On this episode of Ground Up, Kieran Flanagan talks about the early days of freemium at HubSpot, instilling a growth discipline that expanded well beyond the marketing team, managing cross-functional teams, and more.
Ground Up Podcast | Oct 21
Dann Albright on October 10, 2018 (last modified on October 11, 2018) • 16 minute read
We received a ton of responses. A lot more than we anticipated, to be quite honest.
In addition to our usual reporting process, we reached out on social because we really wanted to round out responses for a 3-part Facebook Ads report.
This is part one.
The best part? By receiving so many third-party recommendations, we were able to put together a report from some of the best practitioners that are advertising on Facebook.
For part one of this series, we dive deep into Facebook Ads cost-per-click (CPC), and more specifically, the average CPC that these agencies are seeing with not only their internal ad campaigns but their client campaigns, too.
Here’s what we learned…
All of our respondents reported a CPC of under $3. (Which would seem to suggest that if marketers are seeing higher CPCs, they simply bail on the campaign and revisit the strategy, copy, targeting, etc.)
Most impressive, however, was that 63% of respondents report a Facebook CPC of less than $1.
How are they doing it?
Well, we asked that, too. Here’s what we learned about improving your Facebook Ads CPC.
Editor’s note: Want to quickly measure overall ad performance as well as the performance of individual campaigns? Grab this free Facebook Ads dashboard and track the performance of multiple campaigns in one place.
“The key to managing the CPC for Facebook ads is to reach a highly qualified audience that actively engages with your ads,” says Meisha Bochicchio, content marketing manager at PlanSource.
“Gone are the days of the ‘spray and pray’ approach,” adds Bochicchio. “Custom audiences are a hidden Facebook gem that are still highly underutilized despite the unlimited targeting opportunities. Taking the time to install the Facebook pixel and define custom audiences will make all the difference in campaign performance.”
Most of the respondents that talked about audiences agreed with Bochicchio and suggested narrow audiences.
Sean Si, editor-in-chief of SEO Hacker, says this:
“People that are not well-versed in running Facebook ads tend to target a larger scope while thinking that more people will see their ad, therefore increasing the chances of someone clicking on it. While this may hold true in some cases, this isn’t cost-efficient.”
Si continues: “Knowing the specific audience to target while also having them overlap with other audiences is the best way to mitigate your Facebook ads cost. This helps lower cost because you’re targeting a smaller audience while still targeting the right audience.”
You might be nervous about excluding viable prospects, says Michael Schiemer of Lean Startup Lifestyle. But “the more specific your target audience is the better.”
And Amy Hayward, inbound marketing specialist at Meticulosity, puts it this way: “Lowering your CPC on Facebook Ads can be as simple as making key audience adjustments to ensure your messaging is super relevant and timely.
“I love coupling custom audiences targeting with super targeted audiences for retargeting people based on the ads they’ve already seen or the posts they’ve already engaged with,” adds Hayward. “Combined with the power of Facebook’s lookalike audiences, you’ve got yourself a supercharged campaign. You can use custom audiences to lead people down the sales funnel, only pushing the hard sell when you know they’re ready to convert. This really lowers cost per result, too.”
There are lots of ways that you can get specific with your targeting. Schiemer gave us a good one:
“[W]hen in doubt, targeting accounts that are interested in your competitors usually gets strong results for a low price.”
But we also received more traditional suggestions, too.
“Don’t forget to get specific with your geographic, age, and language targeting,” says Rachel Bills from Intuitive Digital.
“[C]onsumers familiar with your brand who visit your website are a ‘warm’ audience and more likely to engage. Facebook lets you create custom audiences from this pool based on website activity (such as cart abandoners),” says 4Cite director of marketing Wendy Troncone.
“Instead, you can determine your own custom audiences, driven by insights from current and past activity across multiple channels including website, email, and in-store. Done right, these audiences are continuously updated in real-time to move individuals in and out of different audiences with different bid caps based on their up-to-the-moment shopping activity.”
“These determinations are much more targeted than what Facebook offers because you can add additional layers of business logic to optimize CPC. For example, instead of everyone who abandons a cart, include only those who abandoned two or more carts in the past week,” suggests Troncone.
“And, you can conduct testing to maximize results in ways that Facebook doesn’t allow. When you determine who is in each audience and measure results against control groups, you gain visibility into the true performance of your ad spending.”
“When you start building your Facebook Ads campaigns, try to keep your audience overlap to a minimum,” says Craig Smith, founder of Trinity Insight. “It’s common for marketers to create multiple ads where almost everything is the same except for one or two factors. As a result, these brands are bidding against themselves. This won’t help your CPC.”
“For example, say you wanted to promote an ad with a geographic focus; you wouldn’t build a campaign that targets Coral Gables in Florida and then another campaign that targets all of Miami-Dade County. Similar filters can be applied for age, interest, pages liked, and other factors.”
