"Hello and welcome back to another episode of the Collective Clicks podcast. This is your host Brandon Baitman, and today I'm joined by Garrett Craigan, our director of paid media. We're talking all about lead quality in Facebook ads. How are you doing today, Garrett?"

"Doing good, how are you?"

"Hey, doing awesome. I have to admit, out of our planned four-part series here about mastering Facebook ads, this episode today is the one that I'm the most excited about because there's about to be a lot of minds changed, a lot of standards adjusted. Lead quality is the topic with Facebook, and almost every time you hear somebody complaining about PPC, it's because of the lead cost. Almost every time you hear someone complain about Facebook, it's because of the lead quality. It's the number one issue that you tend to run into in the platform, right?"

"So every platform kind of has its own things, and we even talked a little bit in the last episode about some things that you can do to address lead quality in Facebook, even just from an audience level, like the different networks that you're running on and how that affects things. But there's a lot more to it than just that. I'm excited to jump into it."

"Yeah, me too. It's gonna be good."

"So first question, and I'm curious how you'll answer this because there's a bit of subjectivity to this, but number one: how do you measure the quality, and number two, what is the lead quality of Facebook?"

"The way I think is the most standardized way of that being measured is the leads per deal. For us on Facebook, over the last year or so, we are seeing on Facebook about 17 leads per deal for our clients that have ads active on Facebook."

"Yeah, and I just want to clarify one thing too: that's per contract, not per deal, just because there's varying levels of contract fallout. We do have clients fall out a ton and others that will never ever cancel a contract except for the weirdest of issues. But 17, and that's compared to our benchmark of what, like 11 for PPC? So it's behind PPC, but it's not that far behind."

"I was just having a discussion with an investor Friday, a couple days ago, where we were kind of mapping out the metrics, and I asked them what they expect out of Facebook because they had done some Facebook advertising for a while. This is actually a very well-known investor that probably everybody listening to this would know. When I asked them how many leads per contract they were expecting, they said probably between 70 and 100 leads per contract and a $40 cost per lead. I was just a little bit mind blown. It's so different from our metrics, right?"

"Which leads people to wonder, because you have these different channels and they all perform so differently from a lead to contract. Sometimes we think it's just the channel that makes a difference, but the strategy on the channel makes a huge difference as well. So why did this investor have 70 to 100 leads per contract on Facebook before, and our benchmark says 17 is normal? Turns out a lot of it comes down to the strategy with which the campaigns are executed, and that's what I think we're going to talk about today. What are the biggest things that impact lead quality on Facebook, and how can we make them better?"

"Yeah, the two biggest factors that are going to make or break your Facebook performance are going to be what you optimize for and the creative of your ads - the copy and the actual images of the ad."

"Very simple set. So let's talk about what you optimize for. What do people do, and how could they do it better?"

"Just to go deeper into that, in essence, Facebook is very, very good at hitting the target that you give it. So if you say 'I want people to go on my website,' it's going to find people that click everything, and it's going to show them the copy and images that you've given it that best drive that action."

"So what we see frequently on Facebook is people will optimize for an action that's very easy to drive, for instance, an on-platform form that's built into Facebook. They'll have that form being submitted as the action. So they're very cheap leads, but there also isn't much friction to the action, and so it doesn't take a very high intent user to take the action. So it's going to show the images, the copy that get the most people to take the easiest action, and that's partly why people see this bad quality. They're giving Facebook a bad target and then getting mad when it hits it efficiently."

"Yeah, that totally makes sense. It's wild to me. I remember the first time I changed a conversion-focus campaign to a traffic-focus campaign on Facebook, and for 5 hours I thought I did the best thing ever 'cause we're getting like 10 times the traffic to the website. I'm like, 'There's no way this could ever fail. There's so many people going to the website. How are we ever not going to get the return on investment we need?' And you'd just be absolutely amazed at how the rate of those people converting into deals just went so far down. That's an extreme example."

"So just to lay this out really clearly, the two kind of common ways to do this, and then we'll talk about even a way to go above and beyond just the basics, but just to lay out the common ones: One thing you mentioned was a Facebook form. So this is the way that most people run these ads, and I'm not saying there's a problem with Facebook forms. I've seen them work fairly well in other industries. It's just in this industry we have not been able to see them work as well as other methods."

