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Facebook and Instagram Ads 101 for Small Business

Updated: May 2

This blog is part of a content series helping small businesses to get set up for digital marketing best practice.

You’ll find a guide for each of the major channels that are consistently used amongst each of my clients.

One key area of focus is Facebook and Instagram Ads, and rightly so. If you’re selling online then there’s a high chance that you’ve considered running some Facebook Ads (we’ll just refer to Facebook from here to cover both). I mean, everyone’s doing it - right?

Right! 9 times out of 10 a small business has either considered running FB Ads or actively is.

So, let’s get started.


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What are the different types of Facebook Ads and which ones are right for me?

Facebook Ads are centred around objectives. Essentially, what are you trying to achieve? Depending on your business goals and the simplicity of selling your product / service / app, different objectives may be right for your business.

These objectives range from reach, to engagement to conversions. Now, you may be asking - why would I care about anything but conversions? And, that’s a totally reasonable question to ask. At the end of the day, if you’re selling online (and hence reading my blog) then you are likely looking to convert someone.

But let’s think about the last time you bought something. You may have seen an ad asking you to buy, or you may have seen an ad that showed you a tonne of positive reviews. Or maybe you saw an ad that told you about the key values of the brand or how a key ingredient works. Each of these messages would have likely had a different objective on Facebook. Different pieces of content can work better with different campaign objectives - your job is to piece these together to run an efficient account.

Lastly, you may have heard about the rule of 7. Show someone something 7 times and they’ll be more likely to buy it. Okay, that’s a touch simplistic but let’s roll with it. How can you get someone to see something 7 times? The glorious R word - RETARGETING. Facebook Ads are the holy grail of retargeting - it’s easy to set up and easy to run.

To retarget someone, you need them to take some action worthy of being retargeted. This could be visiting your website, engaging with a social ad, watching a video, liking your page, saving a post, messaging your page - you get the idea. There’s a bunch of different ways to get someone to engage with your brand so that you can retarget them.

What I’m getting at is that Facebook Ads can fill a part or all of your advertising funnel. They are relatively simple to set up, except for the notoriously difficult Business Manager platform, and they can be turned on / off and scaled up / down at the literally flick of a switch. Facebook Ads are essentially made for small business, so let’s jump in.

So, what are the different types of Facebook Ads?

When setting up Facebook Ads you are first asked what the objective of your campaign is. Your campaign is the basis of your ads. Facebook Ads Manager follows a structure of Campaign (Objective) -> Ad Set (Audience) -> Ad (Creative). A campaign can contain many ad sets and an ad set can contain many ads, however to start running ads you need one of each.

Below is a list of each objective which you would select when creating a campaign, with the key online sales objectives I use highlighted in yellow. These are the ones which I most often use in digital marketing for online sales.

  • Awareness

    • Brand Awareness - shows your ads to people most likely to remember them.

    • Reach - shows your ads to the maximum number of people. This typically generates a high number of eyeballs and is a great way to prospect for new customers. You’re essentially paying as little as possible to reach as many people as possible and is a great way to find who may be interested in your offering and retarget those who take some action.

  • Consideration

    • Traffic - send people to website, app, Facebook event or to call you. This typically generates a large volume of traffic to your desired destination. While this traffic is not necessarily likely to convert, it allows for you to distribute extra information than what would be seen on an ad. For example, you may want to take large volumes of people to a dedicated landing page that can display more information than a Facebook / Instagram ad can. This can also be very helpful with building retargeting audiences as you can build audiences of all people who have clicked on your ad.

    • Engagement - Get more page likes, event responses, or post reacts, comments or shares. This typically generates a large volume of engagement on your posts. This can be very helpful for generating ads that contain a large volume of comments on them. For example, you may want to run an ad that says ‘comment your favourite experience with {our product}’. Tactics like this can generate posts that contain a large number of positive comments which can be very helpful for use in retargeting.

    • App Installs - Show your ad to people most likely to download or engage with your app.

    • Video Views - Show people video ads. This is typically used for… video views. If you can distribute a video and you want people to watch as much of the video as possible, then this campaign is right. However, if you’re looking to push your video in front of as many people as possible or trying to get people to your website or looking to directly sell with your video, then consider the Reach or Traffic or Conversion campaigns

    • Lead Generation - Use forms, calls or chats to gather info from people interested in your business. This allows you to generate forms that your audience can fill in directly in Facebook. There is no need to

    • Messages - Show people ads that allow them to engage with you on Messenger, WhatsApp and Instagram Direct.

