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How to Reduce CPA of Facebook Ads

cost per acquisition formula

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Facebook boasts over 1.84 billion daily active users. If you’re a business owner, you have probably thought of using Facebook ads to tap into this audience. However, you can easily overspend on Facebook Ads due to Facebook’s super diverse audience.

This is especially true when you don’t optimize your Facebook ads in a way that lowers the cost per acquisition (CPA). The journey to reducing the CPA of your Facebook ads will start by understanding the cost per acquisition formula.

This guide tells you more about the formula and the strategies you can use to reduce the CPA of your Facebook Ads. Looking for more social media stats? Check out this post from one of our partners.

What Is the Cost Per Acquisition?

The cost per acquisition indicates the average cost you spend to acquire one new customer. It is one of the marketing metrics that help you understand whether your marketing efforts result in positive outcomes in terms of conversions. Depending on your business type, the conversions could be sales, downloads, or sign-ups.

Cost Per Acquisition Formula

To calculate the CPA, you only need to know the total marketing cost over a given period and the total number of new customers acquired during the same period. You divide the total marketing costs with the total number of new customers.

CPA = Total marketing costs/total number of new customers.

Strategies to Help You Reduce the CPA of Your Facebook Ads

Now that you understand the CPA formula, you must know the steps you can take to keep the CPA of your Facebook Ads low. Here are some of the strategies you can leverage to lower the CPA.

Target Your Best-Performing Audience

You can access data about different demographics in digital marketing, especially if you’re using Facebook advertising. You can use the data to learn about the best-performing ads or the Facebook demographic you need to target.

You’ll get this information from the “manager section” or the “view charts” option on your Facebook business page. You will see how your previous ads performed based on gender, age, and other demographics.

Once you identify the best-performing audience, you can revisit your ad targeting and narrow it down to this demographic. For example, if your Facebook ad performed better among the audience under the age of 40, you’ll know that the ad resonated better with younger people.

You can then focus your ads on this population. The targeting will reduce the number of unpromising clicks on your Facebook ads. Consequently, your CPA will decrease.

Optimize Your Landing Page

A perfect landing page is the foundation of your ads. For this reason, you should ensure that your landing page is not complicated. It should be clear and straightforward to yield a high conversion rate.

Your landing page should clearly state what you’re offering. Your call to action should also be straightforward. In addition, you should include your contact information and testimonials to persuade the undecided Facebook users.

An optimized landing page will generate more leads and conversions. In turn, your CPA on Facebook ads will be reduced.

Set Up and Update Your Facebook Pixels

A Facebook Pixel can help you gather information about your customers and monitor conversions. The pixel will make it easy to track your customers’ Facebook pages. This way, you’ll identify details like their interests and spending patterns.

This information will help you tailor your marketing strategy to target the audience interested in your products. You can target people who viewed your website or those who started the purchase process and left it incomplete. You’ll most likely convert more leads, which will increase your new customers and reduce the CPA.

Make Use of Video Advertising

Using videos is one of the most rewarding strategies in Facebook marketing. In addition, video campaigns are less expensive than those involving a single image. As such, videos will be a cheaper alternative to help you save on CPA.

Your CPA will reduce if you have a steady stream of video content for your Facebook audience. Facebook will rank video ads higher because they will impress your viewers. This means that Facebook will automatically assign your ad a higher quality score if it has a high click-through rate (CTR).

The high CTR will, in turn, help you improve your ad position at a lower cost. The increased engagement and CTR will translate into a lower CPA for your Facebook ads.

Avoid Ad Fatigue

You can reduce your CPA in Facebook ads by taking measures that prevent campaign burnout. If your target audience is narrow, Facebook may display your ad several times to the same audience.

If people see one ad repeatedly, they will find it irritating. Eventually, the CTR will go down, and the CPA will increase.

You can avoid this by keeping a record of your ad stats. For example, when the impression frequency exceeds three, you should display a new Facebook ad. This could be a new image or a new promotional offer.

You can use different visuals every day when posting your Facebook ads. These will make your ads look fresh and prevent users from getting bored.

Consider Retargeting Campaigns

Since Facebook ads are a form of paid advertising, your goal should be to advertise at the lowest cost possible. One way of lowering the cost is to avoid advertising to new audiences every time. You can retarget people who have shown an interest in your website, ads, and products.

Retargeting is more than targeting the people who visited your website in the past month. You can make the process more granular. For example, you can retarget the audience that stayed on your website for more than 30 seconds and clicked on one of your ads.

You can also retarget those who watched 75% of your Facebook ads. These people are highly interested in your products. As a result, retargeting them will increase the chance of conversion, lowering the CPA. There is a great tool to help you implement this strategy. Utilize Replug for Facebook retargeting ads to start making the most of your advertising data today!

Use the Cost Per Acquisition Formula to Your Advantage

Most digital marketers can attest to the increasing CPA of Facebook ads. However, you cannot forego digital marketing, especially on a popular platform like Facebook. Understanding the cost per acquisition formula is the starting point to lowering the CPA of your Facebook ads.

Once you know how the formula works, you can explore ways of getting better returns on your investment in Facebook ads.

If you’re unsure of how you can start reducing the CPA, E-Comm Boardroom can help you out. Check our website for more resources on making the most of your digital marketing strategies.


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