What effect does the age range selected during ad targeting on Facebook have on pricing in the social network’s ads auction market? SocialCode, a Facebook Marketing Partner, sought an answer to that question.
SocialCode sampled bid costs via the Facebook ads application-programming interface across more than 1,800 interest and demographic traits during a five-week period from July 9 through Aug. 12, 2014, examining the data using three common objectives: cost per action, cost per thousand impressions (CPM) and cost per click.
The company said it determined average bid costs by weighing CPC median bid costs by user counts, and then averaging it out across time.
- Millennials (aged 15 through 31) represent the largest age group on Facebook but are less likely to interact with ads. This demographic therefore has a relatively high CPA. The combination of high user counts and slightly elevated CPM suggests that advertisers are highly competitive when serving impressions and achieving reach goals against this audience.
- Gen-Xers (aged 32 through 50) engage and take actions on the platform, as seen by their relatively low CPA. They also are highly sought after among advertisers, as evidenced by the higher CPM relative to their user counts. This is a high competition group, although their value and scale on the platform presents high potential for advertisers.
- Baby boomers (aged 51+) have the lowest user counts. Their relatively high CPA rates suggest that they are less likely to interact with ads. Although user numbers are low, their CPM costs are so low that high-volume impression purchasing presents advertisers with huge potential for reach. For instance, the targeting indicator “affluent baby boomer” is among the least expensive CPM indicators in the entire data set we analyzed.
The company shared its takeaways for advertisers:
There is a large price variance between age groups when bidding CPC versus CPM, so the value of impressions to age groups is highly variable. Advertisers must break out age groups and test different bid types to achieve the highest return on ad spend. Advertisers that fail to segment campaigns by age risk offsetting performance and increasing cost. For example, if baby boomers are valuable to you, there is huge efficiency in targeting them for reach objectives, versus age 17 through 31, where there is high saturation on the platform.
Of course, if an advertiser has creative/copy specific to a certain age group, isolating age segments is a must. However, different creatives — even when differences are subtle — may not perform uniformly against different age groups.
Lastly, advertisers don’t need to segment age groups in Facebook ads to see performance by age, although advertisers will be presented with Facebook’s standard age brackets. When advertisers need more specific age segments, they can be achieved from the account structure side.
Readers: What did you think of SocialCode’s findings?