Facebook Ads Audience WAY Too Expensive?

Summary

In this video, Ben Heath from Lead Guru identifies six key reasons why Facebook ads may be too expensive, focusing on high CPM issues. He discusses factors like audience size, competition, seasonality, ad placements, geographical targeting, and ad engagement. Heath provides actionable advice on how to address these issues, such as increasing audience size, broadening targeting, adjusting budgets seasonally, diversifying ad placements, expanding geographical reach, and improving ad creativity to lower CPMs and enhance ad performance.

Takeaways

• 📈 Your Facebook ad's cost per thousand impressions (CPM) can vary greatly and is a key metric for assessing audience cost-effectiveness.
• 🌍 CPM is influenced by factors such as advertising location and industry, with the US generally having higher CPMs compared to places like India.
• 🔍 A high CPM could indicate a small audience size, limiting Facebook's flexibility in ad placements and leading to higher ad frequency and costs.
• 🏁 Increasing audience size can help reduce CPM by giving Facebook more options for ad placements and reducing the frequency of impressions per person.
• 💥 Intense competition for a specific audience can drive up CPM, as there are many advertisers vying for a limited, high-value audience.
• 🎯 Broadening your target audience beyond a highly competitive niche can potentially lower CPM and uncover new market segments interested in your product.
• 📅 Seasonality can affect CPM, with certain times of the year being more expensive due to lower consumer interest or demand for products or services.
• 🗓 Adjusting ad spend according to seasonality, by reducing budgets during low-demand periods and increasing during high-demand periods, can optimize CPM.
• 📍 Geographical restrictions can lead to high CPMs, especially if focusing on major, expensive cities. Expanding to less competitive locations can reduce costs.
• 📺 Restricting ad placements to certain platforms or formats, like Instagram only, can increase CPM. Diversifying ad placements can help lower costs.
• 🎨 Engaging ads that resonate with the audience can lower CPM as Facebook rewards advertisers with lower rates for ads that enhance user experience.

Q & A

What is the main topic of Ben Heath's video?

The main topic of Ben Heath's video is explaining why Facebook ads audiences might be too expensive and how to fix those issues.

What does CPM stand for in the context of the video?

CPM stands for Cost Per Mille (or Thousand), which is the metric used to assess how expensive an audience is to reach in terms of how much it costs for a thousand views on ads.

Why might a high CPM be an issue for advertisers?

A high CPM might be an issue because it indicates that it is more expensive to reach the target audience, which can lead to higher costs for advertising campaigns without necessarily better results.

What is one of the factors that can significantly affect CPM according to the video?

One of the factors that can significantly affect CPM is the location of the advertising, with certain locations like the US being more expensive on a CPM basis than advertising in other countries like India.

What is the first reason Ben Heath gives for an expensive Facebook ads audience?

The first reason given for an expensive Facebook ads audience is that the audience size might be too small, which reduces flexibility for Facebook to target and increases the cost of advertising.

What is the second reason for high CPMs mentioned in the video?

The second reason for high CPMs is the high level of competition for the targeted audience, especially when the audience is small and in high demand.

How can seasonality affect CPMs for Facebook ads?

Seasonality can affect CPMs by making certain times of the year more expensive to advertise due to higher demand or less interest from consumers, which Facebook picks up on and charges more to reach the same audience.

What is one strategy to address high CPMs due to seasonality?

One strategy to address high CPMs due to seasonality is to spend less during less favorable times of the year and allocate more budget to times when results are likely to be better, thus averaging out the cost over the year.

Why might advertising only on Instagram lead to higher CPMs?

Advertising only on Instagram might lead to higher CPMs because recent data suggests that it is more expensive than advertising on Facebook, with costs being 30-35% higher for the same number of impressions.

What is the sixth reason for high CPMs mentioned in the video?

The sixth reason for high CPMs is that the ads themselves might be boring and not engaging, which Facebook punishes with higher CPMs as they prioritize user experience and engagement on their platforms.

What does Ben Heath suggest to improve ad engagement and potentially lower CPMs?

