Tis The Season for Facebook Ad Prices to Skyrocket, Here Are Two Ways You Can Prepare

If seasonal trends in ad pricing continue this holiday season, Facebook pricing will go up – by a lot. Clients in years past had to brace for 20 to 30 percent increases. Last year, we saw Facebook’s cost per thousand impressions (CPM) jump 50 percent. That kind of increase can be a huge shock to the system.

And it will likely happen again. It’s early mid October now, and prices have already gone up. This may be attributable in part to more competition for space, and if that is the case, the holiday bump might even be greater than 50 percent this year.

cross client data

Combined client data from the 2015 holiday season.

So what are your options? If you are B2B, it will probably be painless to shift away from consumer-oriented channels during the holiday season. Just sit this one out.

But that won’t fly in retail. You can’t step away from advertising during the holiday season, and that’s never something we would recommend. But we do recommend changing your approach, because if you don’t, you’ll have to get ready for the most expensive advertising pricing you’ve ever seen on Facebook.

We recommend protecting your budget from crazy fluctuations during the holiday season with a pair of proven strategies:

Strategy #1: The Aging Effect – Shift your holiday spend to Pinterest

seasonal ad pricesWhy Pinterest? First, its seasonal ad prices won’t increase nearly as much as Facebook’s. Second, the Aging Effect, which accounts for the unique lingering conversion rates on Pinterest, allows you to continue tracking conversions even after you’ve turned off or turned down your spending, once the ad prices start to spike, saving money.

Here’s how the Aging Effect Strategy has worked for us. Last year, by front-loading ad spends on Pinterest, we got better pricing than we would have, had we waited until everyone else’s holiday ads were running. Because of this strategy, we got even better results when our competition turned their ads down or off. Some of our clients were paying just $7 CPM.

If you don’t have experience on Pinterest, we recommend using this year as a chance to get that experience, and plan ahead. Next year, start in August with ads going live, then scale up in September. In October, monitor performance, and turn it down (if it’s getting expensive), or crank it up (if you are getting good results and ads stay cheap).  Then, as the holidays get closer, start to decrease your spend 10-20 percent per week, until you stop.  You will see the benefit of the Aging Effect Strategy as your sales continue to roll in.

But a caveat to this strategy: You need to be able to withstand an aggressive spend through October, which will not show immediate results like Facebook.  The goal your first time out is not profitability, it’s R&D.  Set this expectation so your partners and stake-holders know to take the longer view.

Strategy #2: Subcategorization – Focus on budget allocation across subcategories of your audiences

In order to precisely allocate your spend and achieve the lowest cost of customer acquisition over the holidays, you have to recognize when you’ve hit saturation with all or part of your audience. Simply put, an audience gets saturated when it has been exposed to your message and made a decision to buy or not. After saturation, no matter how many more times an audience sees the same message, it will not convert. This is why saturation should be managed aggressively, especially as cost go up toward the end of the year.

Like the Aging Effect Strategy, the Subcategorization Strategy is rooted in the way things work. Audiences are rarely comprised of discrete groups. In many cases, there is overlap among them that can lead to unintended saturation and unnecessary spending. In order to see when things are getting expensive, you have to have a highly segmented view of your audience. For example, you might target skateboarders, plus readers of a skateboarding magazine—where overlap is likely. However, if you overlay demographic and other differentiators to create subcategories in your audience, it’s easier to see where you are saturating. This kind of granular view enables you to shift dollars from segments that are getting expensive, or have been clearly saturated.

For a deeper dive into audience saturation, check out our post on customer acquisition models.

If your goal is protecting ROI over the holidays, you may want to work with a partner that can help you implement these holiday ad spending strategies. Here at Social Fulcrum, we use proprietary software to harness the precise data you need to make appropriate decisions. But however you choose to adopt these holiday strategies, we encourage you to think long-term. Not every dollar needs to have an ROI. Keep part of your budget available for R&D, exploration and finding new audiences. To be effective in your role, you need to be able to react quickly. When you see data that shows one channel is more effective than another, you need to be able to pivot, and adjust your expectations.

OK?  Now, let’s to hear from you. What’s been your experience with holiday ad spending? Have you ever had to stomach a big increase in seasonal costs, and what did you do about it? Leave a comment below.

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