Are Facebook Ads Becoming Too Expensive?

If you’ve been in online marketing for the last few years, it’s likely you noticed an increasing number of advertisers getting involved with social media. These platforms have been gaining enormous momentum in turns of activity, engagement, and popularity.

ChartOfTheDay_870_Facebook_s_user_growth_since_2004_n

One social network in particular continues to experience exceptional growth. Facebook now boasts hundreds of millions of active users every day. Their worldwide user base offers an incredibly diverse, catering to almost every demographic nameable. In other words, an advertiser’s dream come true.

Facebook, while completely free for users, inevitably became a goldmine for advertisers who could crack the social code. Going back a few years, Facebook ads were affordable and easily made profitable for businesses. Yet, the rocking popularity of Facebook has not gone unnoticed amongst online marketers. The influx of advertisers closely resembles a gold rush, with Facebook selling the entry tickets.

E-commerce businesses, online brands and t-shirt sellers have all had a fair share of success here. The ability to quickly identify and target specific audiences sparked the rise of many online empires you see today.

Has Facebook Have Become Too Greedy?

Facebook is well aware of the value their platform offers to businesses and readily welcomed the hordes of advertisers. Then as quickly as the competition has been rising, so have the costs. Recent years have seen dramatic inflation for ad costs, even noticeable on recently yearly scales.

Facebook-Media-Costs-by

But it gets worse. Facebook’s diminishing organic reach was noticed back in 2014, still with no sign of returning. So getting posts in front of your audience is becoming increasingly difficult, while the costs of paid advertising options soars.

Facebook-Organic-Reach-Decline

While Facebook’s fan based is incredibly large and still growing, we must remember that there is still only a finite space for adverts. With thousands of marketers promoting adverts to the same audiences, fierce competition has arisen for ad space.

Facebook Advertising is becoming more saturated every year, with a 50% increase in advertisers in only the last year! Many predict the average costs of ads to continue rising. It’s already reached the point where merely setting up profitable campaigns can be challenging.

Facebook endeavors to increase their ad inventory and pack in more hungry marketers. They’ve been acquiring other social networks such as Instagram yet their prices are bulging rather than budging. Is it time to get out?

What’s a T-Entrepreneur To Do?

Since many of us are on limited marketing budgets, we simply can’t afford to blow it all on duff campaigns. But in its current state, its cut-throat territory for unseasoned Facebook marketers. You’re almost certainly going to take a loss in the early days of figuring it all out.

If you’re early in the game and have little experience with Facebook ads, it could be a wise move to avoid it entirely for now. Instead, focus on building your user base without using their paid advertisements.

Alternatively, if you might want to explore the less-competitive emerging platforms. Here are a few that are more affordable, but can still offer great results for t-shirt sellers.

Reddit

rediit

You must have heard of Reddit by now, a diverse online community that’s been absolutely thriving in recent years. Currently, across all their active discussion boards they manage to pull in 17M unique visitors per month!

Reddit advertising is still in the early stages of adoption by online marketers, so competition for space is more relaxed compared to Facebook. As a result, it’s far more affordable, offering ad prices as low as $5 with average CPMs of only $0.75.

Although their targeting capabilities are not quite as advanced as Facebook’s, Reddit still holds great potential for t-shirt sellers and online brands. Reddit is divided categories of interest named Subreddits”, which is perfect for targeting specific niches and audiences.

Pinterest

[pin]

You’re probably familiar with the scrapbook style media sharing platform. Their user base is a highly creative bunch, eager to browse, save and share interesting products by building their own collections and boards.

Now with Pinterest Promoted Pins, it’s possible to open Business accounts and boost your beautiful t-shirt designs through the social network. If you can tap into the creative spirit of Pinterest’s user base, it’s an excellent way to spread the word and generate sales. If your designs are good enough, they will get pinned and shared like wildlife.

Promoted pins offer increased exposure at a reasonable price. Typically, marketers achieve between $0.50-$1.50 CPC depending on their products. However, one case study used a maximum CPC of $1.00 but achieved over 9k impressions and $0.13 cost per click on average.

Promoting quirky t-shirt designs here can be quite lucrative. Plus, Pinterest allows you to promote your ads within specific interests and communities.

Whatsapp

whats

I’ll bet you never considered WhatsApp to be a secret marketing weapon? Well, many small businesses have been leveraging this popular messaging application with great success.

Whatsapp was even acquired by Facebook last year for $20B, so you can be sure they’ve already seen great potential. But what is it that makes it so appealing?

Well, Whatsapp boasts almost 1B active users every month with 30B messages sent every day. It’s been readily adopted internationally and is well-featured with video, voice, multimedia and group chats up to 50 people.

There’s just one obstacle, their current terms of service prohibit direct advertising or soliciting business through the application. So as of yet, paid advertisements are not available. However, sharing photos, blog posts and conversing with customers without hard sells is all perfectly above board.

Savvy businesses have begun engaging with customers on Whatsapp to build rapport and trust, provide customer support and even promote to existing customers.

