How Competitive eCommerce Brands Can Lower Advertising CPC on Facebook

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How Competitive eCommerce Brands Can Lower Advertising CPC on Facebook

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It’s easy to assume you know what your ideal customer looks like. You feel like you know what they want, and so you shape your advertising to fit. Unfortunately, a lot of eCommerce brands quickly burn through their ad budgets by doing so, leaving them confused about how to improve their ads and reduce costs.

According to data from Statista, 95% of Facebook’s global revenue in 2015 was generated by advertising. By 2016, its ad revenue was nearly $27 billion.

Facebook Global Revenue Infographic

Despite all of this extensive spending, brands still struggle to increase clicks while reducing the cost of those clicks. The answer is not in increasing your spend to win CPC bids.

That kind of sacrifice isn’t necessary.

Facebook offers powerful targeting options that, when combined with strategic ad development and deployment, can dramatically lower your cost per click. Take a look at these actionable steps your eCommerce brand can take to lower your CPC on Facebook.

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Limit the Placement of Your Ads

When creating an ad, you’ll have the option to choose automatic or manual placement. Automatic (selected by default) will place your ad in all available locations. Manual will allow you to choose where you want your ad to be displayed.

Facebook offers multiple placement options, though some may not be available, depending on your advertising objective. These include:

  • Mobile feed
  • Desktop feed
  • Facebook audience network
  • Instant articles
  • Instagram
  • Right column ads

Facebook Placement

If you want to lower your cost per click, then limit the placement of your ads. Some placements could result in less-effective targeting or showing your ads to customers where their intent doesn’t align with your ad objective. This results in more impressions but far fewer click-throughs, which could impact your cost per click.

For eCommerce sales, consider limiting your placement to Facebook’s desktop and mobile feeds with the inclusion of Instagram if your store has (or is developing) a presence there.

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Be Mindful of Timing

For every industry and brand, there are varying peak engagement times based on when your audience is most active on social media and most likely to engage with your brand.

Your social insights can provide data showing peak engagement times.

Ad Timing

Compare this data to your customer reporting to track trends on when customers are most likely to make purchases. By testing the timing of your ads, you can find the windows where your audiences are most likely to engage.

Just like with AdWords, the increased click-through rates on Facebook can reduce your cost per click while improving the overall return of your campaign.

Keep in mind that your competitors are likely watching for the same trends, and CPC could potentially increase during peak engagement times.

Hourly CPC spend

Also, keep industry promotional periods in mind when competition gets heavy. During holidays, for example, more of your competitors will be running advertisements on Facebook. With more brands fighting for time in a user’s social feed, you can expect your CPC to increase somewhat.

CPC Monthly Breakdown

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Improve the Relevance Score of Facebook Ads

Facebook applies a relevance score to every ad running on its platform. This 1-to-10 score is used to determine placement, as well as the cost per click.

The relevance score is used to ensure that only relevant ads are shown to the right audience. If irrelevant content is pushed to the wrong audience, it can cost you more because it’s in Facebook’s best interest to only show the right stuff to the right people.

Ad Performance

The higher your relevance score, to a max of 10, the greater the reach of your ad and the less you pay per click.

While Facebook isn’t transparent with its scoring algorithm, there are some things that we know have an impact on relevancy score, including:

  • Audience targeting
  • Ad copy
  • Positive interactions like engagement, clicks, and ad saves

For this reason, watch your ads closely. Tweak your targeting, refresh your creative, and run ad variations to work on boosting your relevance score as high as possible.

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Optimize Click-Through Rates

I’ve mentioned this a few times, and it’s worth emphasizing again—click-through rates have a significant impact on your cost per click. The more clicks you have on your ad, the more your relevancy score will improve, thus reducing your CPC.

Click Through

It’s the best indicator of Facebook’s algorithm that your ad is relevant to its chosen audience. A few ways to improve your click-through rates on your ads include:

  • Test different call to action buttons appropriate for the customer journey.
  • Focus on the benefits in your ad copy rather than using hype or jargon. Let your audience know what’s on the other side of the click.
  • Continually improve audience targeting to layer interests, demographics, behaviors, etc..
  • Don’t saturate your audience with the ad. Limit the frequency of how often and how many times your ad is shown to the same person to avoid ad fatigue.

