People love free stuff. That’s why we take all those adorable mini shampoos from hotels, even when we have our favorite full sized hair products at home.
We love free so much that we’ll do things that don’t make sense, just because something’s free — like wait in line for free pancakes for longer than it would take us to buy ingredients and make them at home.
We figured free might work for Facebook ads like it does for pancakes.
To understand just how powerful the word “free” was in Facebook ads, we decided to do a basic A/B test on a pair of ads — one with the word “free” in the copy, and one without it.
But what we found was not what we expected.
What’s The Deal With “Free?”
“Free” is all over Facebook ads. When we analyzed 37,259 Facebook ads, it was the most used word after “you”.
Once advertisers realized that they could use psychology to influence our purchasing habits, the floodgates opened. Now, they could tap into our favorite colors, our fears about losing money, even our sense of humor to pry our wallets open. Giving away free things — from shipping to samples — came out of this wily trend.
Duke University scientist Dan Ariely ran experiments with chocolate to test the power of free. The basics of the experiment were as follows: people got a choice between two chocolates, a truffle for 26 cents and a Hershey’s Kiss for 1 cent. An equal number of participants chose the truffle as the Kiss.
But when they “dropped the price of both chocolates by just 1 cent, [they] observed that suddenly 90 percent of participants opted for the free Kiss, even though the relative price between the two was the same.”
This experiment has widely been interpreted to mean that free is a powerful motivator for behavior. But these types of experiments only lay the groundwork for the application of psychology in advertising, they aren’t specifically designed to measure customer interaction with a sale or discount.
For example, it took until 2011 for there to be a specific psychological study about whether or not food samples in grocery stores made a measurable difference in purchasing habits — and free samples have been around for a long time.
If it takes that long to study supermarkets, it doesn’t take a genius to figure out that advertisers are still trying to understand the best ways to entice customers on social media. So we decided to stay ahead of the curve and conduct our own research on Facebook ads.
Setting Up The Experiment
Creating a company
To run a Facebook campaign, we needed a believable company. We decided to run ads for beauty products made by “La Lune,” for a few of reasons:
- We needed to be able to envision our potential customers to create an ad campaign that would get customers in. We looked at some popular beauty Facebook pages to come up with ads that would copy what we knew were successful, like those of Glossier, a company whose inventory constantly seems to be sold out. Here’s an example of a post from their page: a friendly invitation and a photo that looks like it belongs on Instagram, perfectly targeted to their millennial customers.
- Beauty companies can be seriously secretive about their products prior to launch. This made it easy to market one product without having to take the time to make a full product inventory.
- Cosmetics are easy to target ads for, something that we’ll discuss more in depth later on. For now, it gave us the assurance that we’d be able to get eyes on our ads in a cost-effective manner.
- Our giveaway would fall in the normal expectations for cosmetics customers. Cosmetics companies frequently throw “freebies” to their customers — for example, every time you shop online at Sephora, you choose three free samples to add to your order.
The next step was making a landing page for the “company” to legitimize ourselves and give the ad someplace to go once you clicked. It looks a little something like this:
Pssst: If you’re interested in the process of setting up your own website, Facebook page, and product, check out our experiment on building a business with $50 and one hour.
Creating the ads
We had to submit a few versions of our ad to get it Facebook approved — they can be picky about everything from the length of your headlines to how much text you have in your pictures. Facebook lets you resubmit your ads once you’ve made changes.
We used AdEspresso’s ad creator, which makes it super quick to tweak any part of your ads. Unfortunately, we had to scrap some good stuff, like this Instagram-optimized version of our picture (made with Canva through the AdEspresso platform).
In order to have our ads approved by Facebook, we decided to keep things simple. Originally, we had emphasized our free sample more vigorously, but our final version of the ads (below) are much more subtle.
Creating our audience
To maximize our budget, and to make sure that our impressions would be for relevant customers, we targeted our audience. This is a great way to help get the most out of your ad budget, and allows you to target a range of factors including behaviors and location.
Since we were “selling” luxury beauty products, we restricted our ads to women from 18-35 who lived in major cities. Millennial women are the most likely users of cosmetic products, and often purchase and research their products online.
We felt that customers who had some college education would be more likely to have spare cash to shell out for beauty products, so we further restricted our audience to hone in on the luxury brand type. Our ads were given a relevance score of 7/10 — not bad.
Again, everything except the word “free” was kept consistent across the two ads.
So now that all of the setup was out of the way, it was time to see how we fared. Don’t worry — we did the math for you.
Spoiler alert: our “non-free” ad did better than our “free” ad in every category. Let’s start with our reach.
We got our ads in front of >4,000 people in about three days. Non-free was viewed slightly more than free ads, but this was through Facebook’s algorithm and auction system, which is out of our control. Non-free did very well on the first day, which signaled to Facebook’s algorithm that it was a better option to run, so it was put in front of more people.
It’s important to note that impressions are different than viewers. Impressions happen any time someone sees your ad. Facebook says:
For example, if someone sees a Page update in News Feed and then sees that same update when a friend shares it that would count as 2 impressions.
