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Data Snacks | Jul 30
Jessica Malnik on December 22, 2020 (last modified on January 8, 2021) • 21 minute read
How do I acquire new customers at the lowest cost?
If you are running Facebook ads, this is a question you’ve probably asked a time or two.
When you are running Facebook ads, you want to maximize your ad dollars and ensure that your ads are not only being seen but leading to clicks and ultimately customers.
In this post, we’re sharing some actionable strategies that you can use to reduce your cost per acquisition costs so that your ad dollars go further.
Cost per Acquisition (a.k.a. CPA) is the cost to acquire a new customer in a given marketing channel or campaign.
There are no universal CPA benchmarks. It varies based on the type of campaign you are running, your industry, and your audience.
However, of the people we surveyed, about 50% of them said their typical Facebook CPA is under $25.
Editor’s Note: Some industries, such as finance, insurance, and technology, tend to have higher CPAs on Facebook Ads. However, here are 29 ways to improve your Facebook ad bidding strategy and potentially lower your costs.
Here is how to calculate CPA.
CPA = Total marketing budget for the campaign in a given time period / new customers acquired in the same time period
For example, if you spent $1,000 on Facebook ads this month and you acquired 25 new customers, your average CPA is $40.
The main difference between Cost Per Acquisition and Cost Per Lead is that Cost Per Acquisition is focused entirely on the number of new paying customers acquired.
On the other hand, Cost Per Lead is all of the new leads acquired. However, just because you acquire a new lead doesn’t mean they will become a paying customer.
For example, if you are looking to generate more leads, Paul Kim of Groovewallet Inc. discovered a great lead generation tactic.
Kim says, “One little known secret about the current landscape of Facebook is that ad rates for Facebook Groups are at an all-time low.
Recently, we’ve been switching the majority of our ad spending onto growing our Facebook groups rather than sending them directly to our website or a landing page to collect emails. Facebook groups have great engagement and are an awesome platform to create a community.”
Editor’s Note: Want to visualize both new customers and leads from Facebook Ads? Download this Facebook Ad Breakdown Dashboard for free.
Regardless of the industry, you are in, here are 24 strategies you can use to reduce your Facebook acquisition costs.
“Reducing the CPA on Facebook can actually be pretty simple, as long as you’re willing to put in the research,” says Alexandra Zamolo of Beekeeper. “First, to run any successful social media campaign, you’ll need to be able to truly understand your target audience. That way, you can better center in on the demographics for your ad campaign, and put your money where it will receive the best return.”
Nikola Roza of Nikola Roza- SEO for the Poor and Determined adds, “My number #1 tip for reducing Facebook CPA is to run very targeted campaigns.
Meaning, do extremely thorough customer research and craft a perfect audience that is going to be exposed to your ads.
This helps lower CPA in 3 ways.
First, a hyper-relevant audience will give you above average ad CTR and later sales. Second, going hyper-targeted will boost your relevance scores while reducing overall CPA.
Finally, when you target a more specific audience you also reduce your competition for Facebook’s ad space, which means your campaigns are going to cost less.”
“Match the content to the audience,” says Kelsey Chan of CocoSign. “It’s basic but it always works. You can’t sell bodybuilding equipment to a grandma. We advertise our SaaS offering only to a limited audience. And we make sure our ad is visually appealing and captivating. A free trial to our service helps.”
Stephen Gagnon of Code Web adds, “Instead of sending ad clicks to your homepage, send them to a page that speaks directly to the ad audience targeted. Use keywords and phrases from your ad copy in the landing page’s headline and subtitle. Reiterate benefits mentioned in your Facebook ad video in the landing page video. This will result in actions from qualified leads and help to increase conversions on your website.”
“In my opinion, the single best way to reduce CPA is to really be on top of your targeting,” says Dan Bailey of WikiLawn. “Using pixels to retarget, custom audience from lists, lookalike audiences from your groups or pages, etc. We aim for targeting 100k-300k people.”
Jackie Kossoff says, “I would recommend getting the audience targeting on point before trying to reduce costs. Without the right audience, there won’t be any acquisitions or they will be of very low quality. Once the audience has been tested, my top suggestion would be to optimize the landing page. Ultimately, the landing page (or whatever happens after the ad) will be doing the acquiring for you. In sum: The ad attracts, but the landing page acquires.”
Rob Sanders of Socially Found adds, “For those starting out and not sure how to go about targeting the right audience, the best option is to test variable parameters in your campaign, such as interest, job titles/behaviors, people they may follow, etc.
