebook valuation after IPO filing: $94 billion, available: [accessed the 06th of February of 2012]. LinkedIn Balance Sheet (2012) Annual Financials for LinkedIn Corp. CI A, available: [accessed the 06th of February of 2012]. 97% of Google revenues come from Adverts The guardian (2010) Ten years of online advertising with Google Adwords, available: [accessed the 06th of February of 2012]. Google revenues BBC (2012) Google revenues worse than expected, available: [accessed the 06th of February of 2012].

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10TH QUESTION ______________________________________________________________________ Page 33

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I used Zoomerang to create my survey. This is the response overview

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First question is about the focus of a campaign in Facebook Adverts. Results are that customers are focus in campaign to increase brand awareness. Other options are not a great success. Brand campaign are more than 50%.

The second question is about when they start first campaign in Facebook Adverts. There is a distribution among all the possibilities. It depends there are people that they start just last month and people that use FB Ads from more than 2 years.

Third question is about people if they think FB is the best way to promote their business and over 60% they thin, now or in the future, is the best way to promote their business. The people, they answer “NO”, specify that it’s just one of the possible strategy and it had to follow the brand policy.

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Fourth question is about the sector of the business. Mostly they work in Technology and service sector. Other option have a low percentage.

Fifth question is about how much money you spend in online ad and in FB ads. Considering small enterprise, they spend from 1 thousand to 10 thousand euros online, principally in FB Ads.

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Sixth question regard the possibility to create a game app to promote the business. Just a 30% think in promote the business using a Game App. However, comments consider Game App a good choice to promote the business.

Seventh question is about a ranking among FB, Google, Twitter, Yahoo! & eBay. What will be the most successful and what will be the least successful. It’s clear that they think FB will be the most successful in the future. In second position Google, third Twitter and fourth and fifth position for eBay and Yahoo!.

Eighth question is a ranking question. There are six questions and customers have to assess each one. It’s easy to use: almost everybody agree or completely agree; less than 15% disagree or completely disagree. FB give me important advices in how to implement the campaign: there is no an unique

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opinion about this; there is just a small majority for people they agree, but it’s not significant. It’s very effective: more than 60% agree. This was foreseeable, because the questionnaire address to people use FB Ads. Essential to promote my Fan Page: about 60% agree, but there is a 21% of people they disagree. It means, maybe, Fan page can achieve great results without spend money in advertisement, but using FB Ads results are quicker. Better than Google Ads: mostly people disagree with this or don’t have an opinion. Less than 20% agree. It could mean FB Ads have to improve their quality. There is another problem: when customer see an advert in Google Ads, usually is interested in that product, but in FB we can just imagine that is interested. Word-of-mouth among customers, it’s not enough to promote my business on FB: 50% of the people they don’t have an opinion about this. It probably mean that people are not perfectly aware about the power of the word-of-mouth on FB.

Ninth question is about where is located your company. Principally are from Italy because I have more contacts from Italy.

Tenth question is the annual revenues of the company. Generally they are from 0 to 2 million of euro. This is because I think start-up are likely to answer to a survey from a student and I have more contacts among start-ups.

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I chose to send my questionnaire to a wide audience. In Italy and around the world. Primarily the sample will be from Start-up because I have more contacts with start-ups. My sample has been from Italian start-up, because the most of the answer come from business with less of 2 million of revenues per year and Italy-based.

I can recode the questionnaire among people they do Facebook Adverts in Europe, Asia, America, Africa and Oceania. I can recode the questionnaire among enterprise from 0 to 2 million of euro, from 2 to 20, from 20 to 100 and over 100.

My way to validate the questionnaire is when I ask if it’s very effective FB Ads and before I ask if FB Ads it’s the best way to promote the business. If their answers are different probably that survey cannot be validated.

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My pilot test was in different groups of Italian start-ups. It was very useful because I found some problems in my questionnaire. First of all I did a mistake about the budget people invest in Facebook Adverts. I didn’t write the period that I wanted considerate. In second hand, I wrote MILLION of euro and, maybe, small business could think that questionnaire was just for big enterprise. At least, the positioning of the questions, maybe it wasn’t very effective. I start with questions about how big is the enterprise and how much money they spend in Advertisement. People need to be involve in the questionnaire and found it interesting. Someone advice that it was maybe too much generic and I didn’t focus in something particularly. I changed the amount spend questions and I put it together and then I add another question about game app, because it’s one of the most important trend actually. Then I changed the questions did some questions easier, decreasing the answer possibilities. Especially about how big is the enterprise I changed my ranks, because maybe they were too much options. Finally I promise to publish results about the research in February in my Twitter page to motivate people.

