The cost of Facebook advertising has never been determined without foundation, and the cost of each click and conversion cannot be invariable. In most cases, even if the frequency of people responding to your advertising (click or conversion events, etc.) remains the same, the advertising cost may fluctuate greatly.

We can’t help but bring up auctions when it comes to advertising costs.

Firstly, what is an auction?

If you choose auction as the purchase type when creating an ad set (auction is the default option, and most advertisements choose this option), the advertisement will be put in according to the advertisement bidding at this time.

Below is Facebook’s definition of the auction:

“We use ad auction to determine which ad is most appropriate to deliver to the audience at a given point in time to maximize the value of the audience and businesses.”

In other words, when determining which type of audience your advertisement will be displayed to, your advertisement will compete with the advertisements of other advertisers. To ensure that the winning ads can bring the greatest benefits to the audience and businesses at the same time, the winning ads are those that Facebook believes have higher comprehensive value. Facebook also explained the evaluation criteria of comprehensive value:

Bidding Price: The bidding price set by the advertiser for the advertisement is the amount that the advertiser is willing to spend to achieve the result. Advertising auction provides a variety of methods to manage the bidding price. For details, see the introduction to bidding strategy.
Estimated Operation Rate: The estimated value of the interaction or transformation between the user and the advertisement, that is, the probability that the user will implement the operation expected by the advertiser after seeing the advertisement.

Ad Quality: We measure the quality of advertising through a variety of criteria, including the feedback provided by users who watch or hide the advertisement, and the evaluation of low-quality features of the advertisement, such as concealment of information, to sensationalize something with ill intent, and interactive bait.

By default, Facebook launches ads based on automatic biddings, and we can also manually adjust the advertising budget. At this time, FB will bid for the audience we want. If the more advertisers want this audience, the more intense the competition will be, the competition will be more intense, and Facebook’s bid will increase. Usually, the better the quality of the advertisement, the better the performance in the bidding. On the contrary, if the people covered by your advertisement are generally not interested in the advertisement, and there is no registration, purchase, or other behavior, then you will spend more on the advertisement during the bidding.

Impact of competition

Generally speaking, the more intense the competition, the higher the advertising cost. The lower the competition, the lower the advertising cost, but this is only for CPM. No matter how low the competition is, if the advertisement still fails to attract the target audience, no matter how low the CPM is, it’s still no use. This situation is more obvious, especially in the period when the competition is very fierce.
As mentioned before, the seasonal change in CPM is caused by fierce competition, and some industries are accompanied by fierce competition from beginning to end. In addition, some people are very popular in front of most consumer advertisements, so there will be a situation where too many advertisers are competing for the same audience. As a result of this competition, the advertising cost has increased. At this time, if your advertising effect is poor, Facebook will determine that the comprehensive value of this advertisement is not high, and will not give priority to your advertisement when bidding, so you will be more affected, in other words, the increase of advertising cost will be greater.

How to monitor the advertising costs

CPM will increase or decrease due to the intensity of competition, so it can more or less reflect the degree of competition. Moreover, CPM can also be directly regarded as the cost of advertising to reach the target audience. Although there are many factors determining CPM, the competition must account for a large proportion.
Therefore, we can monitor the advertising costs by monitoring CPM indicators.

You can choose to view the CPM changes from the time breakdown under the advertising breakdown data. If you put in the same advertisement for a longer period, you will see the obvious CPM changes whether you choose to segment by day or by week.

What should We do?

  1. Change the target audience. If the competition you joined is not affected by seasons and holidays, you can try to change different audience groups to help reduce advertising costs. For example, changing the location of the audience, etc.
  2. Modify advertising materials. Changing the audience is just a simple attempt. If only changing the audience can reduce the advertising cost and ensure the effectiveness of advertising, why not go for it? But to fundamentally solve the problem, we still need to improve the advertising materials, make the advertising more attractive and improve the quality of advertising, to gain an advantage in the bidding process.
  3. Consider suspending. In times of fierce competition, the advertisement may not be profitable at all. If the competition is fierce enough to make you unprofitable or even lose money, you can reduce the budget or directly close the advertisement.
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    https://veryfb.com/d/26-facebook