Explore the different types of Facebook ads, and how they can benefit your business.
With Facebook’s over 2.96 billion monthly active users, it’s indeed an enticing network you can leverage to grow your customer base.
Your Facebook Ads play a crucial role in driving users to become your paying clients. But, you want to optimise the ratio between how much you pay and how many people become your customers.
In this article, we’ll discuss everything you need to know about Facebook CPA, strategies to lower your costs, and the best practices in your CPA Facebook ad campaigns. So if you want to maximise your spending on customer acquisition, read on.
Also known as Cost per Action (or Acquisition), CPA refers to the money that you pay every time an online user does an expected step after viewing your advertisement. The action can vary based on your goals, but a few examples include buying your products, subscribing to your newsletter, trying out new pieces of software, and many others.
You’re giving this money to the platform where you published your ad, which is Facebook in this case. Facebook offers CPA as one of its cost models, and in return, it will bring your content to your targeted audiences.
Running your ad campaigns on a CPA basis can indeed be practical — you’re paying money to increase your customers directly. That is, until the buying costs become painful for your pockets.
For instance, spending £50 to earn only one customer is a losing deal, especially if your niche isn’t too competitive. You should know that the average CPA for the tech niche — a highly competitive space — is $55, which is around £45.
If you think your CPA is too high, there might be something wrong with your advertisements and how you run them. Think of your Facebook CPA as a gauge to know how relevant your ads are to your targeted demographic.
A high cost per action tells you that your campaign likely failed. While there are many reasons for such cases, some concrete instances include audience overlaps, suboptimal landing pages, “too general” content, and poor ad scheduling.
Meanwhile, a minimised Facebook CPA indicates better resonance between your advertisements and your audience. As a result, they’re more effective and more likely to produce a higher number of conversions.
There is no standard or fixed cost per action for Facebook Ads, but you can refer to average rates based on your target audience, industry, and the kind of campaign that you’re executing.
Aside from these factors, other aspects like the stage your business is at and budget are essential too. You want to weigh whether the business you’re representing is okay with sacrificing its profits to achieve better brand awareness.
The amount of money you’re willing to spend matters as well. If your budget isn’t too liquid, you’re more likely to focus on aspects that will directly increase your acquisitions than higher-priced ones with lower rates of viewer conversions.
The spectrum varies widely since rates can go as low as £6 for the education niche to as high as £45 for the tech industry. Don’t get the idea, though, that CPA rates are always at an all-time high. On the contrary, the average is pretty low at less than £20 or so.
There are outlying niches that can cost more than £100 per action. Typically, the more competitive the category is, the higher the running expenses of your Facebook Ads become.
Among the business niches with high competition include:
While not absolute, the presence of more competitors in a niche may indicate good market prospects. Just come to think of why many business owners, advertisers, and digital agencies flock into such niches — there might be gold to dig.
You can ignore the high CPA if the action that you’re expecting from the user outvalues the money. For example, if you can earn hundreds of pounds from a single action, then a cost of £30 doesn’t seem too heavy.
As many businesses do, weigh the investments and the profits. If the CPA is within your acceptable range, there would be no problem if you go with it. Otherwise, you’ll be spending all your money on running ads without directing conversions and making your ROI.
Calculating your cost per action should come first before you strategize how to lower CPA Facebook Ads. All you need to do is to divide the total amount you’ve paid the network to run your ad campaign by the number of actions generated by your audience after they saw your ad.
Here’s a simpler way to view it:
CPA = Total ad spend / Number of actions taken on the ads
For instance, let’s say that you paid Facebook £3000 to let them run and direct your adverts to your target viewers. The goal is to let users subscribe to your brand’s newsletter. And for this amount of money, you generated a total of 50 subscriptions. Here’s a quick computation:
CPA = £3000 / 50 = £60
Hence, you are effectively spending £60 for every action taken by your audience on your ads. Is that a good rate? Well, that depends on whether it can outweigh your expected profits.
We have already discussed what Cost per Acquisition is, but how does it differ from Cost per Lead (CPL)?
The first thing that you should notice from the acronyms is the ending letters. CPA ends with the letter “A,” which stands for “action.” The actions referred to here can include the purchase of a certain product or service, account creation, and other desired outcomes.
On the other hand, CPL ends with the letter “L,” which stands for “lead.” While there are many ways to define what a lead is, it generally points to individuals, and even other brands, that have some likelihood of becoming one of your paying clients. Leads pay more attention to the user’s interactions with and impressions of your ads.
Rather than bringing a user directly to your landing page, CPL lets them engage with the advertisement first. So, for example, instead of redirecting them to your sign-up page, you can try to bring them to your brand’s Facebook community first.
