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Why Are Facebook Advertising Prices Spiking — And What Can Digital Marketers Do About It?

November 6, 2020 Sarah Cavill

In what Jonathan Katz, chief media officer at Digital Media Solutions (DMS), calls “a perfect storm,” the many unpredictable and high-impact events of 2020 have caused Facebook advertising prices to spike. “We’re dealing with COVID-19, a ton of brand dollars initially exiting Facebook, the election booming, and then as the election got closer a lot of brands coming back on to Facebook, increasing competition. And, the holidays are here, which is going to be another wild ride for CPMs (costs per 1,000 impressions),” said Katz. 

In 2020, the rise in ecommerce and adoption of increased online usage by consumers has led advertisers to lean heavily into digital advertising, even more so with the holidays coming. With high advertising prices on Facebook a concern, brands will need to diversify their advertising and rely on the benefits of data to make good choices with targeting on the platform itself. 

What Are The Best Options For Advertisers That Want To Diversify Because Of Higher Facebook Advertising Prices?

“On Facebook, ad prices were already surging before the election, with CPMs up 23% between July and September,” reported Hilary George-Parkin for Vox. This volatility and inevitable squeezing of the margins for advertisers, especially heading into the holidays, requires diversification across social media platforms for brands and retailers. Amber Paul, senior vice president of distribution at DMS, said, “While waiting for Facebook prices to go down, definitely diversify across other social media platforms. For example, Snapchat is great, and people think it’s just for younger users, but that isn’t the case. Pinterest is another good choice — they are having a big year, and getting a lot of eyeballs.” 

Paul also urges advertisers to be smart when finalizing creative, leaving nothing up to chance while still staying agile. “Advertisers should invest in having landing pages that are ready to go, that are flexible enough to work with different brands, structured and formatted so that you can pivot to auto insurance or home-related [offers] or whatever you need. And, keep in mind all the details when building out ads, including shipping and holiday schedules — every small detail really matters right now.” 

How Can Data Help Brands That Want To Make The Most Of Advertising On Facebook?

Despite high prices, many brands are going to continue to find a way to advertise on Facebook. Particularly, as Katz points out, in certain verticals, like jobs and auto insurance, where the “storm” wasn’t that disruptive and efficiencies were high. One major advantage for some brands, however, is data. Data allows brands to circumvent some of the worry of higher advertising costs because of the ability to target more effectively. “A major advantage of brands with internal data is the ability to bring 

something to the table that brands who rely strictly on the Facebook algorithm can’t — including audience targeting tactics and personalized creative. First party subsets of data create efficiencies that other brands can’t access,” said Katz.

Navigating advertising pricing on Facebook, and across social media platforms, is likely to be an ongoing puzzle for many brands, as meeting KPIs and revenue goals may require a unique approach in 2020. However, by diversifying, staying flexible and maximizing data, advertisers can hope to build greater efficiencies, leading to meaningful conversions and broader audience reach.

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About the Author

Sarah Cavill

With more than 20 years of writing, editing and reporting experience, Sarah Cavill brings to Digital Media Solutions (DMS) a fine-tuned and diverse set of skills. Her work has been featured in notable publications including The Daily Muse, CBS Local, Techlicious and Glamour magazine. Sarah has a passion for current events and the deep-dive research that goes into the content development and brand identity of DMS Insights. In her role as Senior Marketing Communications Writer, Sarah contributes to the pitching, researching and writing of multiple stories published each week surrounding digital and performance marketing innovations in pop culture, news, social media, branding and advertising.

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