Clients keep on asking “How much should I budget for Facebook ads?” and “How are we performing compared to the Industry?”.
Little do they know the one and the only answer is: “It depends”.
There are various dynamics that shape the outcome of facebook campaigns and it’s best the client understands the process. This article will help you explain:
(i) How does the bidding process work on Facebook?
(ii) Why industry benchmarks shared online can be misleading?
(iii) What a healthy benchmark is Facebook ads?
(iv) Insights to run cost-efficient Facebook campaigns.
1. How does the Facebook bidding process work?
Before we go into costs, it’s important that we take a second to talk about the bidding process.
It’s important to remember that Facebook operates as an auction and you are bidding against every other advertiser on the platform. This means that at any given time you have hundreds upon hundreds of other advertisers all going for the eyes of Facebook users.
There’s a large number of factors that can affect how much your Facebook Ads cost, and bids are only one of them.
These factors can include:
- The timing: The month of the year, the day of the week, and even the specific hour of the day can affect ad costs.
- Your bidding strategy: Whether you select the lowest cost or choose a specific bid cap can ultimately determine your ad delivery and cost.
- The placement you choose: Different ad placements will have different costs – the more competition a certain placement has, the higher the cost
- Relevance metrics: Facebook has 3 separate metrics to determine the quality of your ad – Engagement Ranking, Quality Ranking, and Conversion Ranking. Having a low score in any of these areas will increase your costs
- The audience you’re targeting: If other advertisers are trying to reach the same audience members, costs go up as newsfeed space is not unlimited.
The successful planning of these factors will define what to expect from your budgets.To learn more check out the 5 Hacks to Optimise Facebook Campaigns
2. Don’t Follow the Facebook Industry Benchmarks shared online?
Have you recently Googled Facebook industry benchmarks and seen traumatizing results? You’not alone.
Most of the content published online are produced by marketers looking to sell their Facebook platform optimization products and they use scare tactics to achieve this.
The truth is, Facebook has too many targeting dynamics to be clustered under the one-single benchmark figure.
A couple of ammunition arguments to support the case. Are you comparing benchmarks for:
- The same product promotion? (ie, B2B sales are guaranteed to cost more than B2C promotion)
- The same target audience group? (i.e. Is the audience size/age/gender/interest data the same?)
- The same placements on Facebook/Instagram? (i.e. Facebook costs cheaper than Instagram ads. Is that considered?)
- The same country? (i.e. Generating clicks from India is fractions of the cost of targeting UK audiences)
- The same targeting strategy? (i,e, Are you doing prospecting targeting or Retargeting? The later has guaranteed better results).
And the list goes on.
You can not compare the benchmarks unless all targeting criteria are playing in the same field. This is a crucial detail these online advertisers forget to mention (aka. Hootsuite, Adespresso, Wordstream and so many others).
So, what benchmark should you really use?
3. What Benchmarks should you use for Facebook Ads?
Cross measuring performance data via conversion rates, post engagements and Google Analytics data (for link traffic) will give you the clearest picture of what is working.
From historic data, we also set bare-minimum benchmarks for what is working.
- For Facebook, we look for Click CTR’s above 1% and link click CTR’s above 0.50%.
- For Instagram, we keep our expectations much lower than these.
The key benchmarks should come from testing-optimizing and discovering how audiences engage with the brand/product on offer. The rest will flow automatically.
4. How to run cost-efficient Facebook campaigns for better results?
The cheat sheet for campaign optimization is too broad to list in a single blog post.
We will, therefore, highlight the basic steps you can take when setting up the campaigns:
- Impression vs Link Clicks/Engagements: We’d recommend avoiding the CPM (Cost per thousand) model unless you have a clear definition of what is a success for the client and you have sufficient budget to a/b test with. Entering the auction with the CPC model ensures you are only costed when people engage with your ads All impressions are free. This allows you to secure the campaign performance with minimal effort.
Selecting to charge by impressions means you can waste money when your ads are performing poorly. But the opposite also applies. If your ads perform well and get a high click-through rate, you still pay only on a CPM basis.
Why is this a good thing? You can essentially “beat” Facebook’s recommended CPC and pay a price per click that you would never achieve if you selected to charge by link click. This is a high-risk, high-reward proposition.
- Be aware of Monthly Market Trends: Yearly data indicates that CPC’s rise during the October, November and December periods. Peak cost time is December
- Be aware of Weekly Market Trends: Yearly data indicates that CPC’s are lower at weekends, with Sunday’s being lowest. The available inventory is also lowest during these days. The most expensive days are Fridays, Thursdays and Wednesdays as of 2019. The cheapest page like campaigns is seen during the weekends.
- Be aware of Hourly Market Trends: Yearly data indicates that link clicks are most expensive at 3pm -7 pm, with the peak time being 5:30 pm.
These steps will enable your targeting capabilities and will offer you valuable campaign savings.
Keep us posted with the results!