Many people log on to Facebook primarily for fun, but businesses are increasingly turning to the social networking site as an advertising gold mine. By placing ads on Facebook, you can zero in on a select portion of some half a billion users according to their interests and demographics.

Facebook advertising involves different considerations than other online ad platforms do. Google AdWords, for one, matches keywords on the pages of Google search results, whereas Facebook Ads can match specifics in a user profile.

Rather than tailoring ad content to concepts or things, such as digital cameras, think of Facebook as targeting people, such as the users of digital cameras, says Tim Kendall, director of monetization for Facebook.

How exactly should you go about that? Kendall shared with us his inside perspective on how a small business can get the most out of Facebook Ads. Here are his tips.

1. Make the most of your Facebook page.
Before you even think about Facebook Ads, Kendall recommends building a Facebook presence by launching a page for your business there. The Facebook Help Center takes you through the process.

To start, learn what separates a business page from that of a casual, individual user. With a business account, you can't view other users' profiles, add friends, or interact with individuals the way an individual Facebook user can.

Even so, the two types of pages have many similarities, such as the capability to post updates. Visitors can become fans of your company and "Like" what you post. You can tweak the page to your preferences, too, first by listing it in a specific category and then by dividing content on your Facebook page among tabs.

Facebook shows you precise metrics about how well the content on your page is doing, and it assigns a score to that end.

2. Create a username for your page.
Once you have at least 25 people connected to your page, Kendall says, you should reserve a specific username for your Facebook URL (which appears as facebook.com/username). This setup makes it easier for visitors to find and remember your Facebook destination.

For a small venture, a Facebook page could be a faster, less expensive alternative to designing an entire website with a custom domain name, or it can complement your existing web and social media presence elsewhere.

3. Remember to have a two-way conversation.
"What we've found with Pages is that the most successful [ones] speak to their customers in much the same way as you have a user profile and you express who you are to your friends," Kendall says.

Don't talk "to" your customers; instead, chat "with" them, and engage them on your Facebook page. Think of ways that content can spread virally. Fans of your company may link to cool items from your business page on Facebook, where it appears to their friends via News Feed.

One success story comes from Baton Rouge, Louisiana-based Community Coffee, which asked users to share their childhood memories of drinking coffee milk. The company found that the question led to all sorts of engagement, helping its fan base grow at a rate of 1000 people per week. Community Coffee counts Facebook as one of its top five sources of revenue, Kendall says. Another example might be a restaurant that posts videos of the chef explaining a recipe.

Remember that these first three steps aren't a must, and it's natural that Facebook would encourage business users to maintain a presence within its ecosystem. It's fine if you'd prefer not to build a Facebook page for your business, driving traffic to a separate website instead. Nevertheless, the interactivity that Facebook provides -- and its tie-ins to Ads -- make setting up a Facebook page worth considering.

4. Use Facebook Ads to drive traffic to your page or website.
To begin experimenting, click the Create an Ad link above the ads that appear on your page when you log in to Facebook.

Once you're in the ad-creation interface, just enter your business URL and then click either the Suggest an Ad button or I want to advertise something I have on Facebook. Facebook whips up an ad for you that feeds in text and an image from your website.You can upload yoown image and edit the copy to your liking.

5. Refine your targeting by profile information.
Next, click the Continue button to dig into Targeting. These settings include gender, age, interests, education level, alma mater, workplace, languages, and Facebook connections. You can target fans, friends of fans, or non-fans of your page, as well as users who are connected to a specific page, event, group, or application.

One of the best tactics is to make the user target narrow but not too narrow, Kendall says. He recommends casting a wide net first, and then homing in.

Among the examples that Facebook touts is a photography studio that reaped $40,000 in revenue from one $600 ad campaign that targeted users who identified as being engaged. And a bakery in Virginia targeted people within a 10-mile radius who ran marathons and liked gluten-free foods.

You can set an ad to run during a specific time period (although not a time of day). A yoga center could aim to treat someone on their birthday with an ad for a free birthday yoga class. An ice cream shop could publicize an ice cream social event for singles two weeks in advance.