CTR vs CPC

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Narrow Your Audience Targeting

Don’t assume that a large audience offers the most reach and conversion opportunity. It’s better to run campaigns carefully, targeting specific interests and behaviors to align with segments of your audience.

Facebook Ad Screenshot

While a highly targeted campaign will dramatically shrink the total audience size, the people who do see your ad will be more likely to click. That all contributes to a better relevancy score and a reduced CPC.

Facebook offers a wealth of targeting options, including age, gender, location, interests, behaviors, and even purchase habits that you can layer multiple times to accurately define the ideal audience.

Facebook Ads Audience Size

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Build Lookalike Audiences

Another approach to improved audience targeting is to let Facebook create highly targeted audiences for you. This is helpful if you’re not entirely sure what interests and behaviors to target, but you have existing customers you can use as models.

Create Lookalike Audience

Facebook can build a lookalike audience from a variety of sources, such as the people who like your page, a newsletter subscriber list, or an exported customer database using email addresses or phone numbers.

From that information, Facebook will build you a lookalike audience that closely resembles your current customers and followers—people who are most likely to engage with your store and product ads.

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Use Retargeting

If you’re looking to maximize conversions and ad clicks, the best people to target are the ones who were already engaging your brand and considering a purchase.

With a tracking pixel, you can create retargeting ads that display products or other content to customers based on activities you specify, such as adding products to their carts and failing to check out or visiting a specific page on your store.

Website Traffic Retargeting

Retargeted customers are 3 times as likely to click on your ads and 70% more likely to convert once they re-engage with your brand.

Don’t limit your eCommerce brand to costly acquisition campaigns. Create high-converting retargeting ads to reduce your CPC and to counter cart abandonment.

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Choose the Right Campaign Objective

The campaign objective you choose when creating your ad can significantly impact your average CPC. Facebook offers a number of objectives to choose from, and it will optimize your campaign placement and bids in order to drive engagement matching those objectives.

Data gathered by Adespresso show the wide gap in cost between page engagement CPC and Reach CPC.

CPC by Campaign Objective

For eCommerce brands, driving sales with link clicks and offsite conversions falls somewhere in the middle. Make sure you choose the most appropriate objective for your campaign so you’re not inadvertently overpaying for clicks.

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Use Manual Bidding with Bid Caps

The default setting in your ad manager is to let Facebook automatically handle your bids. This can be ideal for helping you win placement for your ads, and Facebook will try to get you the best visibility and the most clicks for the lowest bid, but it won’t always be low.

If you’ve narrowed your targeting to reach the most valuable audience, you can expect to pay a bit more per click—especially in a competitive industry with sought-after audience segments.

You can counter this by calculating the lifetime value of your customers against the marketing costs to acquire them. Knowing how your ad costs impact your margins will make it easier to set a manual bid cap that Facebook won’t exceed and, ultimately, to control your overall CPC.

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Test Different Facebook Ad Creatives

Even if you’ve used data to create a highly targeted audience, there are still little things that can impact conversion and your cost per click.

Ad Campaign Quote

Thankfully, Facebook’s ad platform lets you run multiple ad variations within the same campaign. Leverage this to test out small changes in the call to action, ad copy, imagery, etc. and compare the results.

Take the elements from your best-performing ads to refine them into one that is high-converting and highly relevant to your ideal customer. Data-driven ad creation ensures the best value from your ad budget and the lowest CPC.

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Conclusion

You don’t need a six-figure ad budget to compete on Facebook. Your eCommerce brand can still recapture customers and acquire new ones in the most cost-effective way possible by taking a strategic approach to ad creation. The key is to know your audience and refine it based on data.

Run ad variations and continue to optimize those ads for maximum engagement and conversions. As targeting improves, and you get the right content in front of the right customers, you’ll improve your relevancy score and reduce your average cost per click.

 

Summary

How Competitive eCommerce Brands Can Lower Advertising CPC on Facebook

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