# Is Facebook Advertising Getting More Expensive in 2020?

Channel: Ben Heath
Video: https://www.youtube.com/watch?v=YxjMz3n9HaI
Duration: 13 min
Language: English
Words: 2744
Transcript page: https://viewrankai.com/tools/youtube-transcript/YxjMz3n9HaI

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[0:00] hi guys it's ben heath and in this video i'm going to answer a very very important question and that's is facebook advertising getting more expensive it's something that a lot of facebook advertisers are worried about particularly at facebook is a very important part of of your marketing is it's a way that you generate customers generate clients and you might be thinking well i can afford to profitably generate leads and sales on the platform now but if it gets more expensive i'm not gonna be able to do that where my future customer's gonna come from it's something that i think causes a lot of anxiety in the

[0:30] facebook advertising community so something i want to address i said i think it's very important before i get into that i just want to quickly ask you to smash that like button on this video click that thumbs up that'd be much appreciated really help me out and of course subscribe to my youtube channel if you are new and haven't done so already i release facebook advertising content every single week okay is facebook advertising getting more expensive i think to to answer this question properly i need to sort of look back at where what's happened to facebook advertising where it's gone uh where it's come from and where it is

[0:59] now and then and then look forward so i think that that helps frame things so if you look back at when facebook advertising was much newer much less known about let's say eight years ago something along those lines um you know facebook's app manager was far less sophisticated had much fewer options was facebook advertising a lot cheaper then yes yes it was why was it cheaper because there was far less demand as you probably know it's very basic economics to know that the increase in demand will increase the price of a certain thing and facebook advertising as a product is a very fluid thing that people can

[1:34] buy the demand uh ryzen falls more or less in real time and um and increased demand will increase the price which effectively increases the cost to us advertisers so what we saw with facebook advertising is what we've seen with so many digital marketing platforms and what we'll see with future digital marketing platforms is that you've got this this tech company that has this enormous amount of supply and if you think of facebook advertising supply being ad inventory so before facebook started running ads they had just tons and tons and tons of supply loads of places where ads could be placed they've got well now billions but i think maybe not

[2:12] at the time maybe more than a billion but at the time still hundreds of millions of users when they first started running uh allowing people to run ad campaigns and people are on the platform all the time et cetera et cetera okay so tons down supply they turn on advertising and a few entrepreneurs try it not that many so the demand is so low that they have an incredibly low cost of advertising and they're able to get phenomenal results i mean imagine if right now you were advertising on facebook and i just cut your costs um by 90 any campaign any rubbish product any poorly constructed ad creative could

[2:48] get fantastic results under those conditions right and that's definitely what happened to beginning facebook advertising but of course when those entrepreneurs see those fantastic results they do a couple of things a they start spending a lot more increasing the demand b they start telling other people they start creating videos about them and spreading the word and more and more advertisers flock to the platform i remember hearing an announcement that there are now three million facebook advertisers a number of years ago well i heard one last year maybe even two years ago now that there are now seven million advertisers um across you know that use the facebook ad platform

[3:17] obviously facebook instagram and things like that and included so clearly the demand has increased a huge amount which has led the price to increase and by the way we saw the exact same i said with other digital marketing platforms like google adwords google adwords did basically the exact same thing facebook has done it just did it 10 years earlier you know in the early to mid 2000s you could just get the most ridiculously low cost per clicks as more and more people found out about it the cost per click went up and up and up i mean i remember hearing things um when i first got into digital marketing

[3:47] talking about advertising on google and saying with the search network you should never pay more than 20 cents per click stuff like that this is sort of mid-2000s and you're thinking nowadays it's just hilarious the idea that you would be able to find an industry where you could pay less than 20 cents per click i mean there are industries where you pay more than 100 times that per click and there's quite a lot of them so as as markets mature this is what happens that's sort of the scary part and we've been through that with facebook advertising facebook advertising is now mature enough where the costs i don't think and this

[4:22] is not what we've seen over the last few years are going to continue to rise and rise and rise um well because of a few factors which i'm going to to explain right now there becomes a point where the average advertiser on a platform can no longer advertise profitably okay just makes sense right let's say you need to generate leads for less than 20 each for your campaigns to work well if facebook advertising gets more and more and more and more expensive at some point it's inevitably you're going to inevitably end up paying more than 20 per lead at which point you as a business owner marketer entrepreneur

[4:56] turns your campaigns off or scales back your budget significantly well if increasing demand so more advertisers joining the platform and more advertisers spending more money is what pushing the price up once it reached those points you're going to see less demand if i stop advertising because i can no longer be profitable because the platform is too expensive that decreases the demand and the price comes back down now where you sit on that sort of you know think about the ladder up depends on how good a facebook advertiser you are so really poor facebook advertisers you know to see my arm really poor facebook advertisers down here

[5:29] um you know they needed a really low cost to be profitable it worked right at the beginning but even a year in they're out so they're out straight away the better ones can last a bit longer and then you've got the really good ones you know sort of at the top really high quality facebook advertisers achieving outstanding results they're far less susceptible to price increases because they're doing a much better job and what you'll see if you think about going up this graph is that you'll end up facebook advertising sort of sticks at a certain point right so it's not going to get up into the upper

[5:56] echelon it's just not at this point all the poor advertisers can't make profit so they try advertising doesn't really work out they leave and their demand drops off and you find this sort of natural equilibrium okay and that's why facebook advertising hasn't really gotten much more expensive over the last two years and is unlikely to get too much more expensive uh going forward it's because it just reaches a natural point same happen with google adwords as i said obviously that's segmented into different industries so you pay a lot more per click for like insurance clicks than you would for you know someone selling i don't know a pair of shoes for example

