I’ve spoken to dozens of growth marketers and entrepreneurs about Facebook ads over the last few months.
One of the recurring themes I’m constantly hearing is that Facebook ads are getting a lot more expensive. It’s not as easy as it used to be to make a positive return on investment on your Facebook ad spend.
Are the good old days over?
I wanted to dig deeper, so I reached out to as many Facebook ads experts as I could and asked them if they agreed that Facebook ads are getting more expensive, but beyond that, I wanted to know what implications the change in the price of Facebook ads has on performance marketing tactics.
Co-Founder of EmberTribe, Growth & Acquisition Partner
In short, Facebook ads are getting more expensive because demand is outstripping supply.
This is a natural progression for an auction-based advertising platform.
It’s also why you see prices rise during competitive shopping seasons like Q4.
When it comes to the supply, we’re talking about at least two dynamics:
- The total number of people to target with ads
- The placements that can showcase those ads.
At over 2 Billion active users, Facebook will continue to increase its supply of people to target, albeit at an increasingly slower rate. Also, the bulk of that growth is happening internationally and typically in markets that are in less demand among advertisers.
So expansion of the user base isn’t the silver bullet to relieving price pressures, especially for advertisers trying to reach an audience in the United States or Canada where growth has stalled.
However, the ad placements within the product are expanding rapidly and provide an opportunity for advertisers to mitigate some of the price increases we’ve observed over the past two years.
Those placements include the audience network, Facebook marketplace and most notably: stories.
According to Facebook (at the recent partner conference in NYC), sharing on stories is set to outstrip sharing in the newsfeed sometime in 2019. That’s a massive shift in behavior and where users are paying attention.
But at the same time, advertisers have been slower to adopt the stories placement which presents an enormous opportunity for cheaper engagement, even when targeting highly competitive audiences.
Speaking of stories, most underestimate the sheer size of the Facebook ecosystem, which includes: Instagram, WhatsApp and Messenger. Expect placements to continue developing across each of these platforms as the traditional newsfeed supply is constrained.
The last tactic advertisers can leverage to combat rising costs is to be more disciplined about their creative testing process. Facebook, like Google, still rewards highly engaging ad creative, measured through the “relevance score”.
Advertisers who fail to test and refine their message will pay a tax.
Josh Sturgeon - Co-Founder of EmberTribe, Growth & Acquisition Partner
According to Facebook, the top advertisers on their platform are testing a higher volume of creative, in fact, 11x more than the average. There will always be an edge for advertisers who thoughtfully iterate and refresh their creative.
All in all, I predict that the sharply rising costs will continue to increase, but at a slower rate and that there will be incredible windows of opportunity for advertisers who are willing to adopt new placements and platforms within the greater ecosystem.
Success will compound for advertisers who test often and in meaningful ways to improve engagement with their target audience.
Owner and lead strategist at Brandlift Digital Marketing
One way to answer this question is to look at the CPM (cost per thousand) impression rates over the last 18 months.
Because the core of how Facebook bills you is by the 1000 impressions. They have cost-per-click bidding models, yes, but those CPC bids are really telling their algorithm to bid around a certain CPM.
Over the last year, we have seen pretty steady CPMs on our best ads ranging from $5- $8. CPMs for lower engagement ads will be higher ranging way up into the $20-$30 range. You have to look at what Facebook is telling you about your engagement and change your ads accordingly to get the best results.
It’s really hard to say if Facebook ads are getting more expensive because the CPCs are all over the place and so many factors influence what your CPC’s and CPM (cost per thousand impressions) are going to be. Facebook rewards quality ads and engagement.
For example, last week we launched a really engaging ad campaign that got a good response right out of the gates and our cost was the lowest we have ever seen at around .12 per click and only a $5.00 CPM.
The same week we launched an ad that wasn’t working as well and we saw CPMs in the $15 range.
Thoughts on the future price trends of Facebook advertising?
I think that the premium Facebook inventory of Facebook news feed and Instagram news feed ads will become a little more saturated then it is now, thus driving the costs up slightly, but then will see a correction.
Brandon Loures - Owner and lead strategist at Brandlift Digital Marketing
Smart advertisers and the people running Facebook campaigns will be privy to what their own cost per acquisition limits are and that will cause a correction. Business owners simply can’t afford to bid past a certain level, because you lose profitability with ads.
The last year of running Facebook ads has seen so many changes in the ad types, the delivery algorithms, the placement inventory and the market saturation. All factors that can change the performance in any given week.
Owner at Cultivative Digital Agency
I have seen some inflation in the cost of Facebook Ads, which is to be expected as the network becomes more saturated.
Facebook is also notorious for seasonality – as holiday advertisers pick up more and more inventory, cost goes up.
It’s expected to see cost efficiency decrease in Q4 each year and it typically comes back down a bit in Q1 but still higher than Q3. I expect to see that trend continue, with CPMs and CPCs increasing slightly quarter over quarter with the exception of Q4 to Q1.
Amy Bishop - Owner Cultivative
All that said, the cost to run on Facebook is still very inexpensive compared to most other platforms. I have campaigns that still see CPCs below $1 and that’s virtually unheard of in most other channels.
For that reason, even as costs increase, I expect Facebook will continue to be a cost-effective investment for years to come.
As advertisers, we’re all always testing ways to improve ROAS, and one of the best ways to do that on Facebook is to make use of lesser expensive inventory to build and warm targeted audiences. That will continue to be key as CPCs and CPMs continue to rise.