"So if I were selling you on using Facebook forms right now, what I would tell you is it's the least friction that you could possibly have in the process. These people don't even need to leave Facebook. Facebook likes it actually because when somebody clicks on the ad, it just takes them to a form that's within Facebook itself, so they're not leaving the platform, which means they're more likely to stay on it after, which is a really good thing. So Facebook likes you, you're going to get a higher conversion rate there, it loads super quick, it's native to the app, it doesn't have to load on a whole separate web page, the tracking's really easy, etc. So that's why it's good."

"But yeah, I guess the best way I could describe this - everybody, when we're talking about lead quality in Facebook, the first thing that they think is how do I target the right people that I want? I'll give like a basic analogy for this. It's like I'm fishing. Let's just say I could fish anywhere in the ocean. It's like I'm just kind of looking at where the fish I want to catch are, and then I'm just throwing something out there that hopefully any fish would bite, but I'm just putting it in the place where the fish that I want are. That's kind of like fishing if you were to do it the way that most people do Facebook advertising."

"What we're suggesting is instead giving Facebook a wider area to target, saying you can fish anywhere in the ocean if you want to, Facebook, but we really want this type of fish, and we're only going to reward you if you catch that type of fish. So then the algorithm goes and it finds those things more deeply, and it can do that so much better than we can target. So that's what a lot of people don't realize."

"What you're talking about specifically here, what's it called in Facebook? Like an optimization goal, I believe, is the specific terminology. When Garrett's saying that, he's not just saying like what you're focused on optimizing, it's literally like a setting within Facebook that this is my optimization goal. If that is a form that anybody could fill out with little friction, what's going to happen is you're giving a lot of signals that are low quality to Facebook. So you're basically telling it every time any fish bites the bait, that's good, and you're going to be wanting sailfish, and you're just going to end up catching a bunch of little harbor fish or carp or something just because they're the easiest ones to get to catch, to bite the bait. That's just how it works."

"Versus if you're - so the other side of this is you could send people to a website. On the website, you could include a lot more information, you can qualify, you can tell people like, 'Hey, you're looking to sell your house, that's why you would fill out this form,' whereas on a form, you have less information that you can give, right? So it's more friction, it gets these people more qualified, it doesn't autofill their information like the Facebook forms do, but then when you get a bite, you're communicating to Facebook, 'Hey, that was a good one,' and it's actually what you want, and then it does a good job of finding more of that."

"So what a lot of people - like when they're thinking about how to improve lead quality in Facebook, what they think about is the targeting. What they don't realize is that, especially post-Facebook getting sued for Equal Opportunity housing regulations, especially the best way to target is with your optimization goal. It's being really clear with Facebook what you want, and if you do that, then the way that you're communicating success to Facebook changes, and then you get much better at targeting the right kind of people. You'll end up fishing in the deep sea instead of in the retention pond, right?"

"Because when you get those bites from those carp, you're not telling Facebook this is good, right? So it learns that it's not going to find a sailfish in the retention pond, and that's what you want. You want the algorithm to get really smart. So that's just a simple explanation between the two things."

"So yes, you'll get more leads if you focus on the Facebook forms. In my experience, you'll get more leads and you'll get less deals, and a lot of people think you'll get all the leads that you would have gotten otherwise and then some, but that's not how it works. You actually - you'll end up targeting completely different people. You end up fishing in that retention pond, not in the open ocean like you want to."

"So anyways, that's kind of the simple distinction, but how can you take that to even another level, Garrett? Beyond just getting someone to fill out a form on a website?"

"Yeah, so just going just a bit deeper into that tactic of giving Facebook the right target - not all forms that are captured are equal, right? And what we found is that it works very well to send people or to fire a conversion based on the answers that the person gives in their form to give even better feedback to Facebook than not just 'Okay, this person clicked, came to a page, and then gave their info.' They're a higher quality lead, but they also answered in a way that is like the kind of lead we want."

"So what we do most commonly is we ask in our form if the property is listed or is not listed. If it is listed, we still pass that lead over to our client just so that they can still work it, but we don't have that count as a conversion in Facebook. So we teach Facebook, 'Okay, that was close, right? Like they clicked, that's great, but they didn't match our criteria for a lead. Find someone else that fits better.' And so it keeps testing, and so that additional layer of refinement of what you count as a conversion helps teach Facebook even more accurately what you're looking for."

