How do we combat rising costs?

It’s no longer a secret: Getting good results in Facebook ads has been getting more and more difficult over the years. Many companies abandon this type of advertising due to lack of profitability to focus on other acquisition channels in which they invest their marketing budget…

This decrease in results is due to several factors, but the main one is cost: every year, the cost of running Facebook ads increases.

For example, between 2020 and 2021, the average CPC on an ad increased by 15%, from $0.38 to $0.44 (€0.36 to €0.42) (Source: AdEspresso).

So a 15% cost increase means you’ll need to spend 15% more on the platform to maintain similar results to the previous year.

Why are Facebook advertising costs increasing?

Like the majority of online advertising platforms, Facebook (or Meta) sets their prices via auctions.

In other words, instead of selling advertising space at predetermined prices, as television or newspapers might do, online advertising prices are determined entirely by supply and demand.

In this context, supply consists of users to whom ads can be shown, and demand is the total budget of advertisers who want to display Facebook ads.

Thus, there are four possible directions:

  • If advertisers increase their investment, costs go up;
  • If advertisers reduce their investment, costs go down;
  • If users increase their presence, costs decrease;
  • If users reduce their presence, costs increase.

You may have guessed it, the main reason why Facebook advertising costs increase every year is advertisers’ enthusiasm for the platform.

Although the social network has been in existence for years, many companies are still interested in online advertising and only started advertising on Facebook.

However, the number of user registrations has slowed down in recent years (Source: Statista).

So we find ourselves with a growing demand stagnating supply. More advertisers who have to share the same number of ad slots.

We can expect the increase to continue in the coming years as the digitization of companies accelerates.

01. Expand your ad targeting

As mentioned above, it is the ad supply and demand that mainly affects the cost of ad delivery.

In fact, it’s a little more complicated than that: there’s no one-time cost to stream worldwide. Supply and demand varies by Facebook user.

Therefore, depending on your industry and target audience, costs may vary. For example, WordStream has measured that in Finance, the average CPC is $3.77 (€3.57), while in Retail, the CPC is $0.70 (€0.66).

In other words, the more you pursue a specific goal and demand from other advertisers, the more costs can increase.

Thus, an effective way to reduce Facebook advertising costs is to target a wider audience. This way, you will be less in the fierce competition to display ads, and you can reach more people at the same cost.

Of course, broadening the target also means that your ads may appear to a less qualified audience. However, this is not necessarily a problem.

If your business is in a “mainstream” industry, you will have no problem achieving results with a wider audience. Even if your conversion rate drops, the lower delivery costs will compensate you and you will still get more results.

However, if your company is targeting a very specific niche (particularly a business goal), broadening your targeting is likely to hurt your results, despite the lower costs.

If this happens, you can direct your advertising strategy to make good use of this reach a wider audience, such as advertising for your general awareness, or redirecting to another ad network, such as LinkedIn.

02. Expand your investment

As mentioned earlier, it can cost each user more or less depending on the competition from advertisers for their profile.

It doesn’t stop there: we see the same phenomenon with different ad placements. In fact, every site you can display an ad on experiences auctions, and not all sites have the same demand.

For example, here are the costs obtained per location for one of our clients:

We can see this depending on the network (Facebook, Instagram or partner audience network), the location (news feed, right banner, Stories) and the device (desktop or mobile), the cost of connection can vary drastically.

Again, the solution is not to target only low-cost investments because these are the ones that give the least results.

The best way to appear in the right positions and get the best cost and results is to select them all.

Instead of finding the right spots for you, let the Meta algorithm find the best results for you.

Thus, you will be shown places that can provide you with the best possible return, depending on their cost and potential outcomes.

To select all placements, simply select the “Automatic placements” option in your ad group.

03. Optimize your ads

Finally, the best option to reduce advertising costs is to take the problem on its head and improve your results.

If your costs increase by 20%, but you can optimize your ads to increase your result rate in the same way, you will see stable results over time.

To improve your ads, though, there’s no miracle recipe: you have to test.

Also, be sure to post ads of different types (image, video, carousel, etc.) and with different marketing angles.

For example, ads of the type User Generated Content (UGG), both with user-generated content, as well as video content, tend to do well.

In addition, you should know that the cost of distributing your ads is affected by their content. In other words, depending on your ads, Facebook can benefit you and reduce your costs, or penalize you by increasing them, depending on the quality of the ad you want to stream.

By displaying ads on Facebook and Instagram, Meta strives to strike a balance between make a profit And the Annoy people with ads.

On the other hand, if they do not display advertisements, they will not be able to generate sales. But on the other hand, if they post a lot, users will leave the platform, which will also hurt their income.

Thus, Meta seeks to prioritize ads that do not have a negative impact on users, i.e. ads that do not look like them.

If your ads are annoying, selling false promises, or taking value out of your user experience, your costs will increase. Conversely, if your ads get a lot of positive interactions and comments, the platform may prefer it.

In short, make sure that your ads don’t include too many “traditional” ad codes that users see and review.

About the author

Charles Davignon: I eat ads online and drink decaffeinated. I founded Antilope in 2018 to promote bold, unified brands.

YouTube – Instagram – Linkedin – TikTok

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