These are the FB page were I promote my Pilot testing WEB MARKETING INDIGENI DIGITAL START-UP TORINO ITALIAN START-UP SCENE FACEBOOK MARKETING ITALIA ENDEAVOR ______________________________________________________________________ Page 40

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I did a personal interview to Gabriele Costamanga, CEO and founder of Soccersquare. He’s an Italian start-upper from Cuneo, my home-born city. Actually, He’s living in Milan and he’s carry on his project in I3P (Incubator of Politecnico di Torino). I would like to ask him question more precise and focus in the behaviour of the advertiser.

This is the transcription and translation of the interview

AR (Alessandro Restagno) GC (Gabriele Costamagna) AR: How did you know FB Ads? Who did you advice? GC By FB. AR By FB. So, You started to use it, because you wanted or because someone advised
you to use it?

GC I did. I did it alone AR Got it. What are the differences between FB ads and Google Ads? What is your
favourite tool from FB and from Google?

GC Actually, I didn’t use Google Ads anymore. The difference is that FB it can be used
for something inside FB or something outside FB. Google it can’t be used for something inside FB.

AR Got it. Why did you stop to use Google Ads? GC Because it was useless. Really, I tried to use it Google Ads to promote

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SoccerSquare, because I got 30 euro free, but the conversion rate was very low, close to 0. Absolutely, It wasn’t the right solution for my business.

AR What was your FB conversion rate and your Google conversion rate? GC So, I can tell you… Conversion rate by click that then they come users it was about
57% in FB. I didn’t see Google … I spend 30 euro and I got to subscriptions, so it should 0.5%.

AR Ridiculous GC Absolutely ridiculous. AR Which are the strategies to promote your fan page? GC So, Actually I’m using … For the game it’s easy. When you had funs that play the
game, you can give them some gift, if they share to 20 friends the page. Then, I’m trying to catch the attention of the funs on my page. I’m trying to create qualified communication. I’m trying to answer to all the people that they ask something. Actually, I’m not doing a lot of promotion. Actually, It’s just this… We want be active on the page. In my opinion, people must know that there is really something, otherwise…

AR What kind of difference did you notice between Sponsored stories and Advert? GC I never make a sponsored story. AR You didn’t. Are you not interesting about sponsored stories? GC No, I don’t. Sincerely, I’m not interested. I’m not interested to sponsor a news; I’m
interested to sponsor the game.

AR Got it. How did you use feedbacks from you Fan page? GC I use it to improve my game app. AR When did you see results from your campaign? GC Immediately! I improve the daily number of like in my page around 100%. E.g. If I
have 100 hundred “like” a day without advertising, I can get 200 hundred “like” with advertising.

AR How much did you spend a day in advertising? GC Just a little. Last week we spend 400 euro per day, but before just 30-40 euro per
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day. Now, the game is still not definitive and, so, we’re satisfied. When the game will be definitive, we will spend about 1,000 euro per day, at least. I got some information from online marketing agency, and they’re interested in people that spend 25,000 euro per month. This is the actual level of FB Ads. I will come back when I’ll get more money =)

AR Which is the name of these companies? GC I don’t remember… One, it was Facebook ADB, I guess … I’m going to check it.
One is SuperSonic Ads and the other … I don’t know. I think SuperSonic Ads is English. I guess its headquarter is in London.

AR Did you find any Italian agency? GC In Italy… In Turin, I’m sure there is one agency… I didn’t remember the name, but
the responsible is Marco Fei. I’m going to check it on LinkedIn. I guess … I’m sure it’s BitMana, but I think It’s promoting the any kind of communication. It’s not just focus on Facebook. Another one is Easybit

AR Do you want ad something about FB Ads? GC I want to greet my mom and all the people I know  I can say that it’s a great tool. AR Great results !!! GC I’m going to explain you. The most important thing it’s that you can display the ad
just to friends of friends. It makes a vicious circle. If I can see Alessandro Restagno played SoccerSquare. There is an important psychological leverage. If I see a friend of mine played, probably I’m going to play, too.

AR Great results!!! GC Yeah… But then you have to think about customer retention. It’s not so easy. In the
beginning, we didn’t get any “like” in the page, because it was very difficult move from the game to the page. You have to take care about all these things.

AR So, It’s okay. You were very useful for my research. I can help you to promote your
game app in Ireland. Probably, you have to give them a beer, at least.

GC Yeah…  I’m going to do it in Turin. I planned to do a Beta party in Turin with free
beer, SoccerSquare t-shirt and one iPhone.

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AR Awesome GC Before, I have to know if it’s legal  If I can, I’ll do it!! AR Ok… Thank a million… See you GC See you soon
The resume is that, if you want to promote a business on FB, it’s likely you have to use FB Ads to increase the rate growth. The amount of money can be important, but the results are extraordinary.

