One major concern for our new clients is the challenge of balancing ad frequency with audience saturation.
When you advertise to an audience, specifically a retargeting audience, you want to find the perfect balance of exposure where customers are aware of the product or service, but not so exposed that they begin to ignore or get tired of them.
And most importantly for direct response advertising, you want to make sure you’re not wasting money on jaded prospects.
I sat down with Amanda to record our podcast and discuss why all of this data is important for growing your business as well as how you can apply it to your own numbers.
WHAT DO YOU MEAN BY FREQUENCY?
The metric we track to measure saturation is frequency – how many times people in your pool see an ad in a given time frame.
If you’re advertising on Facebook, then it’s critical that you manage your frequency. That’s because it’s significantly more important when compared with Display because the impressions from Facebook have a greater impact.
A user might have 20 banner ad impressions in a single day, but they may not ever consciously notice the actual advertising. A Facebook impression, however, means the user definitely saw your ad because they have to scroll past it in their News Feed. It would even take up their entire phone screen if they were viewing it on mobile.
Since Facebook ads get noticed more than Display ads, you want to manage their frequency so you don’t create creative fatigue amongst your audience.
WHY DOES FREQUENCY MATTER?
Audience saturation is ranks as a greater concern when you’re looking at a retargeting audience. When you’re retargeting, you’re limited in the scope of your audience based on the number of users who have been to your site.
With a specific audience size in retargeting, regardless of your budget, you can hit an ad’s saturation point fairly quickly.
WHAT’S THE SWEET SPOT FOR FREQUENCY?
Seeking to measure where the “sweet spot” for frequency is for our clients, we pulled all of our 2016 retargeting data from across all of our clients who had spent consistently throughout the year and divided them into two groups: Lead Generation and E-Commerce.
Given that Facebook allows a maximum of 2 impressions per person (per ad set) per day, we measured on a monthly basis to give us a more meaningful metric for the ads seen per user.
CPA falls as frequency increases across all measured frequencies. Of the clients we measured only one saw their CPA increase after eight impressions.
However, click-through-Rate (CTR) decreased as users become less engaged after seeing the ad multiple times.
After the initial impression, the lead generation CPAs stayed relatively low until we reached the nine impression threshold. At that point, the CPA shot back up. We saw this effect in every single lead gen client, and while in aggregate we saw the jump at 9, the actual number varied from client to client (ranging between from 4 and 12).
For the CTR, it continued to increase as frequency increased.
WHAT THESE RESULTS MEAN
Ideally, you’d have unlimited budgets to consistently drive either your sales or leads at continuously profitable levels.
Given that we don’t live in a dream world, we used this analysis to ensure that any money we spent on retargeting was generating returns as cost-efficiently as possible.
For you, this means if you’re an e-commerce company, you should be focusing your spend on very recent site visitors. Additionally, you can also concentrate on those who have demonstrated a high-intent by hitting the add-to-cart page without purchasing or visiting other important pages throughout your website.
If you’re a lead generation company, this will mean looking for the potential tipping point in your performance. Once you’ve discovered what this level is, you’ll want to make sure your bids and budgets keep you under that threshold.
HOW TO MEASURE PERFORMANCE BY FREQUENCY
Here’s how we reached these conclusions and the calculations we made to get here.
If you’re looking to find your frequency, it can be calculated as the number of impressions divided by your reach. In other words, you’re looking for the number of times each user saw your ad.
What’s great is that these metrics are available within Facebook’s Ads Manager, alongside your amount spent, clicks, and conversions.
- In Ads Manager, you’ll want to change the date range to as significant amount of time as possible (at least a month, but preferably much longer than that)
- Then you’ll click the “Columns” drop down so that you can select which columns you want to analyze.
- Scroll down to where it says “Customize Columns” and click that.
You’ll then see this screen.
4a. Choose the columns selected above (Ad Name, Impressions, Link Clicks, Amount Spent, Purchase, Reach, and Frequency), or you can substitute whatever conversion event you prefer for your raw data export.
4b. Click Apply.
After you click apply on the previous screen, you’ll come to this one.
- Click the “Breakdown” drop down
- Click on the “By Time” so it shows all of the options.
- Then click on “Month.”
- Once you’ve done that, click on “Export” to get your data for analysis.
With this data, you can see the different performances of your ads at their individual frequencies. This allows you to make better decisions based upon the performance of your ads at each of these frequencies. You’ll also be able to notice if there is a drop off after a certain frequency level so you can make sure to target your spend efficiently.
HOW TO CALCULATE POTENTIAL RETARGETING SPEND
Now that you’ve figured out what your best frequency is, you can calculate your optimal spend based on your audience size.
To start, we use the following formula:
Spend = (CPM / 1,000) * [Audience Size] * [Frequency]
As an example, say you’ve seen historically that your CPM for retargeting is $15. You have a high-intent retargeting audience of 50,000, and you know that your ideal frequency is 12 times per month.
In that equation, it would look like this:
Optimal Spend = ($15 / 1000) * 50,000 * 12
Therefore, your optimal spend for this audience would be $9,000 per month.
If your budget is higher or lower than this, you can keep repeating this exercise by either adding on additional high-intent audiences or increasing your frequency until you reach your desired number.
Time for you to dive in! The examples and equations above should help you figure out at what point you should cap your ad frequency so as not to waste money advertising to people who won’t convert. Hopefully, you’ll also find value in finding your optimal budget for retargeting your potential clients or customers.