CPC on Facebook Has Dropped Continuously in the Past Two Months
According to the data source of Statista, the average CPC on Facebook was about USD 0.09 in the middle of March 2020, which is 18% less compared with the average value in January, i.e., USD 0.11.
It is not only the change in the average CPC of global advertising, but some regional differences have also occurred. For a long time, the advertising market ecology in the UK and the United States has been similar, and there is little difference in the advertising cost at ordinary times. Perhaps due to the pandemic, the data for the past three months have exhibited visible changes.
CPC or CPA (Cost per Acquisition) is a crucial indicator for advertisers to measure the advertising effect. But the Facebook advertising platform is more concerned about CPM (Cost per Mille) because it is the primary way in which the advertisers were charged by Facebook.
While previous data suggest that different countries/regions tend to have varying CPMs and CPCs on the Facebook platform, the range does not necessarily match with the corresponding CTR. For instance, in the United States, the average CPC on Facebook over the past 30 days is higher than that in the UK, but ultimately, the average CTR in the UK is higher than that in the United States. It follows that the average advertising cost on Facebook in the UK is generally cheaper than that in the US, despite having a higher click-through rate (CTR).
Key Factors Affecting the Advertising Cost on Facebook
If advertisers mainly measure the effect based on CPC, the CTR of advertising activities will have a significant impact on the overall advertising cost on Facebook.
As mentioned above, Facebook charges as per CPM, meaning that if advertisers get twice the number of clicks from the same number of displays, the CPC will be halved.
Advertising Relevance Score
The scoring mechanism of advertising relevance is an independent setting for the official platform of Facebook. After an advertisement obtains at least 500 displays, Facebook will generate its relevance score. It will be scored by the displayed target audience in a value between 1 to 10 to express the acceptance level of the distributed Facebook advertisement. The higher the score, the better the effect.
Facebook will reward or punish as per the score. The result will directly influence the user experience of the website homepage of the advertised product. Therefore, many Facebook advertisers will use tools such as ClickFunnels (access link) to create high-quality product homepages.
Meanwhile, the advertising relevance score is determined based on the positive and negative feedback, CTR, and degree of participation (comments, likes, and shares). There are many ways to improve your advertisements and make them more appealing. According to Appsimilar, Facebook video advertisements tend to attract a higher degree of participation.
Facebook Advertising Targets
When a Facebook ad series is created, the advertiser will be asked to choose an ad target. But whatever item you choose, it will affect the advertising cost on Facebook.
If you choose the conversion target, you will need to charged more than selecting the coverage target. This is because Facebook will display the ads on the devices of the target community that will most likely realize the conversion according to the setting after setting the conversion target. These audiences, however, may be much more expensive than the coverage target. In other words, perhaps CPM and CPC will become higher when choosing the most direct advertising series target, but the CPA should be lower.
With the operation of Facebook’s advertising auto bidding system, a higher audience value means that more people are willing to pay for the ad, which in turn implies that its price will be higher. The choice of the target audience may also have a significant impact on the advertising cost on Facebook.
It is best to concretize the options of audience positioning. If the advertising cost of the target audience is very high, it also shows that this group of audience is valuable. According to ADCostly’s audience cost analysis data, the cost and effect of each click vary in different countries, and the same is true for different ages and genders. They are shown in the figures below:
Different industries also have considerable differences in Facebook’s advertising cost. If Facebook advertisers have been operating in an established industry with a high advertising price, they have no choice but to accept the price and ensure that they can bear the various effects brought by the high CPC.
As for the cost of advertising, the specific positioning of products or the attractiveness of advertising materials is of little significance. As mentioned earlier, the average CPC and CPM globally have both changed amid the pandemic, which is rooted in the influence of this unordinary times. When the environment normalizes, the corresponding value will return to normal as well.