[6:32] okay um so they segmented but you still reach a natural equilibrium where companies just go you know what if it gets more expensive i can't afford to pay anything i i can't afford to advertise and that reduces demand okay so so i i don't i by the way when i'm measuring cost i should quickly explain this i'm not measuring on a cost per conversion cost per click basis because there are too many other factors that go into that if you create a better facebook ad campaign you will see a lower cost per conversion what i'm measuring things on is cpms and we've got clients i've been working with

[7:02] for four plus years at this point and maybe even five actually thinking about it might now be five and i've been back through their ad accounts and i've seen the cpms they're targeting mainly the same audiences obviously we're doing things to improve the campaigns over those over that time period um but they're targeting mainly the same audiences we can look at cpm's cost per thousand impressions that's basically what you're buying as a facebook advertiser is you're buying impressions now yes facebook is smart they can work out who's likely to convert and all that sort of stuff which is why you want to run a conversions campaign

[7:33] but the product you're buying is eyeballs is impressions and that's the product that facebook is selling at the end of the day so that's the sort of more consistent way you can look at your cost and i'd encourage you to do this as well obviously some industries are going to be different some countries are going to be different but for the most part over the last two years we haven't really seen an increase in cpms that has stayed fairly consistent okay now that's partly because of what i talked about it's matured we've reached a point at which good advertisers make money poor advertisers lose money and that just

[8:02] keeps you at this natural equilibrium you know there's not just more and more businesses flooding to the platform because unless they're going to do it right it ain't going to work for them they'll leave but it's also because the supply is massively increased now if you understand sort of basic economics you know that price is a function of demand and supply a way to bring prices back down or at least stop them from increasing is to increase supply and we've definitely seen an increase in supply when it comes to facebook advertising right what does that look like a older generations are using facebook much more now than they were three or

[8:32] four years ago we can see it in the data 55 plus 60 plus that sort of age bracket which particularly in western countries represents a huge uh percentage of the population um they're spending a lot more time on facebook now so there's a lot more ad inventory a lot more supply to put ads in front of those people so even as demand has increased as there's been more facebook advertisers over the last two years which there has it hasn't been massive but there have um we've seen the supply uh increase sort of in line with it the other big area is instagram so instagram usage i don't have the

[9:05] exact data on this but instagram usage now in comparison to instagram users three years ago is much larger i mean they've grown as a platform so they have a lot more users but even their existing users from back then are using the platform a lot more i mean if i look at you know friends and family um colleagues people just spending so much time nowadays on instagram so that increase in supply has also helped uh has allowed for more facebook advertisers so the increase in supply has allowed for the demand to go up a bit without seeing an increase in cost as i said even if they just cut supply

[9:37] dead on right now we're unlikely to see much of a cost increase anyway the other big one coming forward is going to be whatsapp so facebook talked about in 2020 was going to be the year that they start allowing whatsapp ads as basically like a placement option so you know you create your campaigns in facebook's ads manager you can advertise on facebook messenger instagram whatsapp is going to become an option and you can imagine how much more ad inventory how much more supply that will add into the system i mean how much how much time are people spending on whatsapp between group chats and talking to friends and

[10:10] things like that people are spending an enormous amount of time on whatsapp and there aren't really ads in there imagine a scenario where you know you're in a group chat and every eighth message is an ad and every you know you're scrolling through the various chats between friends that you've got going on and you know between each fifth you know five chats would be an ad another five chats would be an ad that's a huge amount of bad inventory and that increase in supply is likely to really help decrease the cost of um of facebook advertising even if the demand continues to increase so what does that mean i basically think we

[10:43] are likely to see as we've seen the last two years very much stabilized cost in terms of facebook advertising i think what it costs now is basically what it's going to cost for the next few years at least there's going to be fluctuations between markets there's going to be fluctuations between countries things like um the pandemic of the lockdown obviously affected things for for a time for for a while um so it could be things like that happen again um but i think going forward you should plan based on cost being as they are and then you can basically park that as not something to worry about

[11:20] and then focus on all the areas of the campaign that you do have control over and that will make a big difference to your business and your facebook advertising efforts things we know work create a better campaign target better audiences create better ad creative come up with a better product use a better offer all the things that are in your control don't sort of worry too much about the future i think costs are very much staple for all the reasons that i've mentioned okay hopefully that's been useful before i go a couple of things i want to quickly mention first is a free webinar called three killer facebook advertising

[11:48] strategies to double or more your revenue and in this webinar i basically break down a number of different sales funnels that we use that perform really well they've worked for so many clients of ours and i go through them in detail so go ahead and check that webinar out completely free we'd strongly recommend you do it link is in the video description below just click on that check it out another um free thing i want to mention is my facebook ads mastermind group so there's currently about 45 000 members fantastic community full of facebook advertisers that want better results for facebook advertising they're asking questions getting them answered

[12:17] and by experts in the group all day all day every day and i do free live trainings in there as well if that sounds like something you want to be part of again completely free to join link is in the description go ahead and click on that we'd love to have you in there if this video has been useful please give it a like give it a thumbs up that'd be much appreciated please subscribe to my channel if you are new and haven't done so already and of course comment below to let me know if this was interesting if you've got questions all that sort of stuff best of luck with

[12:41] your facebook advertising guys and i will talk to you soon bye for now

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