| 📊 View Lecture Slides | Full-screen presentation with navigation |
Learning Objectives
By the end of this module, you will be able to:
- Understand how ad auctions work
- Map the marketing funnel (TOFU/MOFU/BOFU)
- Explain retargeting and its strategic value
- Identify psychological hooks for ads
- Use AI to brainstorm ad angles and copy variations
1. How Online Advertising Works
The Ad Auction Model
Every time someone scrolls social media or searches Google, an auction happens in milliseconds:
USER SEES AD SLOT
↓
ADVERTISERS BID
(based on targeting match)
↓
PLATFORM EVALUATES
(bid amount × ad quality × relevance)
↓
WINNER DISPLAYS
(highest total score wins)
Key Factors in the Auction
| Factor | What It Means | Your Control |
|---|---|---|
| Bid Amount | What you’ll pay | Direct (set budget) |
| Ad Quality | How engaging your ad is | Direct (creative) |
| Relevance Score | How well you match audience | Moderate (targeting) |
| Competition | Other advertisers bidding | None |
Important: You Don’t Always Pay Your Bid
Most platforms use second-price auctions:
- You pay just enough to beat the next bidder
- Bid $5, next bidder is $3, you pay ~$3.01
2. The Marketing Funnel
TOFU, MOFU, BOFU Framework
┌─────────────────────────┐
│ TOFU │
│ Top of Funnel │
│ (Awareness) │
│ Largest audience │
└──────────┬──────────────┘
│
┌──────────▼──────────────┐
│ MOFU │
│ Middle of Funnel │
│ (Consideration) │
│ Interested audience │
└──────────┬──────────────┘
│
┌──────────▼──────────────┐
│ BOFU │
│ Bottom of Funnel │
│ (Decision) │
│ Ready to buy │
└─────────────────────────┘
Content & Ads by Funnel Stage
| Stage | User Mindset | Content Type | Ad Objective |
|---|---|---|---|
| TOFU | “What’s this?” | Educational, entertaining | Awareness, reach |
| MOFU | “Is this for me?” | How-tos, comparisons, case studies | Consideration, engagement |
| BOFU | “I’m ready to buy” | Testimonials, demos, offers | Conversions, sales |
The Big Mistake: BOFU Only
Many advertisers only run “Buy Now” ads to cold audiences.
Why this fails:
- Cold audience doesn’t trust you yet
- They haven’t experienced your value
- Competition for ready-to-buy users is highest
Better approach:
- TOFU ads build awareness (cheap)
- MOFU content nurtures (builds trust)
- BOFU ads convert (warm audience)
3. Retargeting: Your Secret Weapon
What is Retargeting?
Showing ads to people who have already interacted with you:
- Visited your website
- Watched your video
- Engaged with your social content
- Added to cart but didn’t purchase
Why Retargeting Works
| Metric | Cold Audience | Retargeting |
|---|---|---|
| Click-through rate | 0.07% | 0.7% (10x higher) |
| Conversion rate | 2.35% | 3.8% (60% higher) |
| Cost per conversion | Higher | Lower |
Retargeting Audiences to Build
- Website visitors (all pages)
- Specific page visitors (pricing, product pages)
- Cart abandoners (highest intent)
- Video viewers (50%+, 75%+, 95%)
- Social engagers (likes, comments, shares)
- Email subscribers (upload list)
The Retargeting Ladder
COLD → WARM → HOT → BUYER → LOYAL
Cold: Never heard of you
↓ (TOFU content)
Warm: Engaged with content
↓ (MOFU content)
Hot: Visited site, showed intent
↓ (BOFU offer)
Buyer: Made purchase
↓ (Retention ads)
Loyal: Repeat customer
4. Ad Psychology: Hooks That Work
The AIDA Framework
A - ATTENTION: Stop the scroll
↓
I - INTEREST: Create curiosity
↓
D - DESIRE: Show the benefit
↓
A - ACTION: Tell them what to do
Psychological Hooks for Ads
| Hook Type | Trigger | Example |
|---|---|---|
| Pain Point | Fear of problem | “Tired of low website traffic?” |
| Curiosity | Information gap | “The SEO trick Google doesn’t want you to know” |
| Social Proof | Herd mentality | “Join 10,000+ marketers using…” |
| Scarcity | Fear of missing out | “Only 5 spots left this month” |
| Authority | Trust in experts | “As featured in Forbes…” |
| Transformation | Before/after | “From 0 to 10K followers in 90 days” |
| Specificity | Believability | “Increased conversions by 347%” |
🤖 AI Integration: Ad Hook Generator
Prompt Template:
I'm creating ads for [product/service].