Ben Heath suggests focusing on more dynamic creative elements such as slideshows and videos to grab people's attention, which can help reduce CPM and improve the cost of advertising to the same audience.

What service does Ben Heath's company, Lead Guru, offer in relation to Facebook and Instagram advertising?

Lead Guru specializes in creating, managing, and optimizing Facebook and Instagram campaigns for clients with a budget of 3k per month or more.

How can potential clients of Lead Guru get in touch to discuss their advertising needs?

Potential clients can book a free call with one of Lead Guru's team members through a link provided in the video description to discuss their advertising needs without any obligation.

Outlines

00:00

💡 Understanding High CPM in Facebook Ads

Ben Heath from Lead Guru introduces the topic of high cost per thousand impressions (CPM) in Facebook ads. He explains that CPM is a key metric for assessing audience cost and shows a range of CPMs in an ad account. He notes that CPM can vary greatly and is influenced by advertising location and industry. Ben emphasizes that while high CPMs are common in the US, there are ways to address this issue, such as increasing audience size to give Facebook more flexibility in ad placement and to reduce the frequency of ad impressions on the same users.

05:02

🔍 Factors Influencing Expensive Ad Audiences

The video script discusses six reasons for high CPM in Facebook ads. The second paragraph delves into the first two reasons: a small audience size which limits Facebook's ad placement flexibility and increased competition for a desirable audience segment, both of which can drive up CPM. Ben suggests broadening the audience targeting and testing different groups to find those who are interested and can afford the product, potentially leading to a lower CPM and more sustainable ad campaigns.

10:03

📈 Seasonality and Ad Placement Affecting CPM

The third paragraph addresses seasonality as a factor that can increase CPM due to lower consumer interest during certain times of the year. Ben advises adjusting ad budgets according to seasonal trends, spending less during slow periods and more during peak times to optimize costs. He also touches on the impact of restricting ad placements, such as focusing solely on Instagram, which can be more expensive than Facebook. Expanding ad placements to include Facebook can help reduce CPM.

🌐 Geographical Targeting and Ad Engagement

The fourth paragraph continues with reasons five and six for high CPMs: geographical targeting limitations and lack of ad engagement. Ben points out that focusing on expensive locations like big cities can increase CPM and suggests testing less expensive areas. He also highlights the importance of ad creativity and engagement, stating that Facebook rewards advertisers with lower CPMs for ads that resonate well with users, thus improving the overall ad performance.

🤝 Lead Guru's Facebook and Instagram Advertising Services

In the final paragraph, Ben introduces Lead Guru's specialized services in managing Facebook and Instagram ad campaigns. He invites viewers with a budget of 3k per month or more to book a free consultation call to discuss how Lead Guru can help optimize their ad strategies. Ben also encourages viewers to engage with the video by liking, commenting, and providing feedback.

Keywords

💡Facebook Ads

Facebook Ads is a platform that allows businesses to create and display advertisements to target specific audiences on Facebook and its affiliated platforms. In the video, the speaker discusses issues related to the cost-effectiveness of these ads, particularly focusing on high CPMs (Cost Per Mille), which is a key metric in assessing the affordability of ad campaigns.

💡CPM (Cost Per Mille)

CPM stands for Cost Per Mille, which is an advertising metric that measures the cost of 1,000 impressions or views of an advertisement. In the video, the speaker uses CPM as the primary metric to evaluate the cost of reaching an audience, noting that high CPMs can be a sign of an expensive ad audience.

💡Audience Size

Audience size refers to the number of people targeted by an advertisement. The script mentions that a small audience size can lead to higher CPMs because Facebook has less flexibility in ad placements, forcing advertisers to compete for a limited pool of viewers, which can drive up costs.

💡Competition

In the context of the video, competition refers to the level of demand for advertising space among other advertisers targeting the same audience. High competition can inflate CPMs, as multiple advertisers bid for the same potential customers, driving up the cost of ad placements.

💡Seasonality

Seasonality in advertising refers to the fluctuation in consumer demand or interest in products or services based on the time of year. The speaker explains that higher CPMs may be due to seasonality, where the product or service being advertised is less in demand during certain times of the year, leading to higher advertising costs.