After enough data has been collected, you should see which options are getting you the best returns. From there, you can look to scale out your budget spend, as well as test other options including remarketing, especially those that visited your page/website and didn’t take you up on the offer.
There is no magic bullet when it comes to audience testing but following a consistent process will go a long way to saving you money.”
Editor’s Note: Looking for a quick way to visualize your Facebook ad campaigns as a whole? Use this Facebook Ads Campaign Dashboard to see ad engagements, click-through rates, and money spent.
One popular way to improve your ad targeting is to niche down.
“The best way to reduce the CPA is to narrow down your target audience,” says Amrita Jaswal of Instancy Inc. “It is not necessary to follow the competitor’s targeting techniques. It’s your campaign and completely your decision, so only bid on the audience that you want to reach.”
Brian Ward of TheWorkoutDigest says, “The more specific the audience, then the fewer companies bidding. And that means a lower CPA for your ads. I find it’s better to run multiple ads targeting narrow audiences than to put all of those audiences in for one ad.”
Charlie Worral of Imaginaire adds, “This is a multi-level tip that I’ve always found to be the best way to lower my CPA while advertising on Facebook. But experimenting with a more granular target audience, you’re then able to create ads that are very specific in their targeting and in turn should convert at a high rate, even if your audience catchment is lower.
For example, if your ad is seen by 100 people and the conversion rate is at 10%, you convert 10 people. But if you pay to get in front of 70 people and your conversion rate sits at 20% you’re converting 14 people. In short, you’ve paid less to show your adverts to your audience but you’ve gotten a better ROI and for your money and converted a higher number of people.”
“To keep your CPA down on your Facebook ad campaigns, be sure to set clear guidelines when it comes to the outcomes that you hope to see,” says Thomas Bolt of Big EVAL. ”Decide if your ad is going to be designed to promote brand awareness, or if you’re clicking for more post engagement. Then, you can create your strategies accordingly, and the see results that will fit your budget and lower your CPA.”
“To reduce the CPA for your Facebook ad campaigns, be strategic about when you run your campaigns,” says Andrea Loubier of Mailbird. “While this will initially require some comparison analytics, you’ll soon find that certain days, or even weeks within the month, may be better suited for your specific ad campaigns.”
“I recommend making use of the Facebook Pixel so that you can use retargeting to lower your CPA,” says Alex Williams of Podcast How To. “It’s easy to add to your site and you can use it with all of your ad campaigns. You get a lot of data from it, which means that you can fine-tune your marketing to maximize ROI.”
Brittany Ware of Elevate App says, “Connecting to the Facebook Pixel allows Facebook to optimize your ad for conversions as opposed to clicks and will help drastically bring down your CPA.”
Chuks Chukwuemeka of Depreneurdigest adds, “The pixel is a few lines of code you can insert on your landing pages. It tracks who visited your page and the actions they took. Chances are your target audience may not make a purchase immediately. But with Facebook pixel, you can retarget them as warm leads down to the actions they took last and convert them to sales. This is less expensive than acquiring new leads whose chances of taking action is very slim.”
“To reduce your Facebook advertising campaigns CPA, of course, you don’t want to keep advertising to new audiences,” says Jonathan Aufray of Growth Hackers Marketing. “You want to retarget people who showed interest in your products, ads, or website.
Retargeting is key to reduce your CPA but a lot of marketers use simple retargeting such as retargeting people who have visited your website in the past 30 days or something. Even if that’s a good strategy, you can improve it with more granular targeting.
For example, you could retarget people who visited your site for more than 30 seconds + clicked a link on one of your ads + watched more than 75% of your videos. When someone fits those 3 conditions, it means they’re interested in your product so you should definitely retarget them with offers.”
“The great thing about Facebook is everyone is on there, the frustrating thing is they don’t have their business heads on,” says Brendon Bennell of Growth Boss. “So for products and services that are a bit dry (B2B in particular) bridge the buying intent gap with an edutainment based lead magnet. Quizzes and evergreen webinars (with audience participation) do this really well, you build a warm audience that converts at a much lower CPA.”
“Facebook ads are based on maximizing Facebook’s revenue,” says Karan Bhatt of Best Web Hosting. “So, if your ad campaigns have high CTR and more people click on it, Facebook will reduce the CPC for your ads and your CPA will go down, but if your ad’s CTR is low, to make more revenue, Facebook will increase the CPC of your ad and you’ll suffer high CPC and high CPA. So, focus on creating curiosity generating ads which more people would click on, and you’ll reduce your CPC and ultimately your CPA.”