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Three months ago I read an article about trends and there was a sentence that it can perfectly fit with FB:
If 20 years ago, it was the age of the information, if 5-10 years ago it was the age of the attention, nowadays it’s the age of the recommendation. (Italo Cillo – Founder of

Advertiser try to catch the attention of the customers creating more exclusive, more creative campaign, but thanks to Facebook Adverts we can add the recommendation. This is a quantum leap for the advertisement’s world and people know this. The trends is moving towards this and nobody can stop it. This is why Google is trying to build his Social Network with Google+. From Today (26 th of January of 2012) it start to unify all the information that he receive from profiles from different service, but that are the same person.In the future, maybe, Google AdWords will became like Facebook Adverts and it will allow Sponsored Stories. Actually, FB Ads is the only that it allows to do this and, so, his advantage is incredible high and customers know this and they don’t want lose this incredible opportunity.

Analysing the motives for shopping we can state that FB is perfect to create a Brand campaign. Its effect it’s incredibly high and word-of-mouth among customer it’s a “killer” weapon. In the other cases, FB help me to achieve better results. From 2004, FB is changed and now it can offers a completely experience for the users and new tools for advertiser. Deeping the confront with Google, we can individuate there is a wide margin to improve the services. Customer retention is a key factor for the success of a company; nowadays FB rate is high, also people they leave, some of them come back to use it. Advertisers, from all around the world, fell in love with the service FB offers and they don’t have any intention ______________________________________________________________________ Page 47

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to stop the promotion on FB. In the early years, FB had a lot of problems to sustain the amount of users and to offer them a perfect service. The most famous example was chat service, it got always problems. In the last year technology problems have been worked out and now FB platform is working very well. FB is oriented to offer always the best service to its client. The design is minimalist and every tool is easy to access. When there are changes, there is always a tutorial to introduce people to the new activities. It try to make easier every experience in the website. Advertiser, as I said above, usually fall in love with FB marketing campaigns and FB is generally seen like a new attractive to promote businesses. Users fell in love some years ago and, actually, can’t live without it. A part of them never log off. Revenues of FB didn’t achieve Google levels, but its trend is impressive. The next IPO will throw FB to another great Fundraising about $10 billion. This should be the quantum leap to overtake Google and become the most important website. Other resources are setting the importance of the social network in the life and the trend is still positive. Primary researches assess what secondary researches set. There are no bad opinions about FB advertisement from the marketers; but the most important thing it’s that FB user can consider it even interesting. This should be a revolution, because, actually, customers feelings about advertisement aren’t good (TV, Newspaper, Youtube, website). In conclusion, we can assess FB is a great enterprise that it should be become the new Google and revolutionize advertisement world. However, there are still problems that it has to work out. In the next year, after the biggest IPO in online business the future will be more foreseeable.

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QR code I send a QR code to I3P and Incubator of Politecnico di Milano to promote my questionnaire.

This project is born to analyse the connexion between Facebook and the advertiser. Analysing the relationship, I discover the significance of the user and, so, I decide to create another survey to know which was the feeling they get about advertisement on Facebook. I forward to my friend this questionnaire to know more.


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By this question I want to know where people come from. 2nd question

I want to target people depending on how old they are. 3rd question

I’m going to analyse when people use more often FB. This question it can be useful, if there are great differences between the ranges. I think FB should give the likelihood to advertiser to choose when the advert will display. 4th question

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I’m going to evaluate how many times people check FB in a day. To know how much it is important in their life. 5th question

I want to know how many people have tried to create a FB pages. Probably they have different ideas about advertisement. 6th question

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By this question, I’m going to analyse several aspect of FB Ads. The first sentence is important to know, if users think that the advertisement is about their interests and hobbies. Second answer, it want to find out how much it’s important that a friend of mine like the page sponsored in the advert. Third sentence is about the feeling that they have about FB Ads, if they want to promote an activity on FB, it probably means they trust in FB. Fourth sentence is no politically correct, but it’s one of the issue more argued about FB. Fifth sentence tries to identify which the sensation about FB Ads and how much customers are impressed by a campaign on FB. Sixth and seventh sentences are sentence to identify which is the feeling about an Ad on FB and an Ad on before a Youtube video. Eighth sentence is strictly correlate with the second sentence.

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7th question

I’m going to target people depending on the gender. 8th question

It’s an open question to identify which are the reasons to click on an advert 9th question

It’s an open question to identify the feelings about FB Ads. 10th question

This is the question “think outside the box”. During my report, I receive a newsletter from and there was the link to this video. I think it’s the best motivational video I’ve ever seen. So, I want to promote it and I want that a lot of people can see this video. It’s very impressive !!!