  • Conversion

    • Conversions - Show your ads to the people who are most likely to take action, such as buying something or calling you from your website. This will very likely be your most used campaign type as it relates to the actual action you are seeking to elicit from your audience. This is used for Facebook to optimise around the core action you are seeking.

    • Catalogue Sales - Use your target audience to show people ads with items from your catalogue.

    • Store Traffic - Show your ad to people most likely to visit your physical shops when they’re near them.

Now, each of these types of ads serve a different purpose. For some businesses it may be in your best interest to run all of these, while for other businesses it just wouldn’t make sense.

Read on to see how I typically place these campaigns across my funnel stages and ad account.

How does Facebook Ad Manager work?

There are three key areas of Facebook Ads:

  1. Campaign, where you set up your objectives.

  2. Ad Set, where you define your audience.

  3. Ad, where you set your creative.

You need to get all 3 of these right. Let’s spend a moment talking about each. The campaign is the highest level of the infrastructure. Each campaign contains ad sets which contain ads.

Campaign: This is where you will choose your objective. It is relatively self explanatory when setting it up and I have focused on this above.

Ad Set: This is where you will set your audience. Your audiences can be custom (owned), saved (based on Facebook interests) or Lookalike (people similar to custom audiences).

  • Custom - this is anything you ‘own’. For example, you can upload a list of your customers (email addresses) or connect to your website to generate a list of website visitors. You can even take it further and generate audiences based on actions - for example, people who visited your checkout page but never converted, or people who read 10 pages of your website but didn’t fill out your lead form.

  • Saved - this is where Facebook’s smarts come into play. You can build audiences based on interests that people have. For example, if you’re selling designer shoes online you can target people that are interested in ‘Shoes’, ‘Online Shopping’ and ‘Designer Brands’.

  • Lookalike - this is where you can find people who are similar to your custom audiences. For example, if you upload a list of your best customers, you can then create a lookalike of this audience.

Ad: This is where you will set the creative for your ad. There are many different forms that you can use, with some of the main ones below.

  • Existing Posts. This is where you can use an existing post from your Facebook or Instagram profile to create an ad. This means that you are using the exact post that you have put on your profile and can add a link for a user to take an action (e.g. send a message, visit your website, shop now). This can help simplify ad set up as you won;t need to create an ad from scratch.

  • Create an Ad. This is where you can create an ad from scratch. You have complete creative control to create it as you would please.

    • Single Image - this uses just a single image as the creative piece, plus the text that surrounds the image.

    • Carousel - this uses a sliding carousel of up to 10 images.

    • Video - this uses a video asset.

So, which Facebook Ads strategy is right for my small business?

Every business is unique, so the ad structure you will follow is very dependent on a few factors. The single most important factor that will determine your structure is how long your sales cycle is and how much thinking a prospective customer will need to do in the lead up to purchase.

The hardest part to get right on Facebook tends to be the top of the funnel (finding new customers) ads. The easiest part is the retargeting (middle and bottom of the funnel) where you will be displaying ads to people that have engaged with your brand before, either by engaging with your social posts / ads or your website / app.

How to set up a Facebook Ads Account

Okay, so by now you should have a pretty strong idea of the different types of Facebook Ads and how to go about them.

In most circumstances, you will want to follow this tried and tested approach. But don’t follow it blindly, you’ll need to keep an eye on your performance and turn on / off and scale up / down campaigns, ad sets and ads that are working.

I like to set up my accounts with the following campaign structure. Under this structure, will be your ad sets (below) and ads. It is a funnel flow, from top to bottom - your prospective customers start at the top in the TOFU stage and flow down the funnel, receiving ads until they convert. And, if they don’t, they get booted out of the funnel at the end.

Purple = Funnel Stage Campaign Name.

Green = Typical Campaign Types Used.

Blue = Ad Set Audience

TOFU - Top of the funnel.

Reach. Interest based audience.

Traffic. Interest based audience.

Conversions. Lookalike 1-10% of Previous Customers.

