This spike means that this final quarter of the year means increased competition and ad costs.
The jump in Facebook Ads costs aren’t determined by one factor. Various elements influence the change to CPC and conversions.
For one, the networking platform is heavily populated. This season won’t be an exception. Each day, more and more advertisers are fighting for the attention of the same audiences.
We know this doesn’t sound very comforting, but rest assured that understanding the market will help you craft your strategy. This post will give you a better idea of how the Facebook ads market works, how to track it, and what you can do to achieve your goals.
You’ve got competition
Industry competitors and your business compete for Facebook ads to reach similar target markets.
The higher the level of competition, the higher the ad cost. Inversely, a drop in competition lowers costs.
It’s important to know when this activity (and costs) fluctuation occurs throughout the year. Some months are more active than others, which is the case for the end of the year. Many reserve the bulk of their budgets for the holiday season.
However, holiday spending is not the only reason for increased costs. Many advertisers target audiences with similar interests; as a result, ads compete for the same users.
How does the auction work?
The ad auction selects the best ad to run based on performance and maximum bids set. All the ads compete against each other during this process. The factors for the winner are bid, estimated actions rates (people who most likely engage with your contest), and ad quality.
Many people don’t know this, but Facebook limits the number of advertisements that each user sees. There’s only so much space available, and many businesses hope to leverage ads in the same way.
When you’re creating a new campaign, Facebook defaults to delivering ads based on your automatic bids. Unless you select “manual bidding,” Facebook will bid “what it costs” to reach your audience.
As we previously mentioned, the more crowded it is to reach your audience, the higher Facebook will bid.
Many clients ask us to hold out until the competition drops; please don’t wait until this happens. Millions of advertisers are active on the platform, with no sign of slowing down.
Facebook, with all its changes, is trying to deliver a better experience for users and advertisers. At this point, they can afford to be picky. Having said that, if you don’t want to be penalized and give your audience a good ad delivery experience, keep in mind the landing pages, images, products, and headlines presented on your ads.
Competition, CPM, and other factors
As we mentioned before, the busy season is upon us. Not everyone is aware of these changes, but they wonder why their campaigns are getting more expensive.
One issue that is often overlooked is ad fatigue. Yes, it’s a thing.
“Ad fatigue occurs when your audience sees your ads so often that they become bored with them and stop paying attention. This, in turn, causes your campaigns to become less effective, prevents users from moving down the sales funnel, and ultimately hurts your company’s bottom line.” This issue can prevent you from reaching the ROI you hoped for and may generate a higher CPM.
You don’t want something like this working against you. Unlike the markets, this is preventable. Ad fatigue can prevent you from reaching the ROI you’re looking for and can generate a higher CPM.
That said, monitor the below in your PPC marketing efforts. Based on performance, determine what works and what to cross out.
- Focus on eye-catching creatives that align with your target audience. Based on what you know about your audience, present more personalized ads to your customers.
- Focus on retention, not only acquisition. Do this by preparing something special for viewers and targeting based on your customer list.
- Compare week over week performance and make adjustments. Add a column in your report to monitor costs. Review this regularly for red flags.
- Monitor the cost per result for each ad placements.
- Include A/B testing and present different formats to identify ideal ad frequency and compare the best performance per format.
It’s unrealistic to try to control 100% of the CPM. You cannot foresee how competition, seasonality, and other factors will vary each month. However, you cover your bases to understand your campaigns a little better and anticipate what’s coming. The inspection tool helps you to understand and optimize the performance of active ad sets. While an ad set is selected, click the magnifying glass icon on the right side of Ads Manager.
This tool won’t be available for campaign goals but is very useful when open. Use a time frame of 30 days and evaluate your data before making changes.
The season has already begun, so evaluating your budget during this time is essential. Make it a priority to create a strategy for the days ahead. The first step is to define your goals and the content you’ll display. Don’t be afraid of changing your target audience, ads, or trying A/B testing. These exercises help uncover your PPC sweet spot.
You will find your way within your industry, market, and audience.
In the end, these are some of the best ways to overcome competition and engage with your audience. These exercises will also make you more confident about what works for your campaigns.
Is your Facebook PPC Marketing strategy ready for the holidays yet? If you need some help, contact one of our Strategic Account Managers.