Marketers warn they could be ‘priced out’ of Facebook advertising
The Facebook CPM increase is a concern for 85% of advertisers who spent at least six digits on the platform in October.
The high cost of advertising on Facebook has become a concern, according to marketing professionals, and the Cost per Mile (CPM) has doubled on the platform.
Facebook’s CPM increased by 90% year-on-year, according to a U.S. investigation conducted by software company AdStage earlier this year, and a new survey conducted by Live Intent marketing platform found that this increase in cost was a concern of 85% of Sellers. Meanwhile, one in seven marketers (13%) are “very concerned” about the increase in CPMs.
If costs continue to rise, nearly half of the respondents (47%) say they could be priced out of their paid Facebook ads.
“Facebook has been a great channel for us, but we love to act as if it will disappear tomorrow,” said Brett Frederickson, marketing manager for customer acquisition at Vuori sportswear. “So what does that mean? Get the most while you are here, but also look for new channels and invest where we think interest is growing.”
AdStage’s research on Facebook advertising in 2019 confirms a recent trend that Facebook CPMs have been growing significantly for several years. Statista showed that Facebook CPMs more than doubled (122%) between January 2017 and January 2018.
However, Zenith’s chief performance officer Thiago Correa told that some marketing professionals may see a higher CPM increase on Facebook because they are trying to be “hyperactive” in their style.
Correa said: “I am not very worried about the overall CPM trends that are going up or down: We have already seen the opposite trend for our customers. I suspect that these concerns are the result of the buying tactics of some brands.”
He added, “People forget to include the metric in their targeting strategies: if extended, a lower CPM is used to achieve better results. If a larger audience is searched, then their CPM will be much cheaper. Intuitively a lot of people want to improve Metrics, such as clicks or interactions, further exacerbate the problem, by reducing its delivery to a specific behavior. “
In August, Live Intent provided three reasons why Facebook’s “CPM” would “explode”: an increase in demand (partly because direct consumer brands “flooded” the platform); Facebook algorithm changes that reduced available ad impressions; and Facebook’s decision In July that it canceled some of the ad targeting options.
Facebook has said that it cannot comment on Live Intent search, but the social media giant has made it clear that its ads auction system is designed to provide value to both users and companies in terms of the importance of advertising, not just choosing the advertiser that has the highest bid.
Instead, Facebook uses a measure of the highest total value to determine which advertisers are earning.
This metric includes a set of three factors: ID (what an advertiser is willing to pay to achieve the desired outcome); estimated action rates (the probability that showing an ad to a person leads to that desired outcome of the advertiser); and ad quality (feedback from people viewing the ad and assessments of low-quality attributes in the ad, such as too much text or “engagement bait”).
During the recent earnings advocacy on Facebook, the company’s chief financial officer, David Wehner, said the average ad price had decreased by 6%, while ad impressions had increased by 37% in the third quarter of the year.
However, Weiner explained: “The annual decrease in average price per ad was mainly driven by the constant change in the mix towards geography and story ads, which is being available at lower prices.”
Live Intent survey surveyed more than 200 vendors who spent more than $ 100,000 on Facebook in one month (October 2019).