A lot of times I hear people complaining about how Facebook advertising is not useful for them. Their biggest complaint is that the high facebook ad cost and low conversion rates rarely results in a profitable ad campaign. Here is the Complete Guide on How to Reduce Your Facebook Ad Costs
With 1.59 Billion users on Facebook and $5.8B in revenue in just one quarter, Facebook is definitely doing something right and for an advertiser, it is a platform that cannot be missed. You just need to get a few things right to ensure you become one of them.
The starting point, of course, is to ensure that the cost of your ads is as low as possible.
So how do you reduce the Cost per click (CPC) for facebook ads?
Understand Your Relevance Score
The most important factor that directly influences the CPC of your Facebook ad campaign is your ad’s relevance score.
The relevance score is Facebook’s way of calculating how relevant your ad is for the audience that is viewing it. The exact algorithm that Facebook uses to determine this is unknown. However, it is obvious that high engagement rates for the facebook post(likes, shares, saves) would make the increase the score. Similarly, if someone takes an action like hiding the post, the score would reduce.
Facebook prioritizes campaigns which have high relevance scores. Which means Facebook rewards ads with high relevance scores by giving them a lower CPC which automatically reduces the cost of your Facebook ads. A “7+” relevance score is good while scores below 5 need to be improved. It’s important to keep an eye on this and keep pausing the ads which have a low score. Here is Complete Guide on How to Reduce Your Facebook Ad Costs
High CTR (Click Through Rate)
Your ad will have a high relevance score if it has a high Click Through Rate or CTR (the ratio of the people who click on your ad to the total views).
Here’s how you can ensure a high CTR.
Run highly targeted ad campaigns.
The biggest reason people do not click an ad is that it is being shown to someone who is not the right target audience for your product/service.
Luckily, Facebook has an incredible targeting feature that allows you to really narrow down your target audience.
For this, it’s important for you to have an understanding of your customer persona. That is, to narrow down to who is the ideal person to buy your product? How old are they? which gender, what are their hobbies, what music do they listen to, where do they live and so on? This is because Facebook allows you to choose your target audience on all this and more.
Apart from regular filters like age, location, gender, Facebook also has something called ‘interests’. And you can use this to target audiences based on whether they are currently in University or if they like cheesecake!
So ultimately, Facebook can make your audience as narrow as you like. And the narrower your audience, the more likely you are to have a high CTR and high relevance score.
Facebook has an excellent feature which allows you to retarget those who are interested in your products but have not yet made a purchase. They may have indicated interest by visiting your website or websites similar to yours.
Retargeting campaigns will have very high CTR because they focus on people who are already interested in what you’re selling.
Here’s how you start a retargeting campaign.
- Go to Facebook Ads Manager and then Audiences.
- Click on Create audience and select “Custom Audiences”.
- Select whom you want to target from the options you get (seen in the image below).
- Choose a detailed audience. For example, if you choose website traffic above, you will get the following options from which you need to choose.
- Anyone who visits your website.
- People who visit specific pages.
- People visiting specific web pages but not others.
- People who haven’t visited in a certain amount of time.
- Custom combination. Choose a detailed audience. For example, if you choose website traffic above, you will get the following options from which you need to choose. Once you set up your custom audience, here’s what it would look like.
- Set up Facebook Pixel
You need to have a pixel code tracking set for your retargeting campaign.
What is Facebook pixel? It’s the code that you need to put on your website which allows visitors to the sight to be tracked. The pixel code can also be used to see if they’ve gone to a particular page or clicked a particular button.
To get the code, go to Ad Manager and audiences and to your retargeting campaign.
Select it, and then click on Actions and click View.
Here’s where you find the code which you need to copy and paste on your website. Or ask your developer to do it for you.
Split Test Images and Copy
This is a fundamental rule of advertising on Facebook that you must follow at all times. Have at least 3 ads for the same ad set running at the same time. Use different images, headlines, descriptions and Call to Action (CTA) buttons.
Having multiple ads run together helps you
- Find out what your audience likes. Keep the ads that perform and pause the ones that don’t. Then create more ads and continue the process.
- Finalize the best ad copy which will help increase your CTR and reduce your costs.
- Keep your creatives fresh. This means your ads and your brand remain fresh in the minds of the customer as you keep testing new ad copies.
