If you want to amplify your marketing campaigns on social media, then, Facebook ads are a sure bet. Surprisingly, the cost of these ads is impressively low compared to the cost of many other digital marketing strategies. But, is there a specific price tag for each ad? This article will answer this and much more.
How much do ads cost on Facebook? There is no fixed price tag for Facebook ads. This is because the cost of these ads is influenced by several other factors. These are:
- Objective of the ad
- Quality and relevance of the ad
- The targeted audience
- Your industry
- Time of the year
- The type of bid and the amount
The good news is that you are in charge of your overall budget for your Facebook ads. And lucky for you, this article is packed with all the information you will need to make a wise and well-informed decision on the amount that your business should invest in these adverts.
Factors that affect the cost of Facebook ads
The objective of the ad
Facebook determines the ideal audience for your ad depending on the goal or preferred outcome your campaign. The marketing objectives are usually divided into these three types:
- Awareness – Ads with this objective aim at increasing the knowledge about your products and services.
- Consideration – Ads with this objective aim at getting people to develop an interest in your product and services.
- Conversion – The aim of ads with this objective is to motivate consumers to take a certain action or better, to buy your product or service.
If you aim at increasing web traffic, your ad will be shown to a person with the behavior of clicking on ads. On the other hand, if your target is increasing sales, your ad is shown to a person who is likely to purchase your product.
Ads with the objective of conversions are more expensive compared to those that boost awareness or aim at consideration.
Type and amount of bid
Remember that no social media user wants their news feed filled up with adverts and other sponsored posts. To prevent such case scenarios, Facebook uses an ad auction system that selects only a specific number of ads. However, ads placement is never awarded to the highest bidder instead, ads that create the highest value are given top priority. This value is measured by considering the criteria below:
- Ad relevance and quality – the Facebook audience you select should be interested in your ads.
- Bid amount – Facebook considers the bidder who is willing to pay the most.
- Projected conversion rate – this is determined by the likelihood of your ad achieving your selected objective. Ads with higher chances of possible conversions are rated more highly.
With this in mind, it important for you to place competitive bids that are highly targeted, and are meaningful to your targeted audience. If the overall value score of your ad is higher than that of your competitors, then the cost of your ad placement will be lower.
There are two possible bidding strategies:
- Automatic bidding – This is a strategy in which Facebook sets an optimum bid for you within the best possible price.
- Manual bidding – This is ideal for bidders who have a specific goal they want to achieve or are looking for greater control over your budget. This strategy requires one to master the art of bidding for best results.
The price for each type of bidding is different. In automatic bidding, Facebook decides the best possible price for you while in manual bidding the ad cost is dependent on your goals.
Quality and relevance of your ad
Here, the focus is on the content of your advert. Does your preferred audience want to see this kind of content?
Remember that the primary reason that anyone joins social media is not to buy a product. In fact, a majority of the users will be put off by too much promotional content. For this exact reason, Facebook aims at ensuring ads are entertaining, creative, and as well as relevant to the target audience. This makes ad relevance the single most important attribute that any seller should prioritize for lower advertising costs.
How is your ad relevance measured? The relevance of your ad is measured by considering the kind of feedback the ad is likely to receive from the target audience. Feedback can either be negative or positive. If your target audience is likely to hide or report the ad as appropriate, then the ad is ranked lower.
Ads that provide the highest value to users are awarded higher ad relevance score. The lowest possible score is 1 and can go up to 10. However, the score keeps on changing depending on the feedback Facebook receives from users regarding your ad.
Facebook offers numerous audience selection options to advertisers. This aims at helping advertisers fine-tune their target audience to gain better conversion rates. The cost of your ad is dependent on the competition for the selected audience. Thus, if you select a broad audience, you are likely to incur higher costs.
Also, note that adds with highly targeted audiences attracts lower costs. And although the size of a highly targeted audience may be smaller, you are more likely to reach appropriate people for your campaign.
On the flip side, Facebook gives more than 350 elements that you need to choose and combine to define your ideal audience. This will require a lot of experimenting and some trial and error before you can master the art of selecting the perfect audience.
Time of the year
The cost of your advert will be directly proportional to the amount of competition. Thus, during holiday seasons, certain days of the week such as Black Friday, or a certain hour when the competition is normally very high, the cost of your ads will be highest.