💡Ad Placement

Ad placement involves deciding where an advertisement will be displayed, such as on Facebook, Instagram, or other platforms. The video discusses how restricting ad placements, such as only advertising on Instagram, can lead to higher CPMs due to increased competition and platform-specific costs.

💡Geographical Targeting

Geographical targeting is the practice of directing ads to specific locations. The script points out that focusing ads on expensive locations like major cities can result in higher CPMs. Expanding geographical targeting to include less expensive areas can help reduce costs.

💡Engagement

Engagement in the context of advertising refers to how interactive and captivating an ad is to its audience. The video explains that ads with high engagement rates are rewarded with lower CPMs by Facebook, as they contribute positively to the user experience on the platform.

💡Ad Creative

Ad creative encompasses the design, content, and overall appeal of an advertisement. The speaker suggests that boring or unengaging ad creatives can lead to higher CPMs because they do not capture the audience's interest, resulting in Facebook charging more for less effective ad placements.

💡Lead Guru

Lead Guru is the company represented by the speaker in the video, which specializes in Facebook and Instagram advertising services. They offer to create, manage, and optimize ad campaigns for clients with a certain budget, indicating their expertise in the field.

💡User Experience

User experience, or UX, is the overall perception and interaction users have with a product or service, such as Facebook and Instagram in this case. The video emphasizes that Facebook prioritizes a positive user experience, and ads that enhance this experience through engagement can receive lower CPMs as a reward.

Highlights

Six reasons for expensive Facebook ad audiences and solutions to fix them.

High CPM (cost per thousand impressions) can be an issue solved by understanding audience targeting.

CPM varies significantly and is affected by advertising location and industry.

US advertising tends to have higher CPMs compared to other locations like India.

Audience size affects CPM; smaller audiences can lead to higher costs and frequency issues.

Increasing audience size can help reduce CPM and improve ad performance.

Competition for a highly sought-after audience can drive up CPM.

Broadening audience targeting can reveal new customer segments with lower competition and CPM.

Seasonality impacts CPM, with some times of the year being more expensive for advertising.

Adjusting ad spend according to seasonality can optimize CPM and campaign performance.

Restricting ad placements, like only using Instagram, can increase CPM.

Expanding ad placements to include Facebook can reduce CPM compared to Instagram.

Geographical targeting restrictions can lead to higher CPMs; testing other locations can help.

Engaging ads with high user interest are rewarded with lower CPMs by Facebook.

Boring or unengaging ads can result in higher CPMs due to reduced user interest.

Lead Guru offers Facebook and Instagram advertising services for businesses with a budget of $3k per month or more.

Book a free call with Lead Guru to discuss advertising services and campaign optimization.

Engagement and creative quality are key factors in reducing CPM and improving ad effectiveness.