Target audience: [description]
Main benefit: [what they get]
Main pain point: [what they want to avoid]
Generate 10 ad hooks using these psychological triggers:
1. Pain point hooks (3)
2. Curiosity hooks (2)
3. Social proof hooks (2)
4. Transformation hooks (2)
5. Scarcity hooks (1)
For each hook, write:
- The hook line (under 10 words)
- Why it works psychologically
5. Ad Types & Formats
Facebook/Instagram Ad Formats
| Format | Best For | Tips |
|---|---|---|
| Single Image | Simple message | High-quality, text on image |
| Video | Storytelling, demos | First 3 seconds matter |
| Carousel | Multiple products/benefits | Each card = standalone story |
| Stories | Full-screen immersion | Vertical, fast-paced |
| Reels | Entertainment, trends | Native feel, quick hooks |
| Collection | E-commerce | Product showcase |
Video Ad Structure
0-3 sec: HOOK (stop the scroll)
3-10 sec: PROBLEM (relate to audience)
10-20 sec: SOLUTION (introduce your offer)
20-30 sec: PROOF (testimonial, results)
30-45 sec: CTA (clear next step)
Image Ad Best Practices
- Bright colors stand out in feed
- Faces increase engagement
- Minimal text (20% rule relaxed but still true)
- Clear visual hierarchy
- Mobile-first (most views are mobile)
6. Budget & Bidding Basics
Setting Your Budget
| Budget Type | How It Works | Best For |
|---|---|---|
| Daily Budget | Spend X per day | Testing, consistent spend |
| Lifetime Budget | Spend X over campaign | Fixed-end campaigns |
Bidding Strategies
| Strategy | When to Use | Risk Level |
|---|---|---|
| Lowest Cost | Maximize results within budget | Low |
| Cost Cap | Control cost per result | Medium |
| Bid Cap | Maximum bid per auction | High |
Budget Rules of Thumb
- Testing: $5-20/day per ad set
- Scaling: 20-30% increase per 3-4 days
- Retargeting: 20-30% of total budget
- Allow learning: Don’t change for 3-7 days
7. Measuring Ad Success
Key Metrics by Objective
| Objective | Primary Metric | Secondary Metrics |
|---|---|---|
| Awareness | Reach, Impressions | CPM, Frequency |
| Engagement | Clicks, Engagement | CTR, CPC |
| Conversions | Conversions | CPA, ROAS, CVR |
Understanding CPM, CPC, CPA
| Metric | Meaning | Calculation |
|---|---|---|
| CPM | Cost per 1,000 impressions | (Spend / Impressions) × 1,000 |
| CPC | Cost per click | Spend / Clicks |
| CPA | Cost per action | Spend / Conversions |
| ROAS | Return on ad spend | Revenue / Spend |
What’s a “Good” CPC?
Varies by industry, but benchmarks:
- Facebook average: $0.50 - $2.00
- Instagram average: $0.50 - $1.50
- Google Search: $1.00 - $5.00 (varies widely)
- LinkedIn: $2.00 - $7.00
Hands-on Activity: “The Funnel Map”
Duration: 45 minutes
Objective: Draw a complete customer journey diagram from Ad Click to Purchase
Part 1: Funnel Mapping (15 min)
- Draw your funnel stages (TOFU, MOFU, BOFU)
- Identify content for each stage
- Define the “trigger” that moves them down
Part 2: Ad Hook Development (15 min)
- Use AI to generate 10 ad hooks
- Select best 3 for each funnel stage
- Write a short description of the creative
Part 3: Journey Visualization (15 min)
- Map the complete journey:
- Cold prospect sees TOFU ad
- Clicks, consumes content
- Gets retargeted with MOFU
- Shows intent
- Sees BOFU offer
- Converts
- Identify potential drop-off points
- Plan how to address each
Template: Customer Journey Map
CUSTOMER JOURNEY MAP
Business: _______________
Product/Service: _______________
STAGE 1: AWARENESS (TOFU)
├── Entry point: _______________
├── Ad type: _______________
├── Hook: _______________
├── Content: _______________
└── Next action: _______________
STAGE 2: CONSIDERATION (MOFU)
├── Trigger: _______________
├── Ad type: _______________
├── Content: _______________
├── Trust builders: _______________
└── Next action: _______________
STAGE 3: DECISION (BOFU)
├── Trigger: _______________
├── Ad type: _______________
├── Offer: _______________
├── Urgency element: _______________
└── Conversion action: _______________
STAGE 4: RETENTION
├── Post-purchase: _______________
├── Upsell opportunity: _______________
└── Loyalty program: _______________
Deliverables
- Customer journey map (diagram)
- 10 ad hooks categorized by psychology type
- Ad creative brief for one TOFU ad
- Retargeting audience list
Key Takeaways
- Auctions are quality + bid: Better ads can win at lower bids
- Funnel before forcing: TOFU → MOFU → BOFU
- Retargeting is powerful: Warm audiences convert better
- Psychology drives clicks: Use proven hooks
- AI accelerates creativity: Generate, then refine
Additional Resources
- Facebook Ads Library - See competitor ads
- Google Ads Keyword Planner - Search volume
- AdEspresso - Facebook ads blog
- SpyFu - Competitor analysis
← Previous: Email Marketing & Automation
Next Module: Meta Ads Manager →
