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Meta told investors last month that ads made with creators are now a $15 billion a year business, up more than 97% from a year ago.
So plenty of brands are spending on them, and media buyers can’t agree on whether they’re worth it…
One side keeps creator ads to a small piece of the budget. Another side runs hundreds of them a month. A third side thinks a lot of brands are losing money on creator ads without realizing it.
I think all of them can be right at once. The answer depends on a number very few brands calculate:
What a creator ad really costs (once you add up all of what you paid for it)
The Ads Work Inside Ads Manager
Creator ads do perform. Meta’s own data shows they cost 19% less per sale on average than regular brand ads.
That’s Meta grading its own product, so I’d hold it loosely.
A study of $130M in Meta ad spend published this summer found creator ads were only about 5% lower CPA.
Either way, creator ads tend to look like winners in Ads Manager, which is why brands keep pouring money into them.
The catch is what those reports leave out.
Ads Manager only counts what you paid Meta to show the ad. It never sees the other bills that come WITH a creator ad:
• The fee you paid the creator to film the video
• The fee for the right to run that video as an ad, usually for a set window like 30 or 90 days
• The renewal when that window runs out and you want to keep the ad live
• The cut taken by any agency or marketplace that connected you with the creator
Those bills sit in your inbox and your bookkeeping, far away from your CPA.
So a creator ad can be the cheapest ad in your account while the program behind it is your most expensive.
I can’t prove those bills flip the math for your brand. In a lot of the accounts I manage, though, nobody has added them up at all.
Your All-In Creator CPA
To see what creator ads really cost, add the other bills on top of what you pay Meta.
I call this all-in CPA:
All-in CPA = (media + content fees + usage rights and renewals + platform fees) ÷ conversions
Let me run it with round numbers. These are illustrative:
Media spend: $38,000
Creator fees: $6,000
Usage rights and renewals: $2,000
Agency or marketplace fees: $1,000
Total cost: $47,000
Conversions: 1,000
Ad-level CPA: $38,000 ÷ 1,000 = $38
All-in CPA: $47,000 ÷ 1,000 = $47
Now say your in-house ads run at a $44 CPA, or $45 once you load in your own production cost.
In Ads Manager, the creator program looks $6 cheaper per sale.
Once you add the bills, they’re $2 more expensive.
It can swing the other way, though. If the added creator bills get you two or three videos that work instead of one, the costs spread over many more sales and creator ads come out ahead.
The point is that you won’t know which way yours lands until you pull this month’s creator invoices and rights agreements and run it.
Three Rules That Keep It Honest
The brands that seem calm about creator spend tend to follow three rules.
Rule 1: give creator ads their own campaign.
• When they share a campaign with your other ads, their results get mixed in.
• You can’t see how creator ads are doing on their own.
• In a separate campaign, you can read the results and set the budget on purpose.
Rule 2: cap how much of your budget goes to creator ads.
• If they’re 15% of your spend today, hold them at 15%.
• Raise the cap only once their all-in CPA beats your in-house ads for a full month.
Rule 3: compare them fairly.
• Test creator ads against in-house ads selling the same product at the same discount.
• If the creator ad pushes your bestseller at 20% off and the in-house ad pushes a full-price new launch, the creator ad will look better for reasons that have nothing to do with the creator.
It’s the same reason you’d keep a testing budget apart from the budget you scale with. When something comes with its own costs, it needs its own fence so you can see whether it pays for itself.
Run the Numbers This Week
Here’s what I’d do before next weekend:
1. Calculate your all-in creator CPA, counting the creator, rights and agency bills along with ad spend.
2. Set a cap on creator spend as a share of budget, and write down what result would earn it more.
3. If creator ads are mixed into your main campaigns, move them into their own.
Creator ads can earn their place in your account.
Your all-in CPA tells you whether yours have.
Once you know that number, there’s not much left to argue about.
If you want a growth partner aligned with your real business goals, let’s chat.
I appreciate you reading and as always if there's anything I can do to help you in anyway just respond to this email. I personally respond to every email I get.
- Kody ✌️