[… But] if a person sees a Page update in News Feed and then sees that same update when a friend shares it that would represent a reach [viewer] count of one.
We showed you our viewers and not our impressions because it lets you know exactly how many people we reached.
When we look at the CTR for these campaigns, it’s clear that non-free still outperformed free, although there is a smaller gap. The way that Facebook’s algorithm promoted non-free after its strong start accounts for the larger difference between viewers, even though the CTR was close. If the campaign had continued to perform at these CTRs, Facebook likely would’ve evened out their placement.
Most importantly, the Cost Per Click (CPC) for non-free ads was much lower than the free ads. Again, this becomes a big deal if we scale up our campaign. If we run our ads with a goal of getting 5,000 clicks, it would cost ~$1,300 for the non-free ads to reach our goal but ~$2,000 for the free ads.
Free doesn’t look so hot now that we’re talking about a loss of $700 from your bottom line, does it?
And that’s just the cost of the ads, which isn’t accounting for any free product or service you’re giving away. If you’re paying almost twice as much for a “free” promotional ad and you have to give away something — that’s a double whammy.
What’s Wrong With Free?
A big reason why using “free” in your copy might not go over well is people could be skeptical about the value or quality of your product if you’re giving it away. A French study in 2012 showed that consumers tend to be wary of price reductions, though their feelings also depend on what item is being reduced.
For example, a free sample of a perfume is different than a price reduction on a printer. But even for perfume, a free perfume that comes with a $100 minimum purchase might be met with less skepticism than if you simply give away that same free sample.
How not to do it
Ads that promise a free item ‘without a catch’, or huge discounts, can actually turn off consumers.
DressLily is offering up to 80% off, which seems too good to be true. People who have never ordered from DressLily before, and therefore can’t speak to the quality of the clothing or veracity of the 80% off claim, could dismiss this ad rather than taking advantage of the offer.
In the case of our experiment, some savvy customers might not have trusted our ads or website. Your Facebook ads need to have a strong sense of legitimacy, especially if you are trying to build your brand. Facebook users see a lot of ads, and they will skip over something that doesn’t look professional or worthwhile.
What actually works
We would bet this Under Armour ad that boasts free shipping did a lot better than La Lune Beauty’s free sample ad, or DressLily’s 80% off.
They have a free shipping promotion as part of their ad, but it isn’t the focus. They have a sense of urgency, stating “Get It Before It’s Gone.” Instead of using a specific percent off, they say “outlet” and “priced to perform,” which lets a customer know that items aren’t full price, but doesn’t immediately set off alarms bells. It also doesn’t hurt that they have amazing brand recognition, either.
The bottom line is that you want to make your product’s value clear, and giving it away can send the wrong message. If your product is really valuable, is the customer being tricked by your free giveaway somehow? If everyone can have it, is it really valuable? Is there a catch that will pop up when you try to get your free sample?
This is a critical underpinning of business that extends beyond giving away free samples. Understanding the value your business provides, and pricing your services or products to correctly reflect that can be crucial to growing your business and attracting customers.
For example, Price Intelligently, a company that specializes in pricing strategy, realized that discounting was causing their software customers a 30% decrease in long term value from their customers. Discounting just didn’t pay off the same dividends for software sales as it did for retail stores.
What Do I Do With My Ads Now?
The million dollar question: how can you apply what we learned to your ad strategy?
- Start A/B testing your ads. Whether it’s swapping out the picture or the CTA, pitting two versions of an ad against each other can help you optimize your ads. Plus, with AdEspresso it’s easy to keep track of and compare multiple campaigns, so you can A/B test to your heart’s content.
- Follow your instincts. We knew that “free” would be powerful in an ad campaign, so we went out to see what the result would be. Maybe you want to see if a certain tag line is more appealing, or if a different age group would respond better to your ads. Don’t shy away from your questions – use them to make your Facebook ads stronger!
- Target your ads to maximize your budget, and your marketing experiments. When you’re trying to figure out the best ad for your business, you want to be able see how your customers would actually respond to the ad. If we had marketed La Lune to everyone in the US, for example, we wouldn’t be able to know how our customers would react — and the results wouldn’t have been as accurate.
- Keep your product in mind when trying marketing ploys. Free samples are probably a great, cost-effective idea if you’re selling cheese, but maybe not if you’re advertising art supplies on Facebook. Play around with your ads to find what works.
Putting It All Together
We’ve talked about using the word “free” to hook in customers, and how free samples and discounts can affect the way people view your business, and only one thing is ultimately clear: “free” is a complicated concept. That’s part of what makes advertising so fun.
The key to free is understanding how it can benefit your business. Using free to entice or reward customers can be a great strategy, as long as you’re using it to enhance your business and not undercutting your product.
This way, you’ll be reaping the psychological rewards of free while still keeping the value of your business sky high. This kind of smart marketing will help you attract customers and will put you a step ahead of your competition.