To reduce targeting costs, you must be aware of how Facebook algorithms work. Facebook ads represent an auction so that advertisers compete for a chance of being featured in the target audience’s feed. Algorithms rank ads not only according to the highest bids; the ad must be of high quality and interest to users. Facebook earns money from ads and assists those advertisers whose ads are interesting and increase user activity.
On Facebook, we only pay for impressions — CPM — while CPC and CTR indicate ads’ performance. Initially, CPM is the same for all ad campaigns and it changes (increases or decreases) in the process of promotion, depending on many indicators. Competition among advertisers for the specific target audience and the quality of the ad affect the cost per mile indicator. Below, we will analyze these factors and how we can influence them.
Targeting
It is typical that the wider the audience, the less CPM. If you target a wide audience, there will be more views and clicks but they do not always provide the required conversions. It makes no sense to pay for cheap but off-target clicks.
By narrowing the audience, you’ll obtain fewer impressions and clicks but more conversions. But “narrow” targeting may not be effective and will provide fewer conversions. Facebook also imposes higher bids on narrow audiences. It also might occur that wide audiences with low CPM provide more conversions because of well-established algorithm operations. Therefore, there is no simple answer to which is better: targeting a narrow audience or expanding the audience based on Facebook algorithms.
So you might want to test and optimize the audience considering the balance of cost per mile and conversions. You can determine it by testing narrow audiences and then gradually expanding the audience that provides the best indicators.
For publishers, expanding the audience to reduce CPM might not be effective. It is best for universal offers. But there are offers when the advertiser’s terms imply certain targeting settings. In this case, you must follow the terms and expand the audience moderately.
Placement
Ad placement also affects the CPM. Choose placement based on your creatives and platforms where the audience spends more time and gets involved more. Different placements and advertising formats are effective for a particular audience. For some groups of products, you must use carousels or catalogs while for another group, a video or a story will be more efficient.
Create individual test companies for each placement format. Based on the test outcome, you will learn which placement is best for scaling a particular campaign.
Creatives & Engagement
Make different creatives for each audience group considering their pains and triggers. The higher Facebook rates your creatives, the lower the CPM. Good creos are prioritized. Such technical matters as the image resolution, the amount of text, and the aspect ratio are very important for each placement.
Audience engagement is another determinative factor. Facebook will boost your ads and cut bids if your content is interesting and engaging for users. Try your best to create such ads that users will repost, comment on, and like.
High-quality creatives also collect more clicks. The higher the CTR, the lower the CPM. Facebook determines a high CTR positively: if an ad is clicked on, it means that it is interesting to the audience. To increase the CTR, you must improve the ad quality: creative, call to action, and placement.
Ad Launch & Impression Schedule
The cost per mile fluctuates during the day due to the auction: the more advertisers compete for impressions at the given time, the higher the CPM. So, you might want to determine the peak of advertisers’ activity and launch ads when fewer competitors participate in the auction. Study the audience behavior, determine the days of peak ad rotation, and disable impressions when the audience is inactive.
You must also consider the time zone and the auction activity at the given time. There’s no way to determine at what point or how many advertisers will launch their campaigns. So, you might want to conduct tests to determine when the auction is least busy and when users are most active. Opt for the inspect tool for that.
Audience Burnout
A high impression frequency increases the CPM. The ad starts to annoy the audience and therefore it provides fewer interactions. Fresh ads or a new ad design are always preferable for users to interact with.
To avoid burnout, you might want to update creatives more often. The optimal frequency is three impressions per user but you might want to monitor your statistics and react to changes at once.
Audience Overlap
To check the audience overlap, opt for the Facebook Audience Overlap Tool. Monitor how audiences overlap in different campaigns. If you show different ads to the same users at the same time, then ad performance becomes worse while their cost increases.
This way you are bidding against yourself. In an attempt to show several of your ads from different ad groups or campaigns to the same user, you are competing with yourself, therefore you are overpaying money in the auction.
Algorithm Reset
From the very start, Facebook algorithms learn to determine the right audience for the ad campaign and eventually start providing conversions at an optimized cost. If you edit a running campaign, then the trained algorithm may reset itself, decreasing the outreach and increasing the bid. Therefore, you might not want to re-adjust such key variables of the running campaign as the campaign objective, the betting strategy, and creatives. Go easier on changing the budget, CPM, and spending limit. Also, you might not want to add new ads to the adset and resume the campaign after a week’s pause.