Marketing & Design Consultant at Jackie Kossoff – Marketing & Design
Audience targeting is the most important factor when it comes to cost-effectiveness for Facebook ads. I never assume that I have the perfect audience from the start, whether I’m running ads for my own business or a client’s.
I am always trying to learn new things about my audience, whether or not it’s related to the product or service I’m selling. Google Trends can be one of the most useful tools to check what people with your audience’s interests are searching for online.
Furthermore, I would like to emphasize the importance of evaluating your audience as people rather than numbers.
Jackie Kossoff - Marketing & Design Consultant at Jackiekossoff.com
Understanding human behavior, especially those associated with individuals in your target audience, can give you incredible insight into your future campaigns.
For instance, I recently worked on a campaign targeting individuals who are very “fitness-savvy.”
One ad was promoting a new nutrition product, whereas a second ad was promoting a blog post on muscle health that included a call-to-action for the product at the end. This particular audience did not respond to the blog ad at all, but responded in high numbers to the product ad.
By understanding my audience as people, I realized that members of this particular audience already believed themselves knowledgeable about muscle health. They did not feel the need to read about it and felt more confident assessing a new product on their own. Therefore, future investment dollars need not be spent on driving this audience to blog posts, but rather directly to the product.
Lead PPC Strategist at Intuitivedigital.com
Yes and No.
There’s a lot that’s changed in Facebook recently, and it’s unsurprisingly affected how much Facebook Ads cost.
There are frequently small changes made to the platform, like different bidding options or new ad formats or placements that can change how things are running. There are also bigger changes that have gone down, causing bigger trickle-down effects.
The algorithm update that de-prioritized Page content was a big one.
Users’ newsfeeds are limited, and ad space even more so, and the surge of submitted ads has raised prices noticeably. However, there is hope that the new updated algorithm could mean more engagement.
Rachel Bills - Lead PPC Strategist at Intuitivedigital.com
Facebook understands that they have needed to make serious transparency updates, for both users AND advertisers. They’re updating the pixel and conversion tracking to help improve ROI calculations for advertisers but I’d be surprised if we actually saw a true return to old ad costs.
Facebook is growing and evolving similar to how Adwords evolved and prices changed.
I think that if Facebook continues down the path it’s going, prices may steady and small business will still be able to compete and perform if they’re focusing on placement, impactful audiences and dynamic creative.
Founder at Bateman Collective
The things advertisers need to do to combat rising ad costs are no different than the things they need to do to be great advertisers in general. The only difference is, with rising costs, those who advertise poorly will no longer simply be less profitable, but they will become unprofitable.
Brandon Bateman - Founder at Bateman Collective
Those who can create uniquely persuasive ads, think in new ways, understand consumers at increasing levels, and make decisions in line with data will dominate the platform.
Facebook is no different from most marketing endeavors; “good enough,” when it comes to strategy and execution, is just that: good enough.
That is what many Facebook advertisers have relied on in the past, but as good becomes okay and okay becomes terrible, only those that can produce undeniably exceptional campaigns will survive.
Social Media Strategist at The LMC Group
Facebook ads are getting more expensive if you don’t know what you are doing.
There are so many different categories to choose from and if you choose the wrong one or use the placements, you are throwing your ad dollars away!
Aleja Seabron - Social Media Strategist at The LMC Group
Take the time to do A/B testing and make sure you have your audience outlined before creating your ads.
As the user base of Facebook continues to grow and Facebook continues to offer additional features, costs for ad spending will continue to increase as more options become available to advertisers coupled with the consumer’s dwindling tolerance for seeing ads.
Facebook ads are getting more expensive.
Does this mean that it’s less of an appealing channel now?
Facebook ads are still super cheap compared to Adwords and will be marketers’ go-to choice for PPC for years to come.
But it’s just going to take more effort to extract ROI out of campaigns…
And the effort does not = spending hours reading blog posts and watching courses.
No. That’s passive learning.
To succeed at Facebook ads in 2021, you need to be actively experimenting and trying out new things.
Every industry and audience reacts differently, so there are no hard set rules.
Don’t get misguided by blog posts like “How I increased my ROAS by 3,225% using XYZ tactic!”
You need to be ACTIVELY learning by getting your hands dirty:
- Actually logging into your Facebook business manager
- Constantly tweaking your ad copy (and preferably videos)
- Analyzing your audience insights and deriving hypotheses based on the data to drive your experimentation
- Refining your custom audiences and look-alike audiences
Like to get your hands dirty?
In this video, I go over a SUPER effective growth hack that is deceivingly simple.
Talk to people who are currently killing it on Facebook and share notes!
Benefits of these calls:
- Increase your confidence to forge forwards and execute. It feels really great to hear from an expert with more experience than you that “you’ve set it up great! good job!”
- Decrease your indecisiveness and decision paralysis dramatically.
- Learn tips and tricks relevant to specific workflows and toolkits. You never know what gold nugget of inside information you’ll glean from a 30-minute call.
- Build new relationships with really interesting people that you can contact again in the future.
If this resonates with you, check out our Facebook mentors page and sign up for early access.
We’re adding new expert Facebook mentors to the platform every single week.
Back to you
What do you think?
Are Facebook ads getting more expensive? What are your thoughts on the future price trends of Facebook advertising and what will the repercussions on performance marketing strategies?
Leave your feedback on the comments below.