"And there is also the option with more volume to tie in an event to things that happen inside of your CRM where when a deal is marked as an appointment, pass that back in as a conversion and take things that much deeper, which we've been testing here already, and it works great. But the overall concept is just to give Facebook as valuable of a target as you can, and it'll hit that as efficiently as it can."

"Yeah, absolutely. And if this is sounding familiar to anybody listening, you probably recognize it based on us having talked about these same concepts for PPC before. Turns out that's one thing really similar between Facebook and PPC - both Google and Facebook use your previous data about what has worked to inform the future strategy. That's just the basis of their algorithms because, turns out, the most predictive thing to future behavior is past behavior, right? And the more data we can gather about that, the better this can be."

"So to add - like you were explaining it super simply, but to add the specific vocabulary to this - that first tactic you talked about, we call lead sculpting, where you're basically cutting out the leads that don't match certain criteria. And the second one is offline conversion tracking, where you're tracking things in your CRM and tying those back into the ad platform so that it understands what generates better and worse quality leads. Both crazy valuable. We've seen massive - I mean, obviously if we're looking at a benchmark of 50 to 100 leads per contract, and we're averaging like amongst our clients that are like really great closers and those that aren't as good, we're averaging altogether 17 leads per contract, it shows quite a difference in the lead quality. And so much of it has to do with the way you generate the lead specifically."

"And don't get me wrong, they'll get more expensive, but when you can start as a marketer thinking about what generates the most deals, not the most leads, I think you're on a really good path. Because a lot of our clients, by switching to these tactics, they're actually getting less leads than they were before, yet they're doing more deals, which means what? It means less overhead in other departments in your business, and it means usually a better return on investment on your marketing. So it makes a ton of sense in the P&L at the end of the day, although it doesn't make sense in your marketing scorecard where you're looking at how many leads can we possibly generate, right?"

"So you have to be aware of that. You also have to make sure your acquisitions team is aware of that because if they're used to Facebook leads being really bad leads, and then you make these big switches, then they're still going to treat them like they're not that good of leads, right? You're treating like a cold call lead basically, whereas they need to be treated like more of an inbound lead. And they're not perfect, right? You'll have varying levels of quality, but these kinds of tactics can increase the lead quality pretty significantly."

"Okay, so what you're tracking makes sense. Stay away from forms on Facebook, focus on the website forms instead. Consider sculpting the leads, consider offline conversions tracking as well, and then you get really good at getting that optimization goal as close to what matters for your business as possible. What else helps with optimizing lead quality?"

"Yep, the other arm of this tactic is going to be your ad content, the messaging and the images. What is commonly like a common misbelief in marketing is 'I want to make my ad as appealing as possible to the most people,' and that works for industries where anyone can be your buyer, right? But in wholesaling and in REI, that is not the case. There are lots of people that own homes that are not going to be your ideal lead, and so it's important to write your ads and design your images to appeal to only who you want to bring into your funnel, to force Facebook to show your ads to that kind of person."

"So if the ad is pushing very nice homes or top dollar offer type of messaging, it's gonna resonate great with someone that isn't in distress and just wants to move, right, and has a nice home. But it's not going to resonate with your buy box. So it's important that your messaging is talking about distress, it's talking about ease and convenience of the sell, not the offer, and that the images are of homes that fit the kinds of homes you buy."

"I think a lot of the ways that people think about the messaging and the creative is 'I need to make sure this is attractive to my ideal lead,' which is a good way to think about it, but they don't think about how do I make it unattractive to my unideal lead, right? You have to think about both because here's the crazy thing: the way that Facebook's algorithm works, if you have an ad that is attractive to a lot of people, not just your core audience - I'll give an example of this. I once worked with this company that had like a smartphone for kids. This is like before my real estate investment days, but I learned a lot about Facebook ads working with them because we were spending 40, $50,000 a day on Facebook ads, and we had this one video that was just absolutely hilarious and everybody loved it, and it was our worst performing ad, turns out."

"All right, ideal customer loved it, but the problem was also everybody else loved it. So what Facebook's algorithm noticed was, 'Hey, a lot of people like this,' and it started to target more and more of the people that liked the ad, which included people in market but also included anybody else that thought it was funny. And that was massive, massive audience. So what we found was when we ran that ad, we ended up targeting a different audience, right?"