For example, Corinna Keefe of Easypromos adds, ”Give people an incentive! We’ve seen brands reduce their CPA massively by offering discounts or running a giveaway for followers who comment on their posts. You can also invite people to click through to a mini-game or challenge. Be careful, though – you can’t run giveaways based on follows or likes.”
“Use campaign Budget Optimization (set your budget at the campaign level rather than ad-set) and keep automatic placement on,” says Kineta Kelsall of Jellyfish Training. “This gives Facebook the best opportunity to learn about which ad-sets and placements are driving acquisition at the lowest cost. If you’re only testing 1 x ad-set and restrict placement to say the Facebook Newsfeed, for example, you might find your CPA increase. Trust the system, Facebook’s Machine Learning capabilities know more than our brains can compute!”
“You can reduce CPA by optimizing your landing page,” says Adam Rowles of Grow My Trade. “Many people forget that a good landing page is a backbone for your ads. Ensure that you are driving the traffic to a single landing page. Also, think of improvisations on the current landing page and if it genuinely caters to the intent of the users or not.”
Chris Jordan of Digital Current says, “You might have the best ad creative and the most dialed audience targeting in your Facebook ads account, but if you’re driving traffic to a landing page that takes too long to load, isn’t relevant to the ad content or simply isn’t optimized for UX, you are wasting money. Effective landing pages are key to reducing CPAs.”
Andre Oentoro of Milkwhale adds, “Utilize A/B testing for your landing pages to figure out which one has the most impact. More conversion rates equals lower CPA.”
For example, Dale Broadhead of Monty says, “Without a doubt, the best way we have found to reduce the CPA of Facebook Ads is to increase the volume of conversions that you get for your spend.
To do this, we apply Conversion Rate Optimization to our landing pages to ensure we convert as many visitors as possible into leads. This is done using a range of qualitative and quantitative research techniques to uncover roadblocks on our landing pages that users are facing. These issues can then be addressed in a page variation and then tested against the original to see if it performs better.”
“The best tip for reducing your CPA is to track its performance daily and adjust accordingly,” says Darren Litt of Hiya Health. “It’s best not to overreact if you see daily jumps in your CPA, however, when you see something is or is not working you need to make a move.”
“The number one tip for running cost-effective Facebook campaigns is to start small and experiment,” says Sasha Matviienko of Boost Shop. “In my experience, Targeting and the main Image/Video account for 80% of success, at the very least. But don’t go too deep into experimentation, unless your budget allows you to get statistically significant results for hundreds of variations of the same ad.”
“Always look for audience overlap,” says Graham Cooke of Cafe Last. “This is a mistake I made a lot when I was first getting started with Facebook ads, and it’s something that a lot of people still aren’t aware of. Always check the audience overlap tool to make sure there isn’t a significant percentage of overlap in your audiences – otherwise you are bidding against yourself, and driving your own ad costs up!”
Bernadett Dioszegi of Bannersnack agrees, “In order to reduce your acquisition costs on your Facebook ad campaigns try to avoid audience overlap.
Besides that your target audience will see your ads too often so they will stop engaging and paying attention to your ads, ad fatigue will result in high costs, your campaigns won’t be effective and this will hurt your ROAS too.
If in two or more ad sets you are using audiences that are overlapping at some level this can lead to poor delivery too because these ad sets will end up in the same auction. Showing ads from the same advertiser to the same people multiple times can cause ad fatigue or ad blindness, which will result in low ad relevance score, leading to higher CPM, CPC and also CPA.
Here’s how to do it:
“Split-test images religiously to bring down the CPA,” says Nate Rodriguez of LIFTOFF Digital. “In other words, instead of testing 5 images, test 20 images. You are bound to find winners and lower your CPA cost.”
“I want to focus on something less talked about,” says Tricia Belmonte of LikeUs Communications. “You see, Facebook ads, similar to Google, runs on algorithms.
You’re essentially “scoring points” for things you do that shows Facebook that people like your company and what you’ve got to offer = Facebook will show your ad to more people for less cost, which will lower your overall CPA.
A big algorithm factor that most people overlook, is their actual Facebook account/page.
Take the time to fill everything out properly – your about us section/business info, your address, your contact info. Add in your story and mission. Add in your products and services. Get some reviews. Get some page likes. Add some events.
The best way to think of it is if Facebook offers a section to be filled out, fill it out. If you do these things well, you will maximize your page’s engagement – which the algorithm “notices” and you get the green light that your ads are ads that people will want to see and engage with = lower cost per reach and best overall CPA.”
“One important step is to work from a warm audience,” says Adam Inglis of Digital Chimp. “Going straight in for the acquisition can work, but will generally cost a lot more than first engaging that audience before going for the install/sale/signup.
