Facebook Ads is one of the more effective social media ad platforms, particularly when it comes to conversions. Advertisers with knowledge of Facebook’s ad system are often able to do well and get a lot of results and conversions with Facebook Ads.
There’s one thing that plagues all advertisers using Facebook, however: the cost of your Facebook Ads conversions.
Facebook Ads can get expensive. I believe that they’re a worthwhile investment, even if they can get a bit costly. That being said, I don’t think it hurts to take a look at what factors are driving up the cost of your conversions on Facebook Ads to see if there’s anyway to reduce the overall cost.
The 6 factors that can significantly and quickly drive up the cost of your conversions are your choice in audience, quality score, optimization, bid amount, bidding strategy, and frequency.
Certain audiences will be more costly to target. This is the case when your audience is in high demand amongst Facebook advertisers—Facebook Ads is, after all, run on an auction and bidding system.
There’s a common misconception that this means you’re only in competition with your traditional industry competitors (ie, if I’m a bistro, I’m only in competition with other local restaurants). That’s not the case. You aren’t just in competition with other local restaurants for your audience—your particular audience may also be currently being targeted by a shoe store, a credit card company, and a candle maker. Though your products are completely different and serve different needs, your ads are all competiting for the ad space on their newsfeeds, which drives up the cost.
Depending on your exact audiences and who fits into them, different types of audiences may cost more. I ran a campaign for a client where targeting their custom audience from their website cost a good bit more than the rest of their audience. Regardless, they saw more conversions from those custom audiences. Still, it’s worth noting that even amongst your current audience, not all targeting is created equal.
Plus, if you target the wrong audience, that’s automatically higher costs going up, especially in a CPM campaign. Keep that in mind and target carefully—if it’s a higher cost, as long as you’re targeting correctly, it’s likely worth it to keep it the same.
2. Relevance Score
Relevance Scores are a relatively recent addition to marketers’ Facebook Ads toolbox, and it’s one that Facebook itself has said can—and will—directly affect the cost of your ads.
Relevance Scores are Facebook’s evaluation of how well your ad will perform with your audience. They determine this score by a variety of factors like how your audience engages with your ad, clicks, conversions, negative reviews, and click-through rates.
In this blog post written by AdEspresso’s CEO, it was shown that ads with a high quality score can reduce the cost over campaigns and conversions dramatically. They ran two separate but similar campaigns in a split test. One had a relevance score of 2.9, and had an average cost of $0.142 per click to the site. The second had a relevance score of 8.0, and cost an average of $0.03. It doesn’t seem like much, but it adds up quickly.
Will having a really high quality score get your ads run for near free? No. Will it help with overall cost? Yes. Especially considering a really low quality score will drive up your costs per campaign—and conversion—way too quickly.
To see how to improve your relevance score, make sure you read this blog post in full.
3. Choice of Optimization & Objective
Facebook asks you what your objective is and what you want to optimize for (you can actually choose to optimize for your objective in the bidding section).
According to Facebook’s own information, when you are optimizing for conversions, Facebook will actually be charging you for impressions. The same goes for clicks to your website. If you find that CPC works best for your campaigns and you want to be charged per conversion, you may be able to change it so that you can be charged as such. You can see more here
When it comes to optimization, if you choose to optimize for your objective, you’ll probably see more conversions and results—but keep in mind you’ll be paying more for them, too.
4. Your Bids
It may sound obvious, but what you bid (if you choose to do so manually) can have a big impact on your final cost of Facebook Ads conversions on your campaigns. While there is automatic bidding, and Facebook will always offer you suggestions, you can manually control bidding, too.
Though this may impact the quality of results from your ads, you can lower your maximum bid in order to lower the costs per conversions (or thousand views) of your Facebook Ads. This is perhaps the most straightforward way to directly lower your costs.
Keep in mind: your bids are different from your budget. Your budget will affect how many conversions you can afford at a set price, not how much the actual conversion itself costs.
If Facebook Ads are costing too much, you can manually lower your bid. A great example of when to do this is once you’ve determined the financial cost of a conversion (ie, a sale is, to your business, worth no more than $1.05 per conversion, and a newsletter sign-up is worth no more than $0.96) and you want to make sure you’re not spending more than you’re getting back. It doesn’t matter much if you’re selling a ton from Facebook Ads, but you’re doing so at a financial loss.
To see how to set your bids manually, click here.
5. Bidding Strategy
While most advertisers will choose to optimize for conversions as their bidding strategy and choose CPC Ads, you don’t necessarily have to—you can also see conversions on CPM campaigns as well.
The bidding strategy will affect the overall cost of your campaigns—it just will.
Some advertisers, when aiming for conversions like newsletter sign-ups or purchases, will still run CPM campaigns. They’ll do this because they believe that paying for cost per thousand views is a less expensive way to get conversions than paying for each click individually, which is the case with CPC.
Depending on other factors that drive up cost, it could potentially be more cost efficient to run CPM campaigns than CPC. If you’re looking to keep costs low while still reaching an audience and get impressions and conversions, CPM could be the way to go—but CPC could produce more, at a higher cost. This depends on your specific ad and its competition.
The challenge is determining which bidding strategy will be best for your business and your audience. That’s where your experience and split testing will come into play to help you determine that, and to see where you can get conversions for a lower cost.
If you’re running a CPC campaign that is optimized for conversions and you’re only paying for clicks, this one doesn’t really apply to you specifically in terms of cost.
If you are, however, running CPM campaigns with the hopes of getting conversions, frequency can drive up your costs in the blink of an eye.
Frequency is the measurement of how often, on average, one specific user will see your ad. For example, if they see your ad only once or twice, you’re good to go. If the same users, however, have seen your same exact ads over and over again and haven’t converted, they probably won’t. Ultimately you’re wasting impressions—and money.
Aiming for a frequency of 3 or under is normally a good place to be—people will sometimes click after seeing the ad more than once. Once it starts to get higher, it’s time to change the ad or get rid of it all together.
Final Thoughts: What’s Driving Up the Cost of Your Facebook Ads Conversions?
As Facebook Ads gets more popular, the overall costs are only going to increase—even if only subtly. Because of this, it’s good to know what factors most heavily affect the cost of your Facebook Ads conversions so you can decide what’s worth investing in, and what’s worth cutting back on.
Now with more reliable split testing coming soon, it will be easier to test different ads with these factors adjusted to see if you’re able to get the same results for a little less of the cost. It’s worth a shot at least, right?
Keep in mind that lowered costs are good, but only so long as you aren’t sacrificing the quality and success of your Ads. If you have lower costs but not effective ads, you’re better off running campaigns without the limitations.
So really, if you’re looking to lower your spending on Facebook Ads, the question is what can you afford to cut the costs with?
What do you think? Would you choose to alter any of these factors to save on cost? Share your thoughts in the comments below!