Transcripts

hi guys it's ben heath from lead guru

and in this video i'm going to give you

six reasons why your facebook ads

audience is too expensive i'm also going

to show you how you go about fixing

those issues if you're seeing really

high cpm so i'm going to get into that

more in a minute that's an issue and

it's an issue that can often be solved

that's what we're going to be covering

in this video before we're going to very

quickly answer hit that like button

that'd be much appreciated and really

help me out okay so i'm in one of our ad

accounts and i've sorted these campaigns

by cpm by cost per thousand impressions

now that's the metric that we're

basically always going to use when we're

assessing how expensive an audience is

to reach how much does it cost you to

get a thousand views on your ads when

targeting that audience okay and you can

see from this column here that the cost

per thousand impressions varies

massively right at the top here we've

got 35 almost 36 pound cpm that's really

quite expensive all the way down to five

pound fifty six pound thirty eight that

sort of thing which is much well far far

far less expensive okay

and

i do need to very quickly state that

your cpm is going to be affected

significantly by where you're

advertising and what you're advertising

certain industries have higher cpms

certain locations

the us is going to cost a lot more per

cpm

on a cpm basis than advertising in india

for example that's just

a fact

nothing you could do about that so

working out what a high cpm is for you

is going to be somewhat relative and

you're going to have to look at

potentially how your campaigns are

performed historically versus the new

ones maybe you know other people in the

industry you can compare with that sort

of thing but we often see

facebook advertisers coming up with cpms

often in the us

which is probably the most expensive

market to advertise it that's

60 70 even 80 cpms and these are

monstrously high in my opinion cpm's

they're a problem that's a problem there

are things you can do about it okay so

why might your cpm be much higher than

it should be first reason is because

your audience is too small if your

audience is too small facebook has a lot

less flexibility around which

who they can advertise to so you're

basically forcing it you're having to

bid against the advertisers and having

to advertise to those people because

facebook's going okay well those people

are really expensive right now they

can't do this right they can't go those

people are really expensive right now

but those over there are far less

expensive let's go with those over there

they can't do that because they don't

have as much flexibility

um

it also means that you rack up multiple

impressions per person you get a higher

frequency number so once people start to

see your ads again and again they become

disinterested facebook doesn't like that

they charge you more as an advertiser um

in order to advertise to people multiple

times than just the ones

and you end up with higher cpm so the

simple answer there is increase your

audience size and i'll include a link in

the video description below to a video

all about facebook ads audience size

what i recommend it's not very long

strongly recommend you go through okay

so that's reason number one

reason number two is that there's tons

of competition for whoever you're

advertising to i often talk to

advertisers that i'm like oh we want

only one to reach really high net worth

individuals and you look at their

product and maybe it's a little bit on

the expensive side but you think but

there's a lot of people that don't have

to be really high net worth individuals

to afford this and might be interested

or maybe they just decide to spend a

large proportion of their budget on this

particular thing because that's what

they're really into

and you know if you just try and reach

the top one percent or even smaller

fractions within that that audience is

incredibly expensive to reach why

because that audience has a lot of money

it's in demand a lot of other

advertisers

there are other examples but that's

probably the most common what can you do

about it potentially try advertising to

other people don't just get fixated on

we only have to reach this specific

small audience that we know is

interested or know is right at the top

end of the market

there may be other people that would

happily buy your products and services

that don't necessarily fit into that

criteria

and this can often work in conjunction

with the two smaller audiences test

broadening things out right test

advertising to other audiences the worst

you'll find out is that it doesn't work

which might cost you a bit of money but

it's absolutely worth it because the

potential upside of going oh actually we

thought we

only wanted to advertise to the top one

percent of net worth individuals but

actually if we advertise to the top 15

or 20

those people can afford our product and

they're happily buying it and that's

amazing because that gives us so much

more audience to advertise to that gives

us um a much lower cpm and um

much more longevity on your facebook ad

campaigns all that sort of stuff so

don't get fixated necessarily on a

specific audience that may have a ton

and i mean a ton of competition because

there are audiences that are just

bombarded how can you work around that

how can you target other audiences worth

thinking about reason number three is

seasonality okay

are your cpms much higher right now

because this is not the best time of

year to be advertising your products or

services people aren't that interested

facebook is picking up on those signals

and they're charging you more to reach

the same amount of people

this happens to a lot more businesses

than people think

um

how do you go about addressing that i

wouldn't recommend that there are times

of years when well i would rarely

recommend not advertising for certain

times of the year but what we will often

do once we've established that there is

a high degree of seasonality within an

industry is we might spend significantly

less during certain parts of the year

like if you know that people aren't as

interested in your business through the

winter months perhaps you drop your

budgets down to

15 20 25 of what they usually are for

those months keep things ticking along

keep those warm audiences and being