"A lot of times when we're thinking about creative, we just assume we're going to target whatever audience we're targeting. You have to remember Facebook's learning based on who's responding to the ad, so you have to think not just about converting people down the funnel, but also about qualifying them. It's a different mindset. It has to be unattractive to people who aren't your ideal customer."

"I think where so many marketing companies go wrong with this is they only optimize for leads. So then you run a bunch of ads, and then one of them just says like, 'We'll give you top dollar for your house,' and all the other ones talk about distress. And then which one's going to work best? 'We'll give you top dollar for your house.' But then who's going to be complaining that they're getting a bunch of people motivated by price that they can't turn into wholesale deals? Like the acquisitions people, right? And there's a disconnect. So you're optimizing for the thing that's different than what's actually going to get you success down the funnel."

"To belabor my fishing analogy, it's like your bait, right? If the algorithm needs to be really good at catching the right fish, ideally you can design bait that only the type of fish that you want to catch would bite. If you have a type of bait that any fish would bite, then what's going to happen? You're going to confuse the fisherman who's going to think that they're getting a lot of success when really they're just getting carp nibbling at their bread because you don't catch a sailfish with bread."

"So it's a simple concept, right? It sounds dumb when you look at it in fishing, but from a marketing standpoint, you want that good motivated sailfish bait, and it should absolutely appeal really strongly but only to a specific group of people. And what people don't realize is it'll affect your whole targeting on the front end. You will have different people that you're targeting because of that creative."

"And a lot of the magic of this, we'll probably talk about in the next episode because you have to be able to understand how the different types of creative are affecting your lead quality, and having a really good ad testing process is a big piece of that. So we'll talk about that a little bit more then, but the concept here, I think, is crazy important."

"So get the right creative, measure the right optimization goal, and the thing we talked about before is avoid Audience Network in my opinion. If you do those three things, you should have a relative low number of leads per contract on Facebook. You agree, Garrett? Anything else you would add?"

Certainly, I'll continue with the rest of the text:

"Yeah, I think I would just add one thing. So with Facebook, they have such a huge audience, right? Like it's just massive. And of that whole audience, the piece that's your target buyer is so small that it's much more efficient to deter the wrong people, because that's almost the entire audience, than it is to try to like only attract your buyer. And so by giving it a behavior-based target of a form, and by having your ad be so unappealing to most people, that gives Facebook much better direction than making an ad that's very appealing. Because it just has such a huge audience that it takes longer for it to learn who likes it than to learn who doesn't like it. That's going to be a much more efficient play, and I think that's what this kind of comes down to."

"Yeah, I've had a conversation with a client recently where they basically expressed a concern to me like, 'Brandon, why are my ads so dull and boring? I wouldn't want to click this.' And my answer was, 'Yes, I tried to make an ad so boring that only a true motivated seller would click it.' That's part of the game. It's about deterring everybody else. It shouldn't be attractive. This shouldn't be something that - like that's - you don't want this to look like an Open Door ad or an ad for a realtor or something like that. It has to be very clear you have a specific audience here."

"It's like a bandit sign. Like bandit signs are pretty basic, they say 'We buy houses' and have a phone number on them. Why are they so basic? It's because if you made some like super flashy bandit sign that looks really nice and stuff, what are - who are the kind of people that are going to be calling you? They're probably different than the kind of people that you actually want to be talking to."

"Of course, in bandit signs, it's less important than it is in Facebook because in - if this was - if bandit signs were the same way and all those cars driving by were the ones that call, then you would actually have different traffic on the streets based on who calls your sign. It's kind of like if bandit signs work like Facebook ads. That's how Facebook ads work. It doesn't work that way in bandit signs. You can still put them like on the - in the right places, but I guess my point is you have to be so conscious of those things because yeah, you're looking for 2% of the real estate market. That's your target, and you got to - even if you block out most of the 98% that's not your target, but you still are left with 2%, you'll have as many bad leads as you do good leads. So you have to be really careful to block it out really effectively."

"So that's all we have for lead quality today. Next time we're going to talk about ad creative testing. We have a specific process that we've actually worked for years to dial into the level that it's at right now. It's a complete game changer when it comes to getting the best performing ad creative. So I'm super excited to talk about that, but that's all that we have for this week, and I will see you next time."

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