Hung Nguyen agrees. The marketing and customer satisfaction manager of Smallpdf says this:
“Through experimentation, we’ve found that the best way to reduce CPC through Facebook ads is to not only avoid overlapping when it comes to choosing your audience but by further narrowing it down to specific demographics.”
“[I]f you go to your Facebook page, click Insights > People > People Engaged, it will show where you are getting organic engagement specifically in age group, country, city, and language. Age group’s actually been the most useful, as it’s often overlooked by marketers,” says Nguyen.
“It’s also important to remember that a smaller pool of responsive audience is better than reaching more people but getting no ‘organic engagement.’ 500 likes with no clicks, comments, shares, or reactions will do more harm than good.”
Interestingly, a few people went against the grain and recommended targeting larger audiences.
“Typically, people say that the more narrow your group the better because you can fine-tune the creative to match their exact interest,” says Blake Aylott, digital strategist at RideYellow.
“But, if you can develop a great creative that has performed well in the past, exposing that to a larger audience that is a little less targeted will get you lower CPC and better [return on ad spend].”
Cloud Employee marketing manager January Collamat recommends keeping your potential reach at 1 million users or higher.
“That being said, make sure to only apply this when targeting a bigger audience and it will not compromise the quality of your clicks,” says Collamat.
“I think, for the most part, a low CPC is no longer the benchmark of a good performing ad but rather cost per conversion or results that you are after, ie. cost per landing page view or cost per like.”
(Collamat wasn’t the only one to call into question the value of CPC as a metric. We’ll discuss that more in a moment.)
“Most people that run ads on Facebook think they need better targeting, which in some cases is true,” says Gareth Robinson, head of business development and growth marketing at Connecting Dots.
“However, few people take the time to truly understand who they’re talking to and communicate in a very compelling way.”
“My #1 thing for driving CPC down is understanding your audience better than anyone else (including themselves). Few people do this and it’s why their costs are so high when running ads.”
Robinson suggests four steps to create great marketing:
“Most people can do points 1 and 2 very well, a few people use 3 well, yet very few use number 4 at all. It’s understanding your potential clients mental models and belief systems that will allow you to create the most compelling advertising.”
Want to drive down your CPC? Then one important area for optimization is increasing your click-through-rate (CTR) on your Facebook Ads.
“Our main strategy in getting CPCs down is getting CTRs up,” says Kalina Fridrich, performance analyst at Social Fulcrum. “That means thorough and iterative creative testing, post engagement collection, and similarly iterative audience testing.”
“Assuming these initiatives are already in motion, we also like to use ad optimization at the ad set level to ensure the lowest CPCs possible. This means looking at each active ad set and assessing how to optimize ads within that individual ad set. We are always considering which ads are hurting performance, which ads are taking an unwarranted majority of the spend, and which ads are pulling the strongest performance—all tailored to targeting specifically to a given ad set.”
Adds Fridrich: “For us, this helps leverage strong CTRs in a fast, data-driven way, and also ensures we are capitalizing on CPM efficiencies in different audiences, which all together translate to more efficient CPCs.”
The best way to increase your CTR, says Brandlift founder Brandon Loures, is with video ads.
“Ads with videos are ranging from $.12–$.35 per click while ads with static post images are getting CTRs from $.37–$1.28 per click and more in some cases depending on the audience. Using videos and slideshow posts have dramatically decreased our CPCs and value of our ad spend.”
(Stephanie Lichtenstein, president of Micro Media Marketing, also recommends video.)
SEMgage growth marketing consultant Irina Maltseva gave us three tips for increasing your Facebook ad CTR:
Where your ad shows up is important. Several marketers gave us advice on how to optimize your ad placement and it varied quite a bit.
“Try testing different placements outside just the Instagram and Facebook feed,” says Dani Paris, paid social account manager at Power Digital.
“Facebook’s algorithm encourages other placements across their platform and favors them when it comes to serving it to the right people with high intent at a lower cost. If your CPCs start to exceed your benchmarks, try switching to an Instagram Story ad placement or the Facebook Marketplace. You’ll likely start to see your CPCs and CPMs go down across the account and build out a more robust retargeting pool.”
Or, you could go the other way.
“A good start would be to edit the placement so that you are showing on mobile devices only and only in Facebook feeds. Omit Instagram and affiliate sites,” says Ashleigh Peregoy of Mindtastic.
Then again, maybe you could go with Kim Smith’s advice: “Don’t budge from the desktop news feed.”
Says GoodFirms‘ content consultant, “In case you’re going for a high CTR, you’ll need to stay with News Feed promotions on desktop. This advertisement composition takes into consideration an expansive picture and a long depiction, helping it emerge more to Facebook users.”
Which strategy will work for you? Experimentation is the only way to find out.
“One of the best ways to lower your CPC in a digital advertising campaign is to test multiple different versions of creative,” says Lauren Petermeyer, manager of digital strategy and planning at 301 Digital Media.
