Mads Mikkelsen: Why has my Facebook CPC gone up

Why has my Facebook CPC gone up so much?

After multiple clients asking me if any of our other clients had experienced a recent increase in CPC on Facebook I thought a blog post might be worthwhile to share our thoughts here at Not Another Agency (NAA). As the year comes to a close, many are beginning to re-examine their marketing strategy going into the new year. Let’s start with Facebook’s increasing CPC.

The answer is YES. We’ve seen an increase in CPC on Facebook this past year. In summary:

Advertisers are getting consistent CTRs month-over-month, but it’s costing more to get the same result due to higher CPMs and CTRs.

Why you ask?

Facebook’s ad impressions have been flat, however, ad spend is increasing. This tells us that advertisers are paying more to enter ad auctions while there are still the same number of impressions to go around. Facebook reported a total of five million advertisers as of April 2017. That’s up from four million monthly advertisers in September 2016, and three million in March 2016. Put another way — Facebook gained two million advertisers in one year.

(Thanks to AdStage for the chart.)

 

A few ways we’ve been able to still improve overall performance for clients:

Paying more attention to ad relevancy and increased creative refresh, monitoring, audience segmentation. Audience segmentation is one of our favorite strategies for honing in not only the target market but actually identifying differing CPA’s based on conversion quality and even LTV.

Further mapping of sales funnel and leveraging other channels to create a more effective and cost-efficient funnel. This may mean using Facebook for things such as “Look Alike Audiences” or primarily retargeting campaigns.

Avoiding frequency peak. The higher your frequency, the more negative of an impact it will have, and the more your costs will rise. If an ad has reached a frequency greater than 3 or so, you’re going to be wasting money by keeping it running. Ideally, you will simply change up or get rid of the ad and start running a new one at that point, or even before.

Hopefully, you’ll find solace in knowing that your competitors are also paying more for their clicks these days. If that’s not your thing – just make sure you’re tackling the upcoming new year with creative strategies to outperform this increasing CPC. (Optimistic? We can help.)

What other changes have you noticed with your digital campaigns lately?

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Logan Wells

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