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1st question

I promote the survey among my Erasmus friends in Athlone; the most people come from Europe and, one half of them from Italy; I’m happy to Asian guy answer to my survey.

2nd question

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Students in Athlone are from 19 to 25 years, so it’s normal one hundred per cent is in this range.

3rd question

When people usually connect to FB. My sample answer that they connect more from 6pm to 10pm. This is not a surprise, because people of my target during the day studying or working and during the night they go out with friends. So, habitually they connect in the evening. Analysing the result, we can think that the advert is better if it is displayed, because in this period people spend more time in FB and it’s easier they click on the advert. FB could implement a new option.

4th question

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How many times they check FB. 100% per cent check FB once a day. This is really impressive, but more impressive even is that 40% of the people they check FB more than 6 times a day or they never log off. This response is due to new mobile technologies like Smartphones and Tablets.

5th question

Just around 10% of the sample created a Fan page. The percentage was foreseeable; students usually don’t have to promote a business or an activity.

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6th question

It’s the most important question. Here I got a lot of information. Results are surprising about first sentence, less than 30% think FB Ads is about their interests. Also second answer is surprising because just 35% agree. People think FB will be the most successful company in the future, but there isn’t a clear preponderance. More than 65% don’t trust FB keeps their data safely; this could be a great problem for FB, because trust is the milestone of the rapport company-user. Users think that it’s not essential a fan page to evaluate if the company is successful or not. Sixth and seventh sentence give an important advice to Youtube: users hate Advertisement before videos.

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Last sentence give us an important response; people don’t really care if they’re the first of the friend to click “like”

7th question

My sample is almost 50-50 in respect to the gender.

8th question

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People click on the advert if they think they could be interested in the product/service. Advertisers have to catch the attention of the audience.

9th question

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Generally, users don’t care about FB Ads, because it’s not very intrusive. There is a little of distrust about them. Someone recognize that it’s the motivation because FB is free. They don’t make worse the experience for the users (conflicting to Youtube advertisement), sometime it can be useful for customers and they improve the experience.

10th question

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This is the real “Think outside the box”. I’m very happy, at least, 30% of the people saw this video. NO MORE EXCUSES AFTER THIS VIDEO. In the movie “Pursuit of happiness” Will Smith said:
If you want something, GO and GET IT !!!

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I want introduce a friend of mind that he never did a campaign on FB (Roberto Demaria) We can look at how much time she spend and how much is intuitive FB Advertisement. Guideline for the Advert: URL: Image: A Desigual wear Target: Irish man over 18 years old they like basketball URL of the video:

1st step

In the first stage, we have to insert the URL or the fan page we want promote. In this case, Roberto had to introduce Desigual fan page and then create a little advert with ______________________________________________________________________ Page 64

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title and body. All it’s very intuitive; he didn’t found any problem and so he could press continue and proceed to the next step. 2nd step

In the second stage, we have to target people. Roberto had to target Irish man, older than 18 and interested in basketball. This second step, it’s a little less intuitive, he spend more time and when he had to introduce, he wasn’t sure. Generally, we can say he found few problems during this step. There were other possibility in this passage. We can target people by city and consider cities around (10-40-80 kilometers). Then there are others advanced connection targeting they allow to identify a narrow range. We can show adverts just to people that are already fan of an our fan page or only people that they’re not fun. We can target people using the relationship status, languages they know, education and workplaces. Probably in the future there will be other opportunity to target people, however I think it’s already incredible the precision we can achieve using FB Ads.

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3rd step

Pricing and scheduling is probably the most complicate part of the process. There are some default settings for new users. Roberto had to change only the budget per day and the currency. He was very fast and it means the process is intuitive. There are other possibility. We can choose between a fixed budget per time or evaluate a lifetime budget for the entire campaign. We can choose between CPM or CPC and we can change our bid. FB set a bid and new users that are not familiar with this tool can choose this option; but probably we can earn money if we set our bid. FB advice a range for the bid, but we can bid for an amount lower or bigger. Probably, if we set an amount too much low, our advert will not be displayed.

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4th step

The fourth stage is a resume of the campaign and a preview of the advert that it will be displayed. Roberto checked and after few seconds click on Place order. If there are some problems about the advert, users can click on Edit advert and come back to step 1, 2 or 3 and re-edit the campaign. 5th step

Last step, users have to choose the payment mode.

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Roberto spend about 3 minutes to implement a new campaign in FB. Maybe he should had spent 2 minutes more to complete the payment details. After this video, I can assure that a new user in 5 minute can implement the own campaign on FB. This is absolutely incredible. Process to start a campaign in Google Ads, it’s extremely harder than this.

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