advertised and things like that and then

you take that budget that you've saved

during the three four winter months

let's say and you

absolutely

smash it out the park in the summer by

spending a lot more and loading budget

into months where you know your results

are likely to be much better

you will see this in your cpm data

obviously you'll see it in your cost per

conversion things like that but if

you're thinking why did our audience get

expensive all of a sudden you go yeah

well we're selling something that

there's more demand through the summer

months than there is in the winter

months and and maybe that's what yes

that can be why it's not just going to

affect your cost per conversion it'll

also affect your cpm by weighting budget

more towards the better times of the

year you'll have much better cost per

version you will also find that when you

average it out over the year your

audience is cheaper to advertise to even

though this is the exact same people one

of the nuances of how facebook

advertising works

reason number four for overly high cpms

an aggressively expensive facebook ads

audience is are you restricting where

you're putting your ads too much one of

the classic cases here is just

advertising on instagram now new data

has come out recently that is

might be quite shocking to some people

for those of us that live and breathe

this it's it's it's not but instagram is

now more expensive than facebook to

advertise on

for the cpm number that we've been

talking about in this whole video to get

a thousand impressions on say instagram

feed it's gonna cost you a good chunk

more 30 maybe 35 percent more than it is

on facebook so are you just advertising

on instagram because you think that's

where your audience is or just

advertising on say instagram stories

because you think that's the best

placement try opening it out try opening

up other locations particularly adding

facebook back into the mix if you've

previously written it off that might

really help reduce your cpms make your

facebook ads audience much less

expensive and give you better results

reason number five is that much in the

same way that you don't want to

necessarily get fixated advertising to a

small group of people from a targeting

standpoint you also don't want to get

fixated on just advertising in certain

locations i've talked to a lot of

advertisers they're like oh we know that

our um

best customers come from cities like la

or new york

yeah okay i understand that but

those are the most expensive places to

advertise to in the world and facebook

is sophisticated enough to work out that

someone living in

um you know rural wisconsin might be

really interested in the product that

you offer and advertising to that person

is going to cost you a fraction of what

it costs for you to advertise to someone

in la um and that might be a much better

result for your business so if you

haven't already tested it and you're

seeing really high cpm's really

expensive facebook ads audiences

definitely try opening in other

geographical locations particularly ones

that aren't big cities or less expensive

states there are far less expensive

states than for example california and

new york um in the u.s

you can even have it expand to other

countries we've

worked with this on lots of clients

where they're only advertising in say

the us canada uk australia and we go

well you know we could advertise to

other european countries maybe other

asian countries are still going to be

demand for your products but they're

going to sell a lot better now this will

only work for certain businesses because

i'm not saying you should advertise out

of where you can deliver your product or

service that might be a real local area

in which case that's fine but something

to keep in mind and last but not least

reason number six is that your ads are

boring facebook really care about the

user experience on facebook and

instagram if your ads are boring if

they're not engaging

facebook

punishes advertisers with higher cpms

they're like yeah you can advertise that

but our audience doesn't like it we

don't want them to be bored or

annoyed by your ads on the platform

therefore you can advertise but we're

going to charge you more for it

conversely if your ads are really

engaging the creative is grabbing people

there's lots of people watching it you

get rewarded as an advertiser with lower

cpms facebook's going okay well look we

know you're running an ad but we can see

that people love this we really want to

put things in front of people that in

front of our users that people love

that's fantastic this is super i'm super

happy about this let's go ahead and

reward you with lower cpms so people

think that cpms and expensive facebook

ads audiences is all about the audience

itself and often it is about the

audience but it can also be about the

ads those engagement signals are really

really important so if perhaps you've

been going through the other reasons and

you've gone like no i'm advertising to

broad audiences i'm doing this i'm doing

that i've done all things recommended

what's going on well it could well be

your

ads

are they just boring no one cares no one

wants to look at them not no one that's

probably too harsh but you know what um

you know what i mean they're not

engaging enough focus on that

more dynamic creative slideshows videos

get people's attention that could help

reduce your cpm reduce your um the cost

of advertising to the same people the

same facebook ads audience and help you

improve your results

okay so before you go something i'll

quickly mention and that's our facebook

and instagram advertising services so my

company lead guru is a specialist

facebook and instagram as agency we

create manage and optimize facebook

instagram campaigns for our clients if

you have a budget of 3k per month or

more and you're interested in finding

out more about our service what you

should do is book a free call with one

of my team members there's a link in the

video description below no obligation

call you can find out more about us we

can find out more about you see if we'd

be a good fit and hopefully we get a

chance to uh to work together and thanks

for watching guys please hit that thumbs

up button uh comment below to let me

know if you've got questions comment

below with feedback was this useful et

cetera et cetera and i'll talk to you

soon