Sure, it takes a little more time but a $0.10 engagement followed by a $1.00 app install is a lot better in the long run than a $3 app install for example – especially when you get into the millions of users.”
“I think you have a lot of answers on hyper-targeting the audience,” says Jill Sandy of Constant Delights. “So I will offer a different angle: Properly Setup your Audience Funnel to ensure an efficient campaign.
I encountered many campaigns that focus on hyper-targeting the audience but forgot to envision how you lead the audience to purchase decision. Moreover, not everyone you target will eventually buy, so be sure to capture them by enticing them to sign up for your email newsletter. That way, you still have the chance to engage them in the future. With the setup, you do not lose your precious money as you get to catch some otherwise would-have-drop-off, which will lead to reducing CPA.”
“When running your Ads don’t choose automatic placements,” says Anne Suddick of Socially Savvy Eco. “Even though it says that this is the recommended option! Look at the breakdown of your data and where your customers are coming from. The likelihood is that you can exclude placements that are wasting your ads budget.
The options are Facebook, Instagram, Audience network and Messenger. I work with lifestyle brands and the placements that perform best for my clients are Facebook & Instagram. You can significantly improve your ROAS by optimizing your ads! Too many people focus on the copy and creative and forget to dig deep into the data.”
“I think there’s a direct correlation between the velocity at which you update your creative and the ability to reduce your acquisition costs,” says Peter Nitso of Blue Angels Hearing. “Although we started with graphics and videos showcasing the product, we’ve recently started to use testimonials from real customers and it’s provided a huge boost to our ad effectiveness.”
“One significant way to reduce your CPA on Facebook is to try and avoid campaign burnouts,” says Chad Evertson of About Generators. “Ad fatigue is a big concern.
If you target a comparatively narrow audience, sooner or later Facebook will start displaying your ad repeatedly to the same part of the audience.
If a user sees the same ad too often, this can be irritating: eventually, the CTR goes down and the cost of conversion increases.
To avoid this, you have to keep a record of your statistics, and when the frequency of impressions is close to 3, stop this creative and start displaying a new one (for example, with a renewed promotional offer or new image).
You can try to rotate visually different creatives every day to limit users from getting bored and to keep your ads fresh.”
“Improving CTR is the best way to reduce CPA on Facebook,” says Sam McCleary of Fusion Culture. “Look to optimize ad creativity and format. Ensure that your ad stands out visually and if you’ve not yet proposed using video in ads, you should. Make sure that you use a relevant call to action button.”
Shiv Gupta of Incrementors Web Solution adds, “Improving click-through rate will enhance your relevance score, and thus lower your Facebook ads cost. Some of the best ways to boost your ads’ CTRs include:
Always use desktop newsfeed ad placements, which generate greater CTRs.
Use proper CTA buttons. Learn More will sometimes drive more clicks.
Write a simple, clean copy that gets directly to the point and doesn’t leave users selecting what they’re clicking on or why they should.
Keep your repetition as low as possible. If the repetition gets too high, your CTR will fall.”
“Use videos every time it makes sense,” says Melanie Musson of Loans.org. “Video campaigns cost so much less than single image campaigns, so they are one of the best places to put time and energy.”
Mike Dominick of SDA Media says, “The biggest tip to reduce CPA on Facebook ad campaigns comes down to video content.
Not only quality, but quantity. We have seen that nuances in video content account for about 80% of the conversion impact on CPA campaigns.
In order to continually reduce your CPA, it is advantageous to have a steady stream of new content ready to test. 15-30 new video assets each month at a minimum will consistently unveil a new top-performing ad set.”
Praful Kharade of Improving Remedies adds, “Switch to video ads and this is because Facebook loves video ads as they are highly engaging and have great CTR. As per my observation Doodle videos are great when it comes to engagement.”
“We’ve always found that lower CPAs aren’t always the best outcome for advertisers, as quality found in higher CPA audiences can typically be better,” says Aaron Dicks of Impression.” However, that said, when we are running a volume campaign we’d typically use broad definitions in our audience target, and then use a cost cap bidding strategy. This is a relatively recent addition to the bidding strategy lineup, and it maximizes results in-platform just below your max acceptable CPA.”
From dialing in on your ad targeting and split-testing different ad creatives to running video ads and analyzing ad CTRs, these are just a handful of actionable strategies you can use to reduce your Facebook CPA. However, the baseline for reducing costs while attracting more customers is to know your audience, pay attention to trends, and course-correct based on your ad data.
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