How to tackle rising Facebook CPAs

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SAN JOSE – With more advertisers and bigger budgets crowding onto Facebook and Instagram, acquisition costs are climbing. Advertisers can make their social ad dollars go further by re-thinking campaign fundamentals.

“You need to make sure you’re scaling your available inventory for click-through rates, mirroring your audience, and being dynamic,” 3Q Digital’s Senior Strategy Development manager Madeline Fitzgerald said in sharing tips for lowering CPAs across Facebook at SMX West Thursday.

Deconstructing Facebook CPCs

Audience size: bigger is usually better. CPCs on Facebook are affected by audience size, account structure, and click-through rates (CTR). The narrower and smaller your target audience, the more competitive your bid will need to be, Fitzgerald explained. The competition in the auction will ultimately impact the CPC outcome.

“If you’re noticing that your CPCs are really high, one of the first things you should do is check your audience sizes. If you’re seeing that [it’s] getting too specific, see if there any other interests, behaviors, demographics that we can add.” Doing so, she explained, will help to broaden the target pool and give the Facebook algorithm more options to show your ads.

If you’ve reached a ceiling, broad targeting might be the next step. “If you already have a mature account, don’t go straight to this if you’re still early on in your testing phases. But if you’re trying to get to that next level, broad targeting is great way to do so,” Fitzgerald explained.

Account structure and segmentation. Account structure and the way we segment our ad sets can also determine the available ad inventory. Ads can run across a range of Facebook properties – from News Feed and Messenger to Stories and Instagram feeds. When we add segmentations like placements or geographies, the audience pool becomes restricted and advertisers might miss out on more efficient inventory.

“The algorithms are smarter than we are,” she reasoned. “Let the robots have it on factors like devices and placements. A couple of years ago, we laughed at everyone who did that. But we’re actually seeing a 13% lower CPA with some of our clients who [no longer segment those].”

Segmentation can be valuable when focusing on the funnel stage – i.e. audience personas, creative, and destination pages. But Fitzgerald recommends skipping demographics, geographies, devices, and placements — any of the factors you can’t edit after you set them up.

Campaign budget optimization. Soon, ad set budgets will be going away, in favor of campaign budget optimization (CBO), which uses machine learning to automatically serve ads to the target audience based on predictive analysis.

“I think the biggest way to figure out how to work this into our strategy is to think about the language Facebook is using to tell us about how the algorithm operates. Facebook tells us that CBO looks at the available opportunities – which is a combination of audience size and the audience’s propensity to actually convert into billable opportunities.”

Facebook’s algorithm prioritizes volume over potential for conversion,
which is why CBO works, she explained. Marketers can group together audiences with
similar potential reach or size and the budget optimization tool will see more
conversion potential for larger audience within the budget.

Conversions are in the creative

Mirror your audience. “As advertisers, it’s our job to help users see themselves
and their goals – what they want to accomplish – in our creative. We need to
make sure we’re making it very obvious for them,” said Fitzgerald.

Compelling ad creative should be able to clearly visualize
the value proposition of what’s being promoted. And it’s not just about getting
more users in the door, it’s about getting the right users in the door
because they were drawn to your creative.

Engage audiences with video. Facebook has been pushing advertisers
to use animation and video for some time now, but Fitzgerald argues advertisers
still aren’t doing enough with it.

“A lot of advertisers take existing creative and put a slow
zoom on it, or pull a three-minute explainer video and think that counts as an
ad. But that’s not really what we’re being called to as advertisers here,” she said.
“It’s our job to figure out how to leverage movement in a more disruptive way,
and think about new original ways to talk to people.”

Highlight clear value in the copy. Effective copy isn’t about being brand heavy. It’s about
making users comfortable with clicking on an ad. Fitzgerald explained that advertisers
can build that trust and comfort by keeping ad copy directly tied to the value of
what you’re selling.

“We want to make sure users don’t need to go through any guesswork to figure out what’s going to happen next,” Fitzgerald said. “People don’t want to have to read through your whole website to understand why they should engage with your brand.”

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