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It was an uncomfortable meeting, I know. I feel your pain. Your boss gave you an online advertising budget and you dumped a ton of money into Facebook ads. And they went … nowhere. Then, you had to explain to the marketing team what happened.

I can tell you what happened, because the same things sink most campaigns.

1. Everybody looked. Nobody bought.

You reached thousands of people (yay) but hardly anyone bought anything (boo).

This happens partly because you targeted people who don't know anything about who you are and what you sell. (What's that you say? You targeted men and women aged 16 to 60? Sorry. That's not a demographic. That's a city.)

You can't really expect anyone to see you for the first time, trust you immediately, and buy. Instead, do this: Facebook will give you some code to put on your audience to track website visits. Over a month or two, it'll start putting your site visitors onto a list you can target later. Then, once you've amassed a healthy number (5,000 is a good start), target those people with ads. After all, they've already visited your site and know something about you.

You can actually get smarter here. Try targeting people who visited your product page but did not visit the checkout page. Or try targeting people who've been to your site in the past 15 days. Or haven't been back for three months. These groups will be much more profitable than "randoms."

2. You made sales. (Or maybe you didn't. You're really not quite sure.)

That uncomfortable silence when your boss asked "Did we sell anything from those ads?" floated ominously through the room. Too bad you didn't put a conversion tracking code on your site, which is free and relatively easy to implement.

Oh wait, you did put codes in place but you could only tell how many sales you got and not how much actual revenue those sales earned. Very common mistake. Turns out, there's a specific place in the code where you have to tell Facebook (and other providers) what the value of a sale is. By default, that value is set at $0. You just need to change that to the value of your product. Presto. What's that you say? You can't track a single value because you sell lots of things all with different rates? Then you probably should have had your Web developer dynamically insert the sale value into that code.

I know. Next time.

3. Those sales cost us way too much to get.

The good news is you have all your tracking in place. The bad news is that it's showing you, in stark terms, that you're losing money. Let's say you sell a $20 product and each click is costing you $1 to get. You will need to sell to one out of every 20 people just to break even. (With value-set conversion-tracking in place, Facebook can do this calculation for you.)

Facebook operates on an audience-auction system – it's a complicated algorithm, but the more other advertisers are targeting the same group you are, the more you'll pay. Thus, your cost for advertising will fluctuate as other advertisers jump in and out.

At my digital marketing agency, we use tools like AdEspresso to automatically manage our clients' bids. If the cost-per-click begins to climb to rates where our clients' margins start getting threatened, it will automatically pause the advertising. This has saved our clients tens of thousands of dollars in overpriced ads.

Another factor in pricing is how relevant your ad is to your target audience. If you're advertising to elderly women but you're showing photos of teens shopping, your audience won't engage with the ad. This brings the relevancy down, which, in turn, increases your ad price.

The secret here is this: 1) Start running ads with a variety of images, headlines, and text. 2) Wait until you have a solid number of ad views. 3) Pause or stop the ad variations that are costing more. We routinely run 48 or 96 variations of a single campaign for clients. Then, after a week or two, we've learned which variations are working. In the end, we're left with three or four highly performing, low-cost ads.

But that's next time, right?

Tod Maffin is president of EngageQ Digital, a Vancouver- and Toronto-based digital marketing agency, specializing in online advertising, digital marketing, and social engagement. His website, todmaffin.com, has many more resources.