The holiday shopping season is upon us. For advertisers, Q4 and particularly the week surrounding Black Friday is unlike any other time of the year. Ad costs typically spike by 25% or more. The competition for quality inventory is fierce.
Ecommerce advertisers are managing their boom time, while other advertisers – like mobile games and apps – are hoping to just close the year strong.
Late Q4 is the busiest time of the year for retailers, so it’s not like the other ad platforms are quiet. But Facebook advertising gets particularly competitive from October through until December 23rd. But even though Facebook ads prices spike during late Q4, it’s still the best platform in town. Most major advertisers will be bidding aggressively.
Even with the inflated prices, most ecommerce advertisers do well. A recent study from Shopify Plus showed that ecommerce marketers say Facebook ads are the most effective channel for new customer acquisition during the holidays.
Of course, it’s no surprise that each year ads get more expensive around Black Friday, Cyber Monday, and all the December holidays. Every advertiser knows this. They just go into the season with a brave face anyway, ready to bid high to hit their annual targets. Anybody who’s ever looked at a Facebook Ads dashboard during the holidays has had to swallow a lump of coal when they looked at their cost per click.
And sure enough: 80% of ecommerce marketers say “rising ad spend” is a concern for holiday marketing.
Despite the expense and the competition, Q4 is a massive opportunity. For retailers, it’s an opportunity to maximize the best buying season of the year. For mobile games and apps, the holidays precede the most cost-efficient advertising season of the year and what will be the lowest CPMs of 2020.
To help you navigate the season, here are five Facebook advertising best practices for late Q4:
1. Manage Strategy Shifts in the Ad Spend Wave.
Done right, the ramp-up to holiday advertising can be as important as the holidays themselves. Advertisers can leverage retargeting, email lists, and other more cost-effective channels after December 8th – if they’ve scaled up their campaigns properly before that.
But don’t underestimate the after-Christmas shopping boom. Everybody likes to splurge with their Christmas money and buy themselves what Santa didn’t bring. That’s why the period after December 26th can be especially effective. Take this time to test out new device ads (like the iPhone 11), video, and new messaging/creative. And don’t stop until January 15th or even Valentine’s Day. Many traditional advertisers pull back their advertising at the beginning of the year, leaving another nice window of opportunity for the rest of us.
2. Increase Average Order Size.
When user acquisition costs rise, you have two choices for preserving profits: cut your overhead/product costs, or raise average order size. Fortunately, increasing average order size complements what’s going on in Q4 nicely – people are spending more, both on themselves and others.
There are plenty of ways to increase average order size:
- Bundling products
- Offering extra features for a discount
- Using $-off discounts (“spend $X, get $ off” offers)
You may also want to just skip this average order size strategy entirely, too. Depending on your company and your situation, it could make sense to just go with a loss leader in Q4 and use it to build your customer base.
If you manage the loss-leader strategy well, you could break even (or make a very slim profit), but you’ll add a ton of people to your buyers’ list. Pair that with effective retention marketing, and Christmas could be a nice opportunity to just find as many new customers as you can.
3. Wait it Out Or Find Pockets Of Efficiency.
Of course, not everybody is in ecommerce. If you do app marketing or lead generation, the holidays present a very different problem.
For Facebook advertisers who aren’t in ecommerce, the best time to scale spend during the fourth quarter is between October 1st through Thanksgiving. CPMs increase during that time, but not too much. Then we recommend you pull back or shift spend between November 28th through December 10th.
Here are some other suggestions to help you combat rising prices during peak CPM cost increases:
For budgeting:
- If you’re going to spend money in the fourth quarter and you’re not an ecommerce company, try to frontload spend as much as possible in October and November.
For audience targeting:
- Focus on less competitive markets during high demand periods.
- Allocate more budget to Android. It tends to see a less pronounced increase in prices.
- Leverage data from International campaigns to scale up in EMEA (Europe, the Middle East, and Africa), APAC (Asia-Pacific), and LATAM (Latin America) where holiday competition is not as intense.
For bidding:
- Scale up Worldwide targeting by using value optimization to scale in global markets, while simultaneously optimizing for the lowest cost per purchase. That tends to preserve ROAS while making the expansion work.
- Facebook research for its new Structure for Scale (S4S) framework has shown that ad set delivery stabilizes when an ad set achieves at least 50 unique conversions per week. They’ve found a direct correlation between ad sets that achieve this volume, reduced CPAs, and stronger ROAS. Occasionally the ROAS improvement can exceed 25%.
- Start small with Minimum ROAS bidding, but use it. Minimum ROAS bidding allows advertisers to input their desired return on ad spend for each ad set. You can set a minimum ROAS with a number greater than 0.01%, then Facebook will stop delivering your ad if they can’t hit that specified percentage. It works best if you start by testing a low ROAS goal (<1%) against a broad audience, then inch up incrementally if performance is not there (1%, 2%, etc). Don’t start high and scale it back; minimum ROAS works better being incrementally increased.
- Use AEO for Purchase Manual Bids. If you’re experiencing under-delivery or lower-quality conversions with autobid, consider switching to highly competitive smart bids (the lowest cost with bid cap). With unpredictable bid conditions like during the holidays, smart bids are a good way to maintain a stable delivery.
For creative:
- Plan for more frequent creative refreshes to fight creative fatigue. You’ll probably have to plan ahead of time for this, as most employees want at least some time off around the holidays. Or, if necessary, look to a creative partner to expand capacity.
- Develop holiday-themed creative to increase relevance scores. This can help reduce some of the higher costs of holiday ads.
- Test Playable ads on the Audience Network to drive more engaged, high-quality installs. Facebook says these ads are getting the best performance of any ad format right now.
Fortunately, the expensive days do pass. Almost like magic, on December 26th, costs drop. Most of the ecommerce marketers have spent their budgets, sold their inventory, and consider the year done.
This is when non-ecommerce marketers – like games and mobile apps – have their heyday. They will enjoy some of the most efficient CPMs of the year from December 26th through to Valentine’s Day on February 14, 2020.
Take advantage of the drop in CPIs and influx inventory from December 26th through Valentine’s Day by using Auction Sales. After Christmas is also a great time to target new device users, and device-specific creative can often get you an extra bump in relevance. Of course, if you want to dominate the bidding during these magic days, you’ll have to have set aside some budget ahead of time.
4. Focus on Mobile.
Everybody knows mobile traffic now exceeds desktop traffic. But many marketers still believe mobile traffic doesn’t convert… or at least that it doesn’t convert as well as desktop traffic.
That might no longer be true.
A study of Google Shopping ads revealed a dramatic increase in mobile conversion rates in the last few years. The conversion rates for shoppers who begin and end their buyer’s journeys on mobile devices has increased by 252%.
But wait… there’s more:
The path of shoppers starting their search on desktop and completing their purchase on mobile rose 259% year over year.
In other words, some people prefer to check out via mobile rather than on a desktop.
Of course, that’s Google Shopping, not Facebook ads. But Facebook did its own research. They also found that mobile users have become mobile shoppers.
5. Use Video.
If you’ve been hanging back from investing in video or investing more into video, it might be the edge you need for Q4 2019.
Nearly 1 in 3 mobile shoppers surveyed in the US said that video is the best medium for discovering new products.
So, if you want to get more buyers, make more videos – both for Facebook and Instagram. And yes, Virginia, there is still enough time to get videos made before the major shopping holidays.
Next Steps
How will your company or agency manage the Q4 Facebook ad cost increases? Did your strategies for Q4 work well last year? Think about where you’ve been to strategize for where you’re headed. Just do think fast; Black Friday is upon us.
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