The past year has been tumultuous, and that’s putting it politely. Despite pandemic lockdowns and record job losses in 2020, both real estate and social media remained bright spots in an otherwise bleak economy. Yet it hasn’t been easy. A closer look at the Facebook ad costs tells a story of a wild year in real estate.
A strong start
With a record economy, Facebook ad costs for real estate looked like any other year pre-pandemic. Looking at tens of thousands of campaigns run by TurnKey Suite ad managers, January through March stand out as the months with the highest ad costs.
For instance, the average cost of Facebook’s lead generation ads for real estate peaked in February at $2.60 per lead. Similarly, the highest average cost per 1000 views (CPM) for 2020 happened in February at $45.33 per 1000 views.
TurnKey Suite also uses a dynamic ad type that imports listings directly from the MLS and displays them in a carousel with a built-in lead generation form. Since a limited number of companies offer this ad type, the costs skew lower than typical lead ads. Like the others, dynamic ad costs peaked in March at $1.88 per lead indicating strong competition to start the year.
Then came the crash …
As everyone knows, the economy crashed in April as widespread lockdowns shut down businesses. During this time, Facebook use skyrocketed while demand for ads plummeted. As a result, prices for Facebook ads fell to shocking lows.
The average cost of Facebook lead generation ads for real estate dropped by 35% from February to April. The cost bottomed out in July at $1.64 per lead at the height of the second wave of Covid-19. As of November 2020, the average cost has remained below $2 per lead for every month since the crash.
The cost of other ad types took a similar crash. For instance, dynamic ads for real estate fell to an average cost as low as $1.20 per lead during April and have not reached above $1.35 per lead since March 2020. Despite being already cheap, post engagement ad costs fell an astounding 80% between February and June to only $0.02 per engagement.
Riding the waves
Interestingly, Facebook ad costs for real estate mirrored the waves of Covid-19 infections. As mentioned earlier, the first drop in ad costs occurred during the first wave of Covid-19 in April. However, the average ad costs across all ads had started to rise heading in June.
In July, ads dropped again as Covid-19 infections peaked in Florida, Arizona, and other important markets. For instance, the CPM for all ad types dropped to its lowest levels of the year in July. In fact, it cost an average of $23.60 for every 1000 views of an ad. That’s a 48% drop in cost from its high point in February.
The same pattern of April and July drops in costs also held true for lead generation and dynamic ads, but some ad types bucked this trend. Like all ad types, page likes and post engagement ads experienced sharp declines at the beginning of the pandemic. However, costs for these ads continued to climb through the July waves. So what explains the difference?
The battleground state of Facebook
In late summer, the election season began heating up, and a flood of political ad dollars came with it. This influx of money created more competition for ad space than seen in previous months. Ultimately, this competition drove up prices for many ads.
In fact, page like ads actually reached their peak in September as PACs and others recruited new followers in anticipation of the peak of election season. Between February and September, the average price of a page like ads went from $1.52 to $2.75. That’s an increase of over 80%.
Other Facebook ad types saw a similar, though less dramatic, upward trend during the last half of the year. After reaching a peak of $0.10 per result in February, costs dropped. That was followed by a slow recovery in the last half of the year to $0.05 per result in October. In a similar fashion, lead generation ads had risen to $1.93 per lead by September.
With 2021 around the corner
With the election in the rearview and vaccines on the horizon, 2021 promises a possible return to normalcy. For the moment, prices for real estate ads on Facebook remain their lowest in years. For real estate agents who have been considering Facebook ads, the new year may be the perfect time to experiment.
The costs for Facebook ads may never be this low again meaning limited marketing dollars can go further. Competition for sellers has also been fierce with limited housing inventory. With the end of a roller coaster 2020 insight, homeowners may be more willing to take advantage of soaring home prices.
It’s the perfect combination of affordability and opportunity, and agents should take advantage of Facebook ads in the year to come.