Facebook is one of the leading channels of advertisement. With its wide spectrum of approach, you can target people based on interests, demographics, and even milestones, like if someone just had a birthday, got married, or had a kid. Facebook is cost effective advertising channel to reach out to your target audience. Having stated their undeniable effectiveness, to deny their economically volatile nature is like turning a blind eye to the prominent side effects of a medicine. Overdosing may lead to unhealthy outcome.
This medical analogy is not just a hyperbole but also a way to emphasis on the gravity of the correct use of Facebook as an advertising channel for e-commerce website.
Unchecked expenditure on Facebook ads is like filling water in bucket with holes. If you aren’t careful, it is easy to spend a ton of money on Facebook quickly with nothing to show for it.
The current metric to keep your ad campaigns and wallet in check is Cost per thousand Impressions (CPM). CPM, like the full form, is when you pay for every 1000 impressions that your ad receives.
CPM means that you are being charged based on the number of times your ad has been viewed regardless of if they clicked, engaged with (i.e., like, share, etc.), or even if they viewed it for only a couple of seconds as they were scrolling through their newsfeed.
One of the key ways to manage CPM ad campaign on Facebook is to manage and mitigate the expenditure as much as possible without hampering with ad quality, reach and the revenue. Lowering your CPM means your cost per click, cost per lead, and cost per acquisition all typically go down as well. Put another way, you get more on less ad spend.
But, how do you lower the amount you invest? We at Cybez have devised best ways to reduce CPM on Facebook ads from a sea of information. In this guide, we’ll share those tips with you. And, since we have already covered the basics, let’s get right to it.
1. Know Your Audience
A thumb rule of performance marketing is that quantity isn’t necessarily more important than quality when it comes to audience. VR Digital’s Larissa Banting agrees, “the more in-tune and tighter the connection with the audience, the lower the CPMs become.” For example, let’s say you are using CPM ad campaign for your online trendy jewellery store. If you choose women as your audience, it won’t be wrong but also not that productive.
This homogenised approach towards demography will not reduce your CPM but will definitely augment it. On the other hand, if you analyse your audience and create a parallel with your products you will be able to limit the ad exposure to relevant audience, for example college girls or women in corporate world.
Banting suggests, “the best approach is to find an audience that is going to engage with your ads, rather than just look at them. Higher audience engagement will automatically increase the relevance score and decrease the CPM.”
We suggest you to target the relevant audience and reduce the impression and thus the CPM by tactics like purchase-oriented approach.
Now, it’s true that Facebook allows you to define a very tight audience for your campaign, allowing you to appeal to a specific segment within your market. But for this Facebook will charge you and why to pay for something that you can do easily with some efficient research?
So, you should do what Maddie Hewitt from McMahon Marketing said, “If you do the work up front and give Facebook a blueprint of your target audience that they can build off of, you’ll see a noticeable difference in your CPM.”
Adding some exclusions and conditions with ‘AND’ function in targeting can do the trick and will reduce the unwanted impressions on your ad.
Along with well guided research you can take advantage of those features to run ads that will specifically appeal to a small group of people within your market. When you do that, you’ll lower your Facebook CPM, drastically.
2. Ad Frequency is like a Sweet Poison
One thing that users hate as much as – if not more, than viruses, is spamming.
When your ad appears on a user’s Facebook page more than it should for no apparent reason it is not only a waste of your money but also annoying for the user.
This ruins the brand perception. To avoid this, you can use Frequency Capping while optimising your CPM ad campaigns.
Investing your time and research in analysing your targeted audience for their online availability and activities on the platform and calibrating the frequency of your ads with those hours not only lowers your CPM but also maximises your ROI. As a good practice in Facebook Ads, we suggest not showing your ads more than 3 times to a specific user.
High frequency is like a sweet poison. If frequency goes higher, your CPM is going to drop initially since the same targeted users are seeing your ad over and over again and doing nothing. This seems beneficial until the poison kicks in. This mitigation of CPM due to high frequency but inactivity of users will be viewed by Facebook as an indication to irrelevancy of your ad and hence your cost will augment.
Therefore, it is advisable to change the ad, or discontinue it altogether if the frequency creeps up (above 3).
3. Don’t let Facebook Take the Wheel
One thing you should always remember in Performance Marketing is that Facebook is your business partner and not a friend. Its goal at the end of the day is to generate maximum revenue no matter how much money it costs. And, if handed the steering wheel and in control of your ad spend, it will run over the budget with no qualms.
