It’s no secret anymore: getting good results in Facebook advertising has been getting harder and harder over the years. Many companies are abandoning this type of advertising for lack of profitability in order to focus on other acquisition channels in which to invest their marketing budget…
This decrease in results is due to several factors, but the most important of them is cost: Every year, the cost of running Facebook ads increases.
For example, between 2020 and 2021, the average cost of obtaining a click on an ad has increased 15%, from $0.38 to $0.44 (€0.36 to €0.42) (source: AdEspresso).
So a 15% increase in cost means you’ll need to spend 15% more on the platform to maintain the same results as last year.
Why are advertising costs on Facebook rising?
Like most online advertising platforms, Facebook (or Meta) sets its prices through auctions.
In other words, instead of selling advertising space at pre-determined rates, as television or newspapers might, online advertising prices are determined entirely by supply and demand.
In this context, supply is the number of users to whom ads can be displayed, and demand is the total budget of advertisers who want to display Facebook ads.
Thus, there are four possible trends:
- If advertisers increase their investment, costs go up;
- If advertisers reduce their investment, the cost goes down;
- If users increase their presence, the cost goes down;
- If users reduce their presence, the cost goes up.
As you might have guessed, the main reason why Facebook advertising costs increase every year is the enthusiasm of advertisers for the platform.
Although the social network has been established over the years, many companies are still starting to take an interest in online advertising and are just starting out in Facebook advertising.
However, the number of user registrations has slowed in recent years (source: Statista).
So we find ourselves with an increasing demand for a steady supply. More advertisers who have to share the same number of ad slots.
And we can anticipate that the growth will continue in the coming years as companies accelerate digitization.
As mentioned above, it is the advertising supply and demand that primarily affects the cost of advertising delivery.
In fact, it’s a little more complicated than that: There’s no one-time cost to broadcast all over the world. Supply and demand vary with each Facebook user.
Therefore, depending on your industry and your target audience, the cost may vary. For example, Wordstream measured that in finance, the average click costs $3.77 (€3.57), while in retail, a click costs $0.70 (€0.66).
In other words, the more you try to reach a specific goal and are demanded by other advertisers, the more costs can add up.
Thus, an effective way to reduce Facebook advertising costs is to target a wider audience. That way, you’ll be less in intense competition for ad serving, and can reach more people at the same cost.
Of course, expanding the target also means that your ads may be visible to a less qualified audience. However, this is not necessarily problematic.
If your business is in a “mainstream” industry, you won’t have trouble generating results with a wide audience. Even if your conversion rate goes down, the lower delivery costs will be offset and you’ll still get more results.
That said, if your company’s goal is a very specific niche (especially a business goal), it’s likely that broadening your targeting will hurt your results, despite the cost reduction.
If this happens, you can further your advertising strategy to make good use of this reach to a wider audience, such as advertising to your general awareness, or redirecting to another ad network, such as LinkedIn.
As mentioned earlier, each user can spend more or less for their profile depending on the competition from advertisers.
It doesn’t stop here: We observe the same phenomenon with different ad placements. In fact, every place where you can display an ad faces an auction, and not all places have the same demand.
For example, here are the costs received for each of our customers’ locations:
We can see that depending on the network (Facebook, Instagram or partner audience network), the location (news feed, right banner, stories) and device (desktop or mobile), the cost of delivery may vary significantly.
Once again, the solution is not to just target low-cost investments because these are the ones that produce the least results.
Selecting them all is the best way to look at the right placements and get the best cost and results.
Instead of figuring out which positions are right for you, let Meta’s algorithm find the best results for you.
Thus, you will be displayed in places that can give you the best possible return according to its cost and its possible consequences.
To select all placements, just check the “Automatic placements” option in your ad set.
Ultimately, the best option to reduce your advertising costs is to face the problem upside down and improve your results.
If costs increase by 20%, but you manage to optimize your ads to increase your result rate in the same way, you’ll see steady results over time.
However, there’s no miracle recipe to improve your ads: You have to test.
Also, be sure to post different types of ads (image, video, carousel, etc.) and with different marketing angles.
For example, types of ads user generated content (UGG), either the content created by your users as well as the video content produces good results.
In addition, you should know that the cost of delivering your ads is affected by their content. In other words, depending on your ad, Facebook may benefit you and reduce your costs, or penalize you by increasing them based on the quality of the ad you broadcast.
By serving ads on Facebook and Instagram, seeks to strike a balance between meta making a profit And Annoy people with ads,
On the one hand, if they don’t display ads, they won’t be able to make sales. But on the other hand, users will leave the platform if they post too much, which will also hurt their income.
Thus, Meta wants to give priority to ads that don’t have a negative impact on users, i.e. ads that don’t look like them.
If your ads are annoying, selling false promises, or taking value away from user experience, your costs will go up. And conversely, if your ads get a lot of positive interactions and feedback, they may be liked by the platform.
In short, make sure your ads don’t include a lot of “traditional” ad code that gets viewed and reviewed by users.
About the Author
Charles Davinon: I eat advertising online, and I drink decaf. I founded Antelope in 2018 to promote bold and unified brands.