So how could online brands leverage this platform right now? Use it to interact and send rich promotional material to all your customers.

WhatsApp is definitely the one to watch, they are actively planning to encourage adoption by businesses. It’s entirely possible that in the future, WhatsApp could be the next great advertising frontier.

Keen to Stay in Facebook Ads Game?

I don’t blame you, Facebook is without a doubt one of the best social platforms when it comes to customer acquisition.

If you know what you’re doing, it can be an excellent marketing channel. But if you’re not on top of your game, it will bite a hole in your marketing efforts.

So, in an effort to reduce your conversion costs, here’s six factors to watch out for when running Facebook ads.

1. Are you Targeting the Right Audience?

udience

Don’t forget that Facebook Ads operate on a bidding system. Audiences with the highest demand are naturally more expensive to target than others.

Let’s also not forget, your competition is only other t-shirt sellers or online brands. Depending on your niche, you could be fighting over ad space with local shops or even industry leading brands. The competition and outright costs can vary greatly on an international level.

CPC chart

Not all targeting is created equal, you’ll need to experiment with different targeting options and audiences to find your sweet spot. But it’s not all about reducing the outright costs, it’s about effectiveness. Weigh up the quality of your conversions to know which is truly serving you the best.

2. What’s Your Relevancy Score?

relevance-score

Did you notice the new relevancy score being added to the ad manager? Don’t ignore it! Facebook states this has a direct influence on the advert cost and is an accurate indicator of recent performance. The most influential factors include click-through rates, conversions, engagement and negative feedback.

When split testing ads and audiences, this relevance score can provide a quick insight into performance. It’s been seen that high relevance scores signify unhealthy campaign costs and conversions.

For example, a typical ad with a low-quality score of 3 may cost $0.15 per click-through, whereas a high score of 8 could see the average cost drop to $0.03. Seemingly small, but imagine this on a much larger scale.

3. Did you Choose the Right Objective? Have You Optimized?

SPM

Facebook encourages users to consider their main objective when creating a new campaign. Then it allows you to choose how to optimize in the bidding section. So choosing the right objective at the start will have a great impact on your ads costs and performance.

But don’t forget, true optimization is always a result of experimentation. Let’s say your objective was to get click-throughs to your web store. Results may vary depending on whether you chose to bid for impressions or conversions. In most cases, optimizing to meet your objective produces better results, yet at higher costs.

4. Should You Reduce Your Bids?

Screen-Shot-6

Bidding for advertising space is how Facebook chooses to allocate their ad space between marketers. They offer automatic bidding, but it’s also possible to manually control your bids if you choose. Ultimately, this can have a significant impact on your cost per conversion for campaigns.

One of the quickest ways to reduce your Facebook advertising costs is to manually lower your maximum bid. You may be able to lower your cost per conversion on a per thousand view basis, however, it may influence the quality of your results.

Wondering how bids differ from your daily budget? Your budget controls the number of conversions you can afford to spend on that day. Whereas your maximum bid restricts the cost of the conversion itself.

Wondering how to apply this to your t-shirt campaigns? Consider the cost of conversions from a business perspective, how much is a conversion actually worth?

Let’s say your ads are costing $0.85 per conversion/visit to your website, then your actual sale conversion rate is 5% and you’re making $9 average profit per sale. Every 100 visitors would cost $85, of which 5 of them purchased, and you would take $45 profit. No matter how many sales you made through Facebook ads it simply couldn’t be profitable!

5. Are You Using An Effective Bidding Strategy?

Screen-Shot-271

This is where split testing comes into play. If you want to get the lowest cost per conversion possible, you’ll need to find an approach that best matches your brand and your audience.

While dive straight into a bidding strategy that automatically opts for conversions (CPC), you might also want to try optimizing for impressions (CPM).

In actual fact, no single approach will always be superior for this business model. Simply because there are variables with ad copy, imagery, branding and let’s no forget your audience.

6. How Frequently Are Your Ads Displaying?

frequency-e

If you’re optimizing for CPC then this one doesn’t apply in terms of cost. However, for those running CPM optimized campaigns, the frequency will be a significant factor for both ad costs and conversions.

Specifically, frequency refers to the likelihood of a single visitor viewing your ad and how often. Ideally, you want visitors to see your ad between 1-2 times, past this point, it is unlikely that they are interested. Displaying the same ads repeatedly to the same people is not only annoying to them but eats into your impressions and ultimately your budget.

As a benchmark for t-shirt sellers, aim for a frequency of 3 of less. It’s enough exposure to give you the best chances of a conversion, without wasting your advertising budget. Once it’s past 3, you should consider changing your ad completely or dropping it for a while.

It’s inevitable that Facebook Ads will continue to grow in popularity, and with it, the cost of advertising space. It can still provide a highly profitable way for t-shirt entrepreneurs to drive traffic to their store, so long as they pay attention to the mention factors.

At the same time, it’s well worth investigating greener pastures and getting yourself established there. As one platform becomes more saturated, there’s almost another that’s just beginning to bloom.