I get my share of questions from people who have been running ads but are simply paying too much per click or conversion and therefore the ads are not ultimately working for them. I thought I'd write up a post to answer this in one broad overview. Hope this is helpful....

While there are many factors that influence the price you pay per ad, the biggest factor is your click through rate. The higher the click through rate, the less you pay. For example, if you bid .20 cents and get a 1% click through rate, and I bid .12 cents and get a 2% click through rate, Facebook makes .20 off of you, but .24 cents off of me, for the same 100 impressions. So obviously I would be favored and I would get the traffic for a fraction of the price. So to improve the price you pay, you should first focus on getting that click through rate up. Changing up the image is usually the first place to start, but headline and ad copy can also influence things quite a bit.

Your quality score is also a factor. When you run a campaign for a while and it is getting a low engagement rate then effectively FB assigns a low quality score to that campaign. This data is assigned to your image as well. So rather than trying to fix a campaign that has been performing poorly, I recommend starting a completely new campaign. If you are planning on using the same image that you have used in an under performing campaign, make sure you re-upload that image (even if it’s the same exact file). Do not just select the old image from your image library or that low quality score will carry over to the new ad.

Another thing you can do is create a campaign for US traffic and one for international traffic. Facebook recommends grouping it with US and Canada in one campaign. European markets in another, Australia and New Zealand together, etc. This is because you will be paying different prices for each market and so by targeting everything in one ad, or even one campaign, you will be paying more than you need to and possibly pricing yourself out of US traffic while the cheaper (and often less effective) markets still send you traffic, throwing off conversion stats in the process. That said, sometimes the audience is just too small for this to make sense and I group everything together anyway because it’s simply easier. But it’s something to consider.

Finally, if you make all of these changes and still can’t seem to get your click through rate up, then targeting may be the issue. I regularly see huge swings in responsiveness across different target groups that defy expectations.

Based on recent changes in the FB ad platform I would recommend creating simpler campaigns with one target audience per campaign. The reason for this is again because of the quality score issue. If one targeting option does not work, that could effect the rest of the campaign. So whenever something doesn’t work. Pause or delete the campaign and start a new one with a fresh image, even if everything else is the same.

Also keep in mind that when running a new campaign it will take a little while before the price will settle. It usually goes down for the first 24 hours or so until your quality score is established. So give a new campaign time. Once the price has bottomed out I will adjust my bid price to be just a few cents over what I am actually paying. If that slows down my traffic, I will nudge it back up.

Once the campaign has stopped performing on an optimal level or the traffic slows down considerably, pause it and start a new campaign with different targeting. Run it until it’s not effective and start yet another campaign. Do this until you have a cycle of 1 – 2 months. Once you have completed the cycle, go back to the first campaign and turn it back on. It will usually start performing well again because your audience has had a break from it. If you find that the ads are not performing well when you cycle back then you know it is time to come up with a new image and angle to your ads. Once you have done so you can go back to your original targeting with the new ad.