Comparing Meta ads among industries for 2023
January 31, 2023
2022 has been a wild ride, and 2023 will bring even more exciting changes in advertising, marketing, and business in general.
One of the most significant changes affecting businesses in 2023 will be the rise and prevalence of paid ads on platforms like Facebook and Instagram.
Meta ads are becoming increasingly popular with advertisers across industries because they offer a unique way to target and reach potential customers.
But, not all industries are created equal.
So, as 2023 approaches, it is crucial to understand how different industries use and perform when it comes to their Meta ads so that you can make informed decisions about your ad campaigns in the future.
Below, we're looking at how Meta ads performed across various industries to help you understand how to design great Facebook ads for your future ad campaigns!
The industry can create a 50% change in advertising costs
Advertising costs can be measured in CPM, or cost per mille, the average cost an advertiser must pay per 1000 impressions.
Factors such as topic, niche, and audience intent all play a role in determining CPM. But it’s primarily influenced by two factors:
The price advertisers are willing to pay and the number of advertisers bidding for ad space at that price.
So the more popular and attractive a target audience is, the higher the CPM, which means not all industries will experience the same CPM.
As we can see, food, home, and sports industries have the highest advertising costs, as much as 50% higher than other industries.
The intense competition among advertisers battling each other for consumer attention pushes CPM costs higher.
In other words, because they’re all looking for very particular types of consumers, they’re willing to pay more to get their ads in front of those people.
On the other hand, we also see that children, beauty, and fashion industries have lower advertising costs.
When we break it down, it’s easy to grasp that consumers are more likely to buy products in these industries.
Products in these categories are generally more affordable, and there’s simply a greater number of consumers in the market who need them.
Therefore, advertisers don’t need to fight as much, which, in turn, leads to lower advertising costs.
Different industries have a different average performance
Aside from CPM, we also found that average performance changed drastically based on the industry.
When it comes to advertising, one rule of thumb is that the more expensive or complex a product is, the lower the conversion rate will be.
After all, it’s easy to see why more people are willing to spend $20 or $30 on a product than people are willing to pay $1000.
So when a product has a higher price tag, more impressions are typically needed to find the right consumer to buy it.
And that’s precisely what we found when we compared performance across varying industries.
Because they typically sell higher-priced products and services, the home and tech industries performed relatively poorly.
In contrast, hobbies, fashion, and beauty industries had much better performance levels.
Ads in the hobby industry performed as much as 340% higher than tech.
Let’s think about that for a second!
When you see ads for computers, smartphones, or furniture, you might be intrigued, and you might even want to buy them.
But because these things cost hundreds, if not thousands, of dollars, you’re not likely to make a purchase immediately.
On the other hand, when you see ads for hobby products, fashion accessories, or beauty products, because these things require a considerably smaller financial commitment, you might even decide to purchase them right away.
The CPA can change drastically according to the industry
When we combine performance with the cost of advertising, we find ourselves with yet another essential advertising metric known as cost per acquisition, or CPA.
To calculate CPA, all we need to do is divide the total cost of advertising (ad spend) by the total number of customers acquired during a campaign.
For example, if you’ve spent $100 on advertising and acquired 20 new customers, your CPA would be $5 per new customer.
And since we’ve seen such a drastic difference in performance across industries, it’s no surprise to learn that CPAs tend to fluctuate in a similar way.
Because industries such as tech and home had the lowest performance levels, their CPAs were as much as 344% higher than their peers.
In fact, it’s not unusual for companies in these industries to pay as much as $6 or $8 per acquisition.
However, since they sell higher-priced items, they can afford higher CPA costs and still make a decent profit margin on each sale.
On the other hand, companies that sell $10 or $20 products can’t afford to pay these higher acquisition costs.
And that’s precisely why industries such as hobby, fashion, and beauty, which have better performance levels, also have lower CPA costs.
Typically, these industries pay no more than $1.70 to $2.50 per customer acquisition.
After all, if a beauty product, for example, retails at $20, but the CPA is $15, that only leaves $5 for marketing, warehouse costs, employee wages, etc.
And that just isn’t enough of a margin.
If this were the case, companies would lose money selling their products.
How Meta ads stack up across multiple industries
Overall, different industries experienced vastly different results regarding Meta ads in 2022.
And as we can see, the industry you’re a part of will determine your advertising costs, how well your ads will convert, and how much it will cost you per new acquisition.
The more saturated your industry is, and the more attractive or profitable your target audience is, the higher your CPM will be.
Similarly, if you sell higher-priced products, you should expect your ad performance to be slightly lower and your CPA marginally higher.
In the end, understanding how each industry performs can provide valuable insight into how you should approach setting up your ad campaigns to maximize your ROI while minimizing wasted spending on ineffective strategies.
And we hope that with this knowledge in hand, you’ll be able to set yourself up for success!
More to read
Make sure 2023 is your year with the following insights:
- The best type of ad messages to use in 2023
- Meta ads outlook into 2023 - Meta ads prices in 2022
- Learnings from top-performing advertisers for 2023
The dataset from this article is based on 7.1B impressions and 59.1K pieces of individual content on Meta (Facebook) platforms. It takes into account data from all countries and industries, with the campaign objective of Conversions. The period is from 1. September 2021 - 16. September 2022.
Numbers are looking at correlation only, not causation. Remember to check your own data: numbers for different brands, industries, and contexts will vary.
If you were intrigued about a specific insight, you can go in-depth into the various dimensions and how data can be segmented in Confect, here.