Are you a small company that is planning to advertise on Facebook? Do you already advertise on Facebook but want to get more out of your money? Then I have some free advice that could save you thousands of dollars.

Before you read this, you should understand I am making two assumptions:

• You have already done some reading and got advice about Facebook advertising in general, and it makes sense for your company.
• You know what customer segments you are going to target with your advertising, especially Geography, Age, Gender, Education and any key interests.
• You are planning to use Facebook advertising to drive people to ‘like’ your Facebook page and engage with your company on Facebook.

Hopefully the first and second points make sense. As far as the third point, in my opinion you should not use Facebook to drive people to your website. For one thing, there are far more effective ways of doing that, like search advertising and even regular display advertising. In addition, there are real reasons to be suspicious about the effectiveness of Facebook advertising when used to drive people to external sites.

So, you already know you want to use Facebook to drive customer engagement in important customer segments for your small business, and now you want to know how to do it as efficiently as possible. To do that, you need to understand that there are two types of people on Facebook: people who regularly click on lots of ads without a lot of true interest in the ads, and people who rarely notice or interact with any ads except when they are really interested. Most of the people you want to reach are in the second group, which means it takes time and effort to get to them. Even worse, the eager people in the first group will flood in at the beginning of your campaigns and use up all your advertising budget before you have a chance to get to the folks you really want.

Dealing with those two groups separately is how you save money. You first have to ‘flush out’ the eager folks as cheaply as you can, and then you make the most of the incredible reach of Facebook by spending more money on clicks from folks that you are confident are really interested. Here is how to do it:

1. Create ads targeted however you want and pay the CPC bid that Facebook recommends. It seems you have to do this for Facebook to give you inventory in the first place.
2. Once the ads are approved and have collected a few clicks, drop your bid by 50% or so. Wait until you get a few more clicks and watch as your click-thru rate rises.
3. After your click-through rate either doubles or goes above 0.1% (whichever is higher), then drop your bid to 90 to 95% of your original bid.
4. Watch as the clicks keep coming in for a few days, and your click-thru rate climbs perhaps as high as 2% or more.
5. Over time, your impressions will decrease. When the number of impressions per day drops below 10% of the rate you saw in Step 2, then raise your bid again to the recommended range to get more impressions.
6. Repeat Steps 2-5 a few times. If you create variations of your ad that use the same copy and image but slightly different targeting rules you can get even better results. This may take a couple of weeks.
7. Once the ads seem “burned out,” then put your bid back to the normal range and let the campaign run as long as you like.

I validated this by proving we could generate about 5,000 likes for our Facebook page for a little less than $200, or about $0.02 a click. The people we collected were essentially the same as the people we collected when paying $0.20 per click. Since I was just experimenting on a shoestring budget, the fans we collected mostly folks from the Philippines, India, Pakistan and Bangladesh. However, some later tests show this method also seems to work in the US and the UK, though at higher CPCs.

I call it the ‘Facebook Flush’ because if you follow these steps, you will have flushed out all the eager clickers in your segments for a low price, and then your ads will be running against normal people who don’t click on ads very often. That second stage will feel a bit depressing after your awesomely high click-thru rates and cheap prices early on, but that’s reality.

I am publishing this because I believe that Facebook misled me and is misleading other advertisers, and I don’t want you to fall into the same trap.

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