Here, they can brush info on what your brand is all about and interact with other people in the same space. Over time, they may grow interested in your offers and become a paying customer too.
The focal point of CPL is the number of customers that you can potentially acquire, while CPA talks about how many customers you have earned. You may have also observed that the conversion directly occurs in CPA, while it’s much slower in CPL.
As the adage goes, everything is relative. So, the answer is no; each is not necessarily better than the other. However, CPA and CPL do have their perks, which you can leverage depending on your current business goals.
CPA is an ideal cost model when dealing with products and services that are available in high volumes and offer low margins. On the other hand, CPL would be great if you want to cultivate relationships and engagement with potential customers for long-term goals.
Done computing for your CPA? If you’re finding it too high or not in line with your expected rates, here are ten effective strategies on how to lower CPA Facebook Ads and boost your ROI.
When your landing page is suboptimal, you can expect a high CPA. Unfortunately, many marketers tend to focus only on the first leg of their ad campaigns — the part where Facebook users see the advertisements. This is a big but common mistake that you want to avoid.
But what exactly is a good landing page? Here are some characteristics that you want your landing page to have when optimising it for UX:
If you are unsure whether your optimised landing page will work, you can use some methodologies like A/B testing. Typically, the one with more conversions is the better landing page.
As early as 2015, Facebook has been generating over 8 billion video views on a daily basis. Imagine how the figures have grown over the years. This indicates that people on the platform love watching videos. And you can leverage that to boost ad engagement.
So, how should you set up your video ads? Here are some quick tips to keep in mind:
You can’t cast your net widely when you want to reduce your CPA. Instead, you want to filter your targeted demographic and choose a more particular audience to optimise your ad targeting.
Because your expected audience is a smaller group of people, you can make your ad content more relevant to their tastes. This increases the chances that your content will resonate with your viewers.
On top of that, such specific content may also boost your conversion rate, directly increasing the ratio between your total ad spending and the number of actions taken. A highly targeted demographic also has fewer competitors, which translates to lower ad expenses.
Driving your viewers to click through your advertisements is one of the best ways to lower your CPA. First, you want to ensure that your ads will captivate the eyes of your audience. Then, you’ll want them to stay engaged with what you’re trying to advertise.
Here are some ways to boost your click-through rates (CTR):
As philosophical as it can be, the only thing that’s constant in the world is change. Your audience’s preferences and what they find relevant change from time to time. Therefore, you want to regularly update your ad copy to ensure it still resonates with your viewers.
So, what aspects are worth updating in your current ad copy?
Doing A/B testing is always effective to see whether your updated ads work as intended.
You don’t have to make all the people in your target audience your customers — that’s almost impossible under normal circumstances. Aside from being inefficient in terms of the budget, constantly targeting new audiences may produce substandard results.
Instead, you want to target people who have already interacted with your ads at an earlier time. For instance, you can retarget people who have:
There are no standard conditions on a retargeting campaign — you have to set them yourself. Still, you don’t want to miss retargeting audiences who have items in their carts. They’re already showing purchasing intent, and a little push may bag that sale.
Another aspect of ad targeting optimisation you need to consider is the location. You want to determine which areas (regions or cities) produce more traffic and acquisitions and focus on them.
For example, you are generating 60% of the sales from city A, 30% from city B, and 10% from city C. Instead of continuously targeting all three, you can first focus on the first two locations, which produce more significant sales.
Do consider targeting the less important regions if your finances are more fluid.
You surely have noticed in your analytics that there are times when your ads don’t generate as many conversions as the others. Determine which times and days your ads can convert viewers more effectively and match your ad scheduling.
Don’t spend your money on unprofitable times — that’s how you lower your CPA with an optimised ad schedule. A good strategy to do this is to review the performance of your advertisements under the Facebook Ads Manager tab.
With people’s ever-disappearing attention spans, they’re likely to get annoyed from seeing the same ad over and over again. So you want to juggle between videos, photos, texts, and other formats to keep your advertisements fresh.
While changing your ad formats is essential, don’t forget to also make the content refreshing and still as interesting. This minimises the potential for so-called ad fatigue.
We have talked about doing A/B testing for your ad copy, creatives, and landing page. But there are many other facets that you should pay attention to in making your ad campaign successful.
For example, you may have to continuously track your conversions with various ad management tools, optimise your timing, and make necessary adjustments. Making your Facebook page up to par with your landing page and ads is also essential
Facebook CPA tells you how relevant and compelling your ads are to your target audience. So, knowing how to compute your Cost per Acquisition lets you gauge whether your ad campaigns are successful.
While there’s no definition for a good CPA, a high rate usually means that there’s something wrong with your ads. We hope you’re able to reduce your costs with what we’ve shared on how to lower CPA Facebook Ads in this guide.
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