As with any paid media campaign, some Facebook ads perform better than others depending on the placement, ad copy and targeting used. But what should you do when one of your ads is outshining all the others? The obvious answer is to increase the daily budget of your best ad group, however, our experience with Facebook campaigns suggests this isn’t necessarily the best thing to do…
So what happens if you increase your daily budget on a Facebook ad group?
When you increase the daily budget for your best performing Facebook ad group, typically these four things will happen:
- Impressions go up
- Click-through rate (CTR) goes down
- Relevancy Score goes down
- Cost per acquisition (CPA) goes up
Impressions are all well and good to increase your brand reach, however, for paid campaigns in particular impressions can be considered a “vanity” metric. As eCommerce PPC specialists, we typically look at meeting KPIs such as ROI and revenue from paid search campaigns. So from a revenue driving perspective, increasing your daily budget can quickly turn your unicorn ad into a donkey.
To understand why this happens, we need to take a look at the mechanics of Facebook advertising, particularly, Optimised Cost Per Mille bidding or oCPM bidding.
How does oCPM bidding work?
The default ‘go-to’ bid type in Facebook ads is oCPM. This bid strategy normally returns the cheapest cost per click (CPC) of all bid types, but at the expense of a much higher cost per mille (CPM). If ROI is your objective, then CPM is less important as campaigns with a higher conversion rate will typically have a higher CPM.
As opposed to CPM bidding where you specify your target audience and Facebook calculates an effective cost per 1,000 impressions based on marketplace competition for that audience, oCPM bidding means that Facebook takes historic user performance data to serve your ads to the people most likely to take the desired action, such as make a purchase, download an app etc.
So when you increase an ad group’s daily budget, Facebook’s “inner circle” of people that are most likely to respond to your ad will expand to include people that aren’t as likely to respond to your ad, effectively diluting the quality of your audience.
The bottom line
With so many variables at play, the bottom line is that you cannot upscale Facebook ads based on the amount you’re currently spending on them as you will see diminishing returns. Despite this, there are a wide number of practices that we use to upscale Facebook campaigns whilst ensuring a good, long-term ROI. Stay tuned for my next blog post to find out more, or alternatively contact us to see what we can do for you!