This is where you should be prospecting new customers. You will be introducing your offering to new people who do not yet know about your product or service. You will want to introduce them to it, give them the opportunity to purchase it directly or direct them to a space where they can learn more. Your top of the funnel campaigns will typically be Reach, Traffic or Conversion.

MOFU - Middle of the funnel.

Engagement. Website visitors / email subscribers that have not yet purchased.

Conversions. Website visitors / email subscribers that have not yet purchased.

This is where you should be nurturing prospective customers with key messages and value propositions of your brand. Imagine content like positive reviews and testimonials, celebrity endorsements and brand values. You will be retargeting those in the TOFU stage who have shown interest and taken action (clicked, commented, etc.). The purpose is to nurture and encourage them through the consideration phase of their decision making process.

BOFU - Bottom of the funnel.

Conversions. Product / service viewers that have not yet purchased.

This is where you will want to directly ask your customers to purchase. They will be in this stage of the funnel if they have engaged with your TOFU ads or your website / app / custom list. This is where you should go for the sell. You may want to include a sense of urgency here. Or you may also want to consider providing an offer here to encourage the sale, or waiting for that until the LOFU stage.

LOFU - Last of the funnel.

Conversions. Product / service viewers that have not yet purchased.

This is where you will want to try a last ditch attempt to convert your prospective customer. They will have seen your full funnel of advertising content and are still yet to purchase. So, what’s going to get them over the line? You may want to consider that juicy offer or some sweet add on to finalise the sale.

ROFU - Return of the funnel.

Conversions. Previous customers that have not purchased in a relevant amount of time.

This is where you will be selling to previous customers. This campaign should contain audiences of previous purchasers and you can encourage them to buy again from you. This may be for a repurchase, a new product or service or to subscribe.

Most businesses I work with start by setting up their BOFU and MOFU stages first. This is because they are tried and tested techniques to retarget people who have already shown interest in your business and tend to be the lowest hanging fruit. From there, you will want to build out your TOFU (if relevant to your business objectives) and then your LOFU and ROFU.

It’s important to not feel overwhelmed. Start setting up what you can and then build out from there.

Now, I'm not going to pretend that by following the above structure you will immediately generate success. A lot of work goes into developing, maintaining and refining all elements of Facebook ads - your campaigns, ad sets and ads. You should continue to test and tinker to see what works and how to make it even better.

Hot tips for a successful Facebook account.

You can set budgets at either the campaign or ad set level. If you set it at the campaign level, then Facebook will distribute your budget to the ad set that it receives most results from. If you set it at the ad set level, then Facebook will distribute to the ad which it will receive the most results from. This means that you should set budgets according to what you are looking to test - audience or creative.

  • Ad Text:

    • Keep it below 280 characters for typical conversion best practice.

    • Include a call to action within the text. This is typically at the end of the text and includes something along the lines of, “Shop now 👉”

    • Use bullet points (with emojis) through ads to convey a clear and simple message. 📦 Plastic free packaging 🌱 Everything is eco-friendly 🇦🇺 Local stock and fast shipping

  • Ads:

    • As much as you can possibly do, your ads should be sponsored posts that are already posted on your page. This will allow you to copy them from one campaign to another and have the Ad ID not change. This will heighten the chances of Facebook learning faster. This is not required, but a bonus if possible.

  • Custom Audiences:

    • You should re-create your custom audiences on a regular basis as this will allow Facebook to refresh.

  • Learning Phase

    • The typical, Australia-wide, campaign / ad set budget to exit the learning phase is $1,700. This is based on a typical CPA of $34 which achieves 50 conversions.

      • If you can achieve a lower CPA then the spend needed to exit the learning phase will be lower.

    • Restarting the Learning Phase: Once you enter the Active phase, you will want to stay in it for as long as possible.

      • This is determined by any ‘significant change’.

        • Changing any creative

        • Changing budget by +/- 10-20%.

          • Tip: You can change budget by +10% first. Maintain for no less than 7 days. If it holds in ‘Active’ then you can either increase again by +15% and then +20% after another week. Or, you can increase by +10% again after 3-5 days.

          • You have two levers to pull essentially. Budget and Time.

          • If you would like to test a significantly larger budget, then you should duplicate the ad set with an increased budget. You should then run both Ad Sets for a 7 day period. If the new Ad Set exits the learning phase you can then turn off the existing ad set.