“Once you’ve identified your audience, use multi-variate testing with different images and copy to appeal to every type of consumer. With Facebook, it can be difficult to predict what kind of ad will return the most positive ROI, so your best bet is to test as many different versions as possible to lower the CPC.”
Sunlight Media founder Angelo Frisina recommends three specific types of copy:
Don’t forget to make sure that your offers are valuable, says Xavier Di Petta, founding partner at MedSpa Advertising. “Bad offers just don’t scale, or even start. Data buying, lookalike audiences, the Facebook pixel—all great. But a lot of people skip over the fundamentals.”
“I often look at industry benchmarks to determine how well my ads are performing,” says Jackie Kossoff, freelance marketer and designer.
“My ads usually perform very well, with my average CPC a fraction of the average rate; however, I can usually get my CPCs to perform at 25% of the average cost. Therefore, if my ads are at 75% or 50%, I still try to optimize further. The closer my CPC is to the industry average, the more I tweak the audience.”
“As the CPC gets to within 50% the average CPC, I start adjusting the copy.”
Your relevance score will help you optimize your CPC.
“A low relevance score equals a higher CPC. So make sure you’re working to get that score as high as possible to help keep costs low,” says Tim Absalikov, co-founder of Lasting Trend.
“Run highly targeted campaigns. This gives you the distinct advantage of knowing exactly who you’re speaking to, so you can craft personalized ads and offer that speak to them the most.”
“Split test, split test, split test,” adds Absalikov. “Use Facebook’s built-in creative split test feature to test different ad looks with ease. That’s really it, just keep testing until you’ve found one that works the best.”
“An effective way to lower your cost-per-click on Facebook ads is to leverage influencers and tastemakers in your creative,” says Engine eCommerce founder John James.
“One of the most effective ways we have found to do this is through leveraging the audiences of the influencers that rep your brand, and running ads directly from the influencer’s account or using their likeness to drive that CPC down,” says James. “It comes down to capturing attention, and if you can produce a video or picture with the audience’s favorite influencer, they are much more likely to engage with that ad and click through.”
Cultivative owner Amy Bishop points out that you need to know what you’re aiming for:
“There are a few different ways to lower your CPC on Facebook Ads. The first is to choose the objective that is the best fit for what you are trying to achieve. If the goal is to pull people into the top of the funnel, then Awareness and Consideration campaign objectives can work well to gain exposure to content and build remarketing lists on the cheap.”
A few marketers questioned whether lowering your Facebook ad CPC is really a goal you should pursue.
“To an extent, I would disagree with the premise that a lower CPC leads to greater profitability,” says Josh Sturgeon, co-founder of EmberTribe.
“This is sometimes the case, but it’s not necessarily true. The one exception here may be for a publisher who is monetizing impressions and playing the arbitrage game. Here’s why: Facebook takes the objectives you select for your campaign quite seriously. They are taking into account what’s called a ‘user action likelihood’ score when selecting which segments of users should see your ads. If you choose a traffic objective, you will serve ads to users who have historically been ‘clicky’ people. All things held equal, your CPCs will typically be lower with this kind of a campaign objective,” says Sturgeon.
“But ‘clicky’ people don’t always equate to ‘converty’ people,” adds Sturgeon. “That’s why, the majority of the time, we’re using conversion-focused campaigns, so that Facebook can optimize for the ultimate action we want people to take on our client’s site (be it user acquisition, product purchase, or completing a lead form). There are cases where we’ll leverage a traffic objective to fill up our funnel when retargeting makes sense for the product or service. But all in all, we’d gladly trade in a higher CPC that yields a markedly lower CAC.”
Brandon Bateman of the Bateman Collective had similar thoughts: “A word of caution: while lowering CPC certainly is good in theory, it often isn’t. The main thing to consider when trying to lower CPC is, what is your ultimate goal? I’d highly recommend against optimizing for link clicks. In several situations in the past, I have tested this against optimizing for conversions, with all other factors being equal. While the ads optimizing for link clicks were getting much cheaper traffic (15 cents per click, vs. 80 cents), the [return on ad spend] was significantly lower, at roughly half of the return from the conversion-optimized ads.”
Bateman continues: “Facebook would like to make as much money as it can, and different conversion objectives make that possible. Facebook knows who is likely to click on everything, but never convert. Facebook knows the people that are likely to purchase your product. When you optimize for link clicks, Facebook can satisfy you by giving you the cheapest clicks possible that nobody would otherwise want, and then has more inventory of users that are likely to convert to sell to other people. This idea of wanting to lower CPC is valid, but only in the context of your entire conversion funnel. It is true that your CPC will decrease if you are presenting more relevant content to the right people.”
So should you try to lower your Facebook ad CPC?
Yes. As long as you understand your ultimate goal and include Facebook ads in the larger process. Don’t just aim for cheap clicks. Instead, optimize your ad spend for maximal return.
Have you reduced your Facebook ad cost per click? Share your tactics and results in the comments below.
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