Only Target Facebook’s Desktop Newsfeed
There are some advantages to only targeting the desktop newsfeed on Facebook. The images and descriptions are larger, and navigation is easier. This results in a higher CTR.
By default, Facebook selects all the placements for your ad so you need to manually disable them like this.
Also, do remember that this is not a hard and fast rule. In some cases, mobile feed and Instagram ads do provide a better response.
For example, they are known to have a good CTR if your goal is mobile app downloads. Similarly, if you want to target certain audiences that use Facebook only on mobile (eg. a number of Indian audiences), then desktop only may not be the best strategy.
Use Bid Caps
Facebook offers you an option to manually set a cap or upper limit on all your bids. This means you can calculate your costs (advertising budget, conversion rates, etc) and come up with a maximum CPC. Setting a bid cap will ensure that your CPC never goes beyond that maximum amount in any situation.
Check for Audience Overlap
This is a very fundamental mistake that many Facebook marketers make. An audience overlap will occur when you have 2 different ad sets that cater to the same audience to some extent. The greater the audience overlap, the more your own ad-sets will be competing with each other and drive up your costs. Moreover, the audience will be seeing too many of your ads resulting in “ad fatigue” which will lower your CTR and raise your costs.
You can go to the Ad Manager, Tools and Audiences. Under Actions, Click “Show Audience Overlap” and then choose the audiences you want to compare.
Facebook will generate a Venn diagram similar to the one shown below. This will show you the overlapping audience for two different ad sets.
You can use this to make sure that there is no audience overlap, especially if your ad sets will compete with each other.
Target Fans and Email Lists Separately.
Facebook gives you the option, through Custom Audiences, to target only those people who already like your Facebook page or posts. So do make sure that you create a separate campaign targeting this audience. It will have a higher CTR, a lower CPC, and a higher conversion rate.
Similarly, you can create a custom audience by uploading the email ids of those who are already subscribed to your emails. This will ensure that you are targeting the same audience through the facebook channel also. And just like in case of the fans, it will result in higher CTR and reduced marketing costs.
Take advantage of Video Ads and Have Outstanding Visuals.
Video ads tend to have a much higher conversion rate since a lot more can be communicated through videos. This is especially important for companies that have educational, training or similar kinds of content.
Another thing to ensure is that your images are truly outstanding. This doesn’t mean they have to be fancy or include lots of text(Facebook limits text space to 25% for an image). The images need to be simple yet appealing. To make sure that it catches someone’s eye as they are scrolling through their newsfeed.
Here are some good examples.
Choosing Ad Budgets
An ad budget should never be chosen randomly. There is a simple and effective way to calculate the ad budget.
- Decide what revenue you want to generate in the month. For example, Rs. 1 lakh is the total revenue and each product is priced at Rs. 10 thousand. So you need to sell 10 products.
- If you have sold through Facebook before, you will have a good idea of your marketing cost per product. Say your cost per sale is currently at Rs. 1500. If you have not used Facebook ads before, keep an estimated cost per sale based on competitor estimates and your own margins.
- Figure out your profit margin before adding marketing expenses. Make sure that there is a healthy margin after deducting marketing costs
- Accordingly, allocate the budget; that is 10*1500 which is Rs. 15 thousand, to your ad campaign
- Divide the total budget into a per day budget, that is Rs. 500 per day
Deciding When to Run Your Ads
There is no one answer to this. For example, as per research, weekends are a bad time to sell educational or coaching products (Tuesdays are the best). But weekends are ideal for selling travel and other lifestyle products. So it completely depends on your industry. Do a thorough research and schedule your ads accordingly. If you are not sure, then start by distributing your ads evenly; observe the traffic for a couple of weeks, and then adjust.
How Facebook Ads Help in Organic Traffic and Reducing Marketing Costs.
Facebook Ads’ Audience Insights feature helps you get the most granular description of who your audience is. So for any ad that works well, all you need to do is analyze exactly who the audience was, and what content worked for that audience. And then design all your organic content be it on facebook, email or Instagram, accordingly. Over time, this will pay off in much higher organic traffic to your site which will reduce your marketing costs.
So yes, Facebook ads take time and effort to understand and get right. That’s why so few people are able to run profitable ad campaigns. But for those who do understand and follow these insights, Facebook can be a platform like no other. And can grow your business many times over in just a few weeks.
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