The Likes & Interests settings provide a multitude of choices as diverse as the expressions of Facebook users. These options aren't as inclusive as you might prefer. You can't target, say, users who like both ice cream and Android; instead, you can target users who like ice cream or Android. This limitation is to prevent your making the target too narrow. Facebook suggests other interests based on the first item that you type inside the field; at this point, though, the first three topics tend to be the most relevant.

As you set up your choices, Facebook displays the number of people who are likely to view your ad, and also estimates what it will cost you.

Even with all the controls for targeting types of people, however, the possibilities are not endless. Facebook admits that it is still working to expand options for targeting people over the age of 64. The offerings have other limitations, as well, such as the inability to reach people (intentionally) who have the "It's Complicated" relationship status. Facebook claims that the capability doesn't exist because there's no evident purpose for reaching such people. However, it's not hard to imagine any number of products or services -- dubious or not -- for people whose relationships may be either nontraditional or in turmoil. (Therapy sessions? Marital aids?)

More geographic controls would be nice, too. You can target a city plus other communities up to 50 miles away, but you can't necessarily extend that range by more miles without getting as broad as the state, nor can you include a specific county.

6. Experiment with different ad combinations.
Once you run an ad, Facebook returns detailed metrics about how it performed, which can reveal what works and what flops.
If you have a Facebook page, Kendall suggests paying close attention to how your users engage there. It's probably wise to run an ad campaign at the same time you reinforce it on your page or stand-alone website.

As for paying for your campaign, should you bid on ad impressions or clicks? Bid on what you value, Kendall says. If you want to increase awareness for your brand, paying for impressions (CPM) is probably better than paying for clicks (CPC), he says. The cost-per-click approach could cost less overall, since you're paying only for each time someone clicks on the ad -- but Facebook could discontinue your ad if it gets no clicks. Facebook suggests an advertising price, but it also lets you set a maximum budget and bid per click or impression.

Metrics aside, the process is an art, not a science. In addition to Facebook's own tips, I'd suggest listening to your gut. To get a sense of how campaign targeting can work, pay attention to the ads that appear on Facebook when you're logged in as an individual.

Facebook serves me an ad for a Teddy Pendergrass album, maybe because I've listed Marvin Gaye as a "Like." Then there's an ad for a free bra fitting at a nearby department store to support breast cancer research; the advertiser apparently targeted me based on a mix of my interests, location, gender, and age.

"The really unique thing about our advertising is what we call social context," Kendall says. You can pop a sentence into an ad that reveals to a user that his or her friend Bob "Likes" your coffee shop. A Nielsen study found that a sentence like that in an ad can increase the chance by 68 percent that a user will remember the ad.

Some viewers, however, may resent seeing their friends' social networking behavior used by advertisers (individual users can set their profile to prevent their name from appearing in ads). Keep in mind that there's a fine line between ads that an intended target may welcome, and those that feel uncomfortably close or creepy to the viewer. Some women might be pained to be reminded that they are in the breast-cancer-risk demographic, for instance. As a happy, healthy, unmarried thirtysomething, I'm not sure I appreciated an ad from a local therapist who specializes in women and depression, either.

7. Keep an eye on your ad campaign and keep it fresh.
In addition to adjusting the target users, tinker with the creative options on your ads.

"We do find that with people who don't change their ads or images, performance tends to drop over a long period of time," Kendall says. When you're running a campaign that hits a lot of people, user fatigue can set in after several days. "Change the targeting or at least the creative," he advises.

If you're pushing an upcoming gala, for example, running several different ads in one day could deliver decent results -- as long as the images and text vary from one ad to the next. On the other hand, if your campaign is narrow and your budget is very small (you're aiming at a $5 daily ad budget for wine lovers in San Francisco, for instance), ad fatigue would probably take longer to set in.

Also keep in mind that although you want to be creative, not all ads will fly on Facebook. In August the site reportedly blocked an ad for a marijuana-legalization campaign after it ran for more than a week.

Finally, don't get discouraged if you don't see spectacular results from the get-go. With Facebook's minimum ad expense of just $1, you can probably afford to try new things.

More from PCWorld