In order to control your budget, you need to control the role CPM plays in the Facebook ad budget.
An automatic budget will give a run for your money so you need to understand the algorithm well. For this, you will have to decrease the running of CPM. Use a value-based approach of targeting to reach a larger and more specific audience.”
Marketers approach this issue with tactics like split testing, cost reduction and longevity of the campaign, to name a few.
Split testing can also help you understand exactly what’s working and what’s appealing to your target audience. In addition to testing your audience, you can also split test different copy and visuals on the same audience.
For cost reduction, we at Cybez have mapped out an entire fortified and tested plan for you:
Step 1: “Within the Facebook Ad Manager console, you can try to select optimize for clicks, pay for clicks.”
Step 2: “Then, over the course of the next few days, monitor your performance carefully.”
Step 3: “If you have a high CTR (like 1% or above), switch to optimize for clicks, pay for impressions.”
Doing so can potentially reduce your CPC by 10-15%” In fact, when running large scale campaigns this cost reduction can translate to hundreds of thousands of dollars per year.
You can also extend the scheduled run time of your marketing campaign so the algorithm is compelled to efficiently test and deliver your ads to the correct audience. We advise that you “always keep in mind the longevity of the campaign.”
“Facebook’s ad algorithm is designed to spend a campaign’s budget in its entirety by the scheduled end date. The longer your campaign is scheduled to run, the longer the algorithm has to efficiently test and deliver your ads to the right audience, and thus draw out the pace in which it spends your media dollars.”
4. Catch the Attention
In today’s world of mini-series, one minute read newspapers, Instagram reels, consumers are rarely interested in going through plethora of reading material. With everything concise to match the fast-paced users, it is essential to keep the content of your ad informative and engaging and not too long.
It is common nowadays for users to scroll right past posts that requires a lot of reading, as they don’t have the patience or time to get interested. Users tend to also get more annoyed when they see an ad interrupting their feed as they scroll.
The noise on Facebook is another issue. Every ad on Facebook is basically using the same formula to attract the attention of the user.
Although Facebook is one of the best platforms to use to promote your ads, it is difficult to catch user’s attention in the mist of many other brands trying to do the same thing. If you see a comparatively lower CTR than other ads then it is time for change in the creative and ad copy. The change will ensure high engagement with the ad, increasing the CTR and hence a significant decline in CPM.
The solution for this often-underrated issue is to make the advertisement trend oriented. “Adding the popular choice of memes, gifs, videos, etc.” These “will grab that user’s attention and will give your post a higher chance of users engaging and wanting to read more. If more users engage with your post and share, your post will gain more impressions.”
5. A Picture is Worth a Thousand Words
The basic physics behind a lowered CPM is that CPM of a particular ad is inversely proportional to the user engagement with the audience.
The best way to increase the engagement rate, on a percentage basis is generating interest via images. Adhering to the recommended image size: 1,200×628 pixels is a must. The minimum ratio that is to be religious subscribed to is at least within: 1.91:1. Professionalism must be maintained when it comes to visuals. Apart from being informative and captivating, you should make sure that it is making positive impression.
Finally, make the image itself an attention-getter. Select something that will stand out from the standard assortment of images in a person’s newsfeed. Images have been used for advertisement since the advent of advertisement. The reason for its perpetuality is its ability to engage with the audience.
Creating an interactive narration around the image has a potential of high user interaction, if it maintains its authenticity, creativity and positivity. Thus, lowering the CPM considerably.
6. Creating Lookalike Audience
This is another way to reduce CPM on Facebook Ads.
One of the simplest yet effective approach for optimizing the CPM for your Facebook ads is the implementation of custom and lookalike audiences!
This can be achieved by categorizing the audience into 3 different groups (cold, warm and hot audience).
One way for optimizing your cost while also balancing it with quality is by uploading a list of customer emails and allowing the platform to create a lookalike audience with it. It’s a tactic that we readily use in Cybez, increasing click rates and driving down CPM cost while also keeping quality high.
In a Nutshell
We recommend testing multiple variations to keep your CPM in control. A well steered CPM keeps your expenditures in check. Also, an economically optimised CPM strategy contributes to the originality of your brand and its services. A higher CPM would mean a higher cost of acquisition which will be a direct impact to your business profitability and we don’t want that, do we?
Therefore, just like we do at Cybez, you must never let CPM out of your sight, not even when it is stable. Never let the sleeping dog lie.