  • Frequency: Do not let this go above 5 for any Ad Set / Campaign.

  • Ads - Creative level.

    • Do not have more than 2-3 pieces of creative per Ad Set otherwise you will struggle to get out of the learning phase.

    • If an ‘Ad’ is not working well then you should Pause the ad and not delete it.

  • Creative

    • As much as possible, create square assets. These will be easier to distribute in most spaces on Facebook.

Key stats to check

Before we jump into stats, there’s the most important element - the attribution window. Facebook as a standard attribution window of 7 day click, 1 day view. This means that Facebook will attribute results within this window. For example, if someone makes a purchase with either 7 days of clicking on your ad OR 1 day of viewing your ad, Facebook will attribute that sale to that ad. This is important to note as you may be comparing Facebook data to something like Google Analytics, which typically works on a last click model (what is the last thing someone did).

Purchases / Leads (Conversions)

  • Unique - this is the number of conversions you have from your ad.

  • Cost per conversion - how much you spent on ads for each conversion.

  • ROAS (return on ad spend) - how much you’ve made (or lost - hopefully not) for every dollar you’ve spent.


  • CTR (click through rate) - this is the percentage of people that clicked on your ad after seeing it. Generally, the higher this is the better.

  • Frequency - this is the number of times people in your audience have seen your ad. Depending on the scale of your campaign, you tyically don’t want your account frequency to go above 10. However, this number can vary dramatically between advertisers.

  • Link Clicks - this is the number of link clicks on your ads. Now, link clicks can be ANY link on an ad - it can be your website, the button to message you or the link to your Facebook page. So, it doesn’t mean that the click has taken someone to your website.

  • Landing Page Views (LPVs) - this is the number of views of your website, from your ads. This can be a good metric to look between the lines of Link clicks. However, with the pixel tracking effectiveness decreasing, this too is tracking downwards and you are most likely missing out on some LPVs in your numbers.

Tips for a successful Facebook Ads Campaign

Capture email addresses

Selling directly on social can be hard. If you can tie it together with an email capture and remarkietng campaign, you will likely immediately optimise the performance of your social campaign. Attempt to offer your audience value adds or promotions in exchange for their email address when landing on your website. Then, sell to them via the email channel.

Set up your Pixel with relevant Events or Custom Conversions

Not every website is built the same. Facebook’s Pixel plays pretty well with most eCommerce website and website builders to automatically tag certain on-site events (e.g. add to carts, purchases, etc.). However, sometimes things don’t work so smoothly and you’ll need to set these up yourself (just visit the Events Manager inside your Facebook Business Manager). This will also be important to set up other custom events such as phone call clicks and chat bot clicks.

Set up your Conversion API (CAPI) to capture server side events

The world is moving away from pixels for the sake of privacy (good!). Facebook’s solution (at the moment) is to track events on the server side. This means that Facebook will be able to capture a little bit more data to help your campaigns.

Create Instagram Reels / TikTok Ready Assets.

Vertical, scroll-worthy short videos are where the world of social content appears to be going. Facebook’s/Instagram’s Reels are growing astronomically in the shadow of TikTok. And, the purpose of social ads is to get people where they’re digesting content. While I mention square assets being a holy grail for social assets, the Reel/TikTok format is the future - you just need to be able to produce content that can capture attention quickly.

Tools to use for Facebook Ads

For seeing what ads other companies are running.

One of the best ways to get your head around Facebook Ads is to see what other people are doing. But that doesn’t mean that you need to doom scroll your feed until you see enough ads. One Ad Library (linked above) you can see all the ads that a page is running. You can segment by country and see whether the ads are currently active and when they were set up. Hot tip - if an ad was set up a long time ago and is still active, then it’s probably working pretty damn well.

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Happy marketing!


About the author, Josh Berg

I’ve worked with over 200 small businesses, spending thousands of hours analysing their performance to advise on digital marketing best practice.

Over the hours there have been several key recommendations that have been consistent for almost all of my clients. This guide is the product of this time and focuses on providing you with an actionable list of tactics to get your digital marketing basics set up.


Want help with this guide? Tap me on the shoulder.

I’m available for consultation to help you work through this guide, ensuring that you’re implementing with best practice advice and are set up for success.

Book a time in my calendar for 30 minutes or for 60 minutes or check out my plans.


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