Facebook ads are ridiculously underpriced, here’s why.

A couple days ago 2 young entrepreneurs met me to have a chat about something they were doing. An education startup which helps people identify the classes that they should take to graduate in their respective field.
They have a site running which they didn’t want to mention. The site generates a few thousand unique visitors every month and growing. Their main concern was accelerating that growth so they can hit a critical mass.
Of course, a large portion of the equation lies in what the site has to offer visitors. Keeping them coming back, making sure they’re engaged and getting value for their time spent. Those aren’t things that can be solved in a 2-hour conversation (so we didn’t even go there) but I’ll leave that up to them.
What I wanted to help figure out was their key problem. Which is “How do we get more people to visit the site”.
Not all traffic is equal, we obviously don’t want random people that have no interest in what the site has to offer to visit. But who do we want? The site is built for students and it makes sense to bring as many students as we can.
The first thing that ran through my mind was, running search ads against people who are actively searching for tuition classes. That had to be taken down pretty quickly, as this startup was bootstrapping with no funds to spare.
The overwhelming majority of the site’s traffic was coming from Organic Search (over 70%). But once we did some keyword research, we found out that the market is too small and scattered for anything tactical. We’d have to spend a ton of time and effort finding bits and pieces of keywords with little to no searches to try to rank against. (put the physics example).
But, as a startup focussed in Sri Lanka, and having an understanding of the Sri Lankan behavior of people, it was quite evident that the market existed. Hundreds of thousands of people go to these tuition classes apart from school (I myself went, even though it was for naught).
Knowing that the audience exists, but the behavior doesn’t, was kind of bittersweet. We knew who to target, but we also knew that creating habits is hard. To top it all off, we have little to no money to execute this (we’re talking $50/month).
This is when we turned to Facebook. There’s some staggeringly amazing information about Facebook in Sri Lanka.
21,000,000 people live on the island.
6,000,000 are connected to the internet.
5,100,000 of those people are on Facebook.
Facebook Audience 01
 That means 85% of all internet users in Sri Lanka, are on Facebook. And luckily, a lot of people that are on Facebook here in Sri Lanka also mention their school (Yes, we started going through our friend lists).
 The Co-founders that I met were from Royal College, so we wanted to start there.
 Facebook Audience 02
We came up to 26,000 people. But of course, not all of those were actively in the age range for requiring tuition. We broke it down further to the age range that really needs the service. Which is between 17-21, that comes to a total audience of 4,900 people.
 Facebook Audience 03
These are the core group of students that need to use this platform. Reaching “every single student” seems like a crazy expensive idea until you dig into the numbers. The main reason that Facebook doesn’t convert well in the APAC region is the lack of proper targeting.

Facebook recommends a $0.28 – $0.58 (or $0.39 Avg CPM bid). We know we can pay less because we’re willing to wait it out a bit (Speed isn’t a priority).

At $0.2/1000 impressions, we could technically reach every student in Royal College sitting through their GCSE’s for $1.
Yes, Frequency matters, and there are a few variables that’ll get thrown into the mix, but $1. Put a frequency of 5 and add a 100% margin of error and you’re still reaching every single individual child out there for $10.
These students also have most of their friends in neighboring schools in the same age range. Which means that word of mouth can be accelerated pretty rapidly once an entire school knows the platform. Later expanding into interconnected clusters of students.
Whether they’d stay and use the platform, isn’t something that we can help out with. But, we do know that with the amount of attention Facebook has to play with, the raw amount of users logged in, and the amount of ads flowing through, it’s a gold mine.
Even at 10 times the cost, the numbers still make sense. It’ll probably hit that 10x cost in the coming years, and will still be worth it. You’ll also be kicking yourself that you didn’t put in the ad-money now and leveraged the scenario.
This is why with all our clients across the world we spend 100s of thousands of dollars on Facebook Ads alone. Zucks is absolutely killing it.