Facebook Ad Prices Will Rise in Q4, and That’s No Reason to Worry
October 28, 2015
Retailers have conditioned consumers to expect bargains throughout the holiday season, especially on Black Friday. The media has gotten in on the act, calling attention to the steals and deals awaiting the brave souls who start their shopping as soon as the turkey gets cold on Thanksgiving Day.
For advertisers, it’s a different story. The fourth quarter, and the holidays in particular, get more expensive. That’s true for television, as more marketers (and, increasingly, politicians) ramp up their spending to reach an audience that often is on vacation and consuming more content in their free time. All that demand drives prices higher.
It’s true for Facebook, too. And that’s okay.
I’ll get into why Ampush isn’t worried about Facebook prices increasing in a moment. First, though, here is an overview of the price changes we anticipate for the holidays. (You can find this and much more in our 2015 Holiday Advertising Strategy Guide.) Each of these changes are relative to early November, which begins this Sunday.
- Cost per click (CPC) will increase by 20%.
- Cost per install (CPI) will increase by 24%.
- Cost per thousand (CPM) will increase by 61%.
This means that regardless if your campaign objective involves direct response, mobile app installs, or branding, it’s going to cost more to achieve this holiday. Marketers should adjust their pricing goals accordingly to ensure that their ads don’t get under-served, which can result in stagnation for even the best campaigns.
All things being equal, Ampush prefers lower ad prices to higher ones, but we’re not losing sleep about the holiday’s expected increases for one simple reason: we optimize more for return on ad spend (ROAS) and lifetime value (LTV). Both these targets include a cost component, but they equally consider revenue the campaign generates. As long as the total return stays at or above target, an increase in cost is something to monitor but not let disrupt.
Here’s an example. Last year, one of Ampush’s partners in the financial services verticals had a campaign objective to drive mobile app installs. As the holiday season unfolded, CPIs rose 35%, but this partner didn’t reduce spending. That’s because the partner also knew that the season would bring an influx of new device owners, the result of having received phones as gifts. In order to have any chance of becoming the preferred app in its category for all these new consumers, the partner accepted the higher costs. More importantly, the partner also acquired a bunch of new users who otherwise would have selected a competitor had this partner gone dark.
Ampush works with dozens of clients spanning all sorts of industry verticals, campaign objectives, and geographies. This isn’t our first rodeo. We know how to optimize campaign performance even as prices increase, and we’re ready to help our partners shine this holiday.
In just a few days, Halloween costumes will be stashed away and candy bins emptied. This means we’re nearing the end of what should be the staging period for advertisers’ holiday campaigns. Perfect your creative, both text and copy. Affirm your targeting. Think about what your competition is likely to do.
And, by all means, tweak your ad cost expectations to reflect the season’s economic reality. With a focus on ROAS and LTV and Ampush’s experience and know-how, we are ready to help our partners achieve very happy holidays.