To reduce the cost of targeted advertising, it is important to understand the algorithms by which Facebook sets prices. Facebook advertising operates on the principle of an auction, so each advertiser is fighting for a place in the target audience's feed. Algorithms rank ads not only on the principle of who will pay the most, it is important for algorithms that the advertising is of high quality and interests users. Because Facebook earns money from advertising, and helps those advertisers whose ads arouse the interest and activity of users to develop.

On Facebook, we pay only for impressions — CPM, all other indicators (CPC, CTR) show us the effectiveness of advertising. Initially, CPM is the same for all advertising companies, and it changes (increases or decreases) in the process, depending on many indicators. The cost per views is affected by competition among advertisers in the selected target audience and the quality of the ad. Next, we will analyze what affects the cost per 1000 impressions, and how to influence it.

Setting up an audience
It is natural that the wider the audience, the less CPM. If you choose a wide audience, there will be more views and clicks, but they do not always lead to the desired conversion. It makes no sense to pay for cheap, but not targeted clicks.

By narrowing the audience to the target audience, there will be fewer impressions and clicks, but more conversions. But narrow targeting may not be effective and bring fewer conversions. And Facebook rates narrow audiences more expensive. It also happens that wide audiences with low CPM get large conversions, because of the good work of the algorithms. Therefore, there is no clear answer, which is better: to choose a target and narrow audience or to expand the audience based on Facebook algorithms.

Test and optimize the audience scale to the balance of cost per views and conversions. You can determine this through tests for narrow audiences, who converts better. And then gradually expand the boundaries of this audience.

For arbitrageurs, expanding the audience to reduce CPM is not always effective. The expansion of the audience is suitable for universal offers. However, there are offers where the audience is clearly limited by the advertiser, then you need to follow the specified framework and moderately expand the audience.

Test different placement
The cost of CPM is also affected by the location. Choose placements based on your creatives and places where the audience spends more time and gets involved in content faster. Different placements and advertising formats are effective for each audience. For one group of products, it is more efficient to use carousels or a catalog, and for another, a video or a story.

Create test companies for each individual placement format. Based on the test results, you will understand which placement and for which audience to use for scaling, and which not.

Work on creatives and engagement
Make different creatives for each audience group, taking into account the pains and triggers of each. The higher Facebook rates your creatives, the lower the CPM. Good creos are given priority in impressions. The technical part is important: the resolution of the image, the amount of text, the aspect ratio for each placement.

But also the decisive factor will be the engagement of the audience, how actively it is involved in the ad. Facebook will stimulate your promotion and lower the bids if your content is interesting and will engage users.

High-quality creatives get more clicks. The higher the CTR, the lower the CPM. Facebook perceives a high CTR as a good sign — if an ad is clicked on, it means that it arouses the interest of the audience. To increase it, you need to work out the quality of the ad — creative, call to action, placement.

Ad launch and display time
The price of impressions changes during the day due to the auction principle: the more advertisers compete for impressions at this time, the higher the CPM. Determine the peak of advertiser activity, and launch when fewer competitors participate in the auction. Study the behavior of the audience, determine the days of maximum rotation of ads and disable impressions at a time when the audience is not active.

It is important to understand the time of your chosen geolocation, as well as the auction activity at this moment. We can't find out exactly at what point and how many advertisers are launching campaigns. Test to understand when the auction is least congested and when users are most active. Use the Inspector tool

Audience Burnout
A high frequency of impressions increases the cost of CPM. The ad bores the audience, gets few interactions. It is always better for users to visit fresh ads or with a new design.

To avoid burnout, change creatives for the audience more often. The optimal frequency of impressions is 3 per user, but always evaluate your statistics, react to every deterioration.

Audience Intersection
To check the intersection of the audience, use the Facebook Audience Overlap. Pay attention to how audiences overlap in different companies. If you show different ads by the same user at the same time, then the effectiveness of advertising decreases, and the cost increases.

So you are bidding against yourself.

Don't reset the algorithms
From the start of the advertising campaign, Facebook algorithms progressively learn to find the right audience and eventually bring conversions at an optimized cost. If you make edits to a running campaign, then the trained algorithm can be reset to zero, after which the coverage will immediately drop and the bid will increase. Therefore, it is important not to change the key variables in the running campaign: the goal of the campaign, the betting strategy, creatives. With care and without abuse, change the budget, CPM and spending limit. Also, you should not add new ads to the adset and resume the launch of the campaign after a week's pause.