There are three million businesses advertising on Facebook. People willingly putting money into a machine that yields, in most cases, varying results. Without understanding exactly how much Facebook advertising costs!
Due to a lack of time and knowledge, business owners can become confused with their social media endeavours. Questions we often hear are “How much do they recommend to spend on Facebook ads?” and “Why did I receive such poor results from my ad campaign when I spent loads of money”.
Here at This & That Media, we thought that whilst we self-educate ourselves every day as a growing creative agency, it would be handy to help you gain a better understanding of all things social media.
We think that if more people understood how these machines work. They would make more informed decisions that will help them utilise these powerful platforms. Below is the second of two articles explaining how much Facebook advertising costs and how you can implement it to your business’s social media strategy.
Like any form of advertising. There are metrics that are given a value based on their outcomes. Social media is no different and has four cost metrics.
- CPC – Cost Per Click
- CPM – Cost Per 1000 Impressions
- CPL – Cost Per Lead
- CPA – Cost Per Action
A general rule of thumb is the closer the metric is to generating direct revenue for your business the higher the cost. But there’s a lot more to it than that.
How much do Facebook ads costs?
On average, Facebook ads cost $0.97 per click and $7.19 per 1000 impressions. Ad campaigns focussed on earning likes or app downloads can expect to pay $1.07 per like and $5.47 per download, on average.
What determines the Facebook ad costs
There are eight factors that play a role in how much Facebook advertising costs.
Target audience has a significant impact on the prices of your ads. For example, if your ad campaign targets women, your CPC may increase $0.55. That’s $0.15 more than if it were targeted at men. For age, ads that target 55-65+ tend to have substantially higher costs than campaigns focused on users 25-34 year olds. This is based on the saturation of these age and gender demographics on the platform.
Specific interests or audience attributes can imapct how much it costs your business to advertise as you may target high value attributes or broad interests.
While high value attributes can help you reach your specific market, broad interests can inflate your target audience with low value users. Some of these users often click on your ads but don’t act on your call to action. Targeting them can result in a low performing campaign so focus on who matters most.
2. Ad Budget
No matter your budget, it will impact how much Facebook advertising costs your business. As an example, if your company launches an ad campaign with a monthly budget of $100.00, you may set a maximum bid of $1.00 per click. Social media strategists recommend a daily facebook ad budget of at least $5.00.
While a large ad spend provides your business with additional flexbility, you can still make a small budget work. You need to realise, however, that a low ad budget provides fewer conversions because of its performance limitations.
3. Ad Bid
Depending on your bid strategy and your bid amount, you may have higher or lower Facebook ad costs. In most cases, manual bidding comes with higher ad costs while auto bidding tends to make the most of the budget.
Before you decide on a bidding strategy, it’s vital you understand how the ad auction works on Facebook. As it enables you to understand the algorithm so you can build better ad strategies and budget. If you are unsure refer to our previous article – How Facebook Advertising Works!
While an agressive bid can increase your total value, it also raises your Facebook ad costs. That’s why your business wants to focus on creating a relvant high-quality ad first. Then you can assess your bidding stratgy and bid investment.
Lowest-cost bid strategy: this option helps businesses achieve the lowest possible cost per click or action. It also aims to make efficient use of your budget, which is why companies tend to start with this budget.
Target-cost bid strategy: this option works to reach your desired cost per click or action. You can only use this for app-installs, conversion and lead generation objectives.
4. Ad Objective
When you create an ad on Facebook, you need to choose one of the available objectives. In most cases, more valuable ad goals lead to high ad costs. That’s because these actions have immediate value for businesses. Creating immediate revenue for your company.
As your build your ad campaign, however, it’s important to remember the value of brand awareness and consideration. When you reach and connect with users on the early stages of the consumer funnel you can grow their interest in your brand and move them further down the sales funnel, resulting in a purchase.
Even though the action occurs later, it offers your business real and tangible value. Decreases your Facebook ad costs, as most companies pay less for awareness and consideration phase than for conversion related goals. The only difference is turnaround for conversion.
5. Ad Placement
Facebook: offers a versatile platform for advertising your business. Average CPC is $0.30 less than Instagram.
Instagram: maintains the highest CPC. Companies spend $0.80 CPC to appear on IG. For stories, it increases to $0.78 CPC.
Audience Network: Allows your ads to appear on websites and mobile apps, maintains an even lower CPC than Facebook & Instagram. In most cases, companies spend an additional $0.20 per click.
Automatic placements allows the social media platforms delivery system to make most of your ad spend by placing your ads on platforms that offer most potential for results.
If you want to reduce your Facebook ad costs you can turn off this feature. When you turn it off you allow your team to select where you want your ad to appear, whether on Facebook, Instagram or audience network.
6. Ad Quality
As discussed in the previous article, the quality and relevance of your ads (rated by Facebook) affects the cost of your advertising. The higher the quality, the lower the cost.
Ad score = 2.9 CPC = $0.14
Ad Score = 8 CPC = $0.03
The time of year can also impact how much Facebook advertising are. Busy seasons inflate the cost of advertising.
Although this is the case, your business probably wants to take advantage of increased demand from consumers. You may decide to increase your budget for those high-demand months or audit your strategy to improve the quality of your ads.
Even while the average price of Facebook ads is $.097 CPC, you can gain more insight into your expected ad costs by looking at the average price for your industry.
- Apparel = $0.45
- Auto = $2.24
- B2B = $2.52
- Beauty = $1.81
- Consumer services = $3.08
- Education = $1.06
- Employment = $2.72
- Travel = $0.63
- Finance & Insurance = $3.77
- Fitness = $1.90
- Home Improvement = $2.93
- Healthcare = $1.32
- Industrial Services = $2.14
- Legal = $1.32
- Realestate = $1.81
- Retail = $0.70
- Tech = $1.27
You should only use these numbers as benchmarks.
How you can implement this to your business?
Understand your target audience as best you can
This will help you gauge not only what to post on social media but also the culminating costs of those you’re targeting the ads at. The more refined your audience and content messaging are, the more relevant the ads become. Meaning low Facebook ad costs.
If you want learn how to define your target audience on social media, read our latest article here.
Get clear on your social media goals
Understanding your social media goals will give you a clearer idea of how much that will cost relative to the outcomes you want to achieve for your business. Clicks and views cost less than leads and conversions so weight that up when you set out to advertise on Facebook.
If you’re struggling to align your business goals on social media, you can read our SMART goal setting article here.
Having a “top-down” perspective with Facebook advertising should help you have a more holistic approach to your business’s social media endeavours. It should also inform how you develop your creative strategy and goals that will yield great returns with the lowest cost.
If you are looking to get a clearer picture of your social media strategy find out how we can help sign-up to our FREE online 20-minute consultation here.