The advertising cost varies from one industry to the other. For instance, research by Wordstream shows that the average cost per click for travel and hospitality companies is only $0.63 while that of finance and insurance companies is $3.77.
This difference is attributed to factors such as the size of the audience and the competition in your said industry. As seen above, if there are a lot of advertisers competing to get a slot in the same industry as you are, so does the cost increase.
What is the importance of using paid ads on Facebook?
Every business owner should understand the possible outcome of any investments they are about to make. Have a quick look at the benefits you are likely to gain from the use of paid ads.
- Targeted campaigns – Facebook is the most targeted type of online advertising. In fact, it brags 89% accuracy rates in such campaigns.
- Cheap – Unlike other advertising channels you can spend just $5 to reach more than 1000 people
- Fast – A person can achieve same day results by use of Facebook advertising.
- Helps in building your brand awareness – It’s no secret: the more familiar consumers are with a certain brand the higher the chances of purchasing its products.
- Increased web traffic – Compared to other platforms, Facebook is more effective and cost-effective in increasing traffic to your website. This can be done by running a website click campaign that targets at luring your target audience to visiting your website.
- Increased sales – Due to its ability to run highly targeted campaigns, your Facebook ads are only shown to the people who are more likely to purchase your product.
- Results are measurable – by installing conversion pixels on your website, you can easily monitor and measure the impressions, clicks, and conversions received from Facebook.
- Builds meaningful interactions with prospects – Through the likes, comments, and shares on your post consumers feel more connected to you and your brand.
- Keep up with competition – Research shows that a whopping 93% of social media marketers use Facebook Ads. This is enough evidence that a majority of your competitors are using Facebook marketing. So, if you are not making use of this cost-effective marketing strategy, you are allowing your competition to take the lead. This may eventually cost you your business.
How do you set a Facebook advertising budget?
As you have seen above, the cost of Facebook ads is dependent on several factors. Thus, when setting your marketing budget it is crucial that you put all these factors into consideration. Here is a step by step guide to do so.
Make a list of the goals for your campaign.
Do you want to increase traffic to your website, increase the number of your followers, or is your goal to gain more conversions to your shop?
Having specific goals will ensure that you are able to select the most appropriate ad objective. Keep in mind that different objectives will have different costs.
Choose a bidding strategy
As discussed earlier, there are two types of bidding strategies. Either, you can let Facebook choose the lowest possible cost within a certain budget for you. Or, if you are aiming at app installs, conversions, and catalog sales then you can consider manual bidding.
You will notice that the costs vary (increase or decrease) depending on the time of the day. Depending on your budget and objective of your ad, consider setting a schedule for your ad. However, this option is only available for users who select the lifetime budget option.
Carefully craft your ad.
Although the costs incurred in designing your ad is not directly paid to Facebook, it is one of the major costs that you will incur before you can start your campaign. Start by researching on the quality of ads that your competitors are showing on social media. Then, carefully craft a more visually appealing and highly relevant ad that will score a higher relevance score.
According to a study by Sprout (as shown in the figure below), users prefer entertaining content compared to any other aspect of ad content. This only emphasizes the importance of investing enough time and resources to come up with highly attractive and entertaining ads.
Please note that the success of Facebook marketing is not proportional to the amount invested. Thus, a good idea is to start with a lower budget as you closely monitor the performance of your ad. Then, with time you can adjust your budget, objectives, and audience until you achieve optimum results.
Definition of various bidding terms
Below are common terms that you are likely to come across during your bidding process.
- Cost per Click (CPC) – this is used for campaigns that charge whenever users click on a certain ad.
- Cost per Like (CPL) – this is used for campaigns that charge when a user clicks the like button of a certain ad.
- Cost per Mille (CPM) – this is a common measure for campaigns aiming at brand awareness. It refers to the cost per every 1000 impressions.
- Cost per Action (CPA) – this is used for campaigns whose objective is for the audience to take action. For instance, if you need users to install an app, or make a purchase, you are only charged after a person clicks the ‘install’ or ‘buy now’ button.
How can I know if Facebook ads are working for my business? The best way to establish if Facebook marketing is working for you is by looking at the relationship between the return on investments (ROI) and the cost per action (CPA). For one to say that an ad was effective the ROI has to be higher than the CPA.
When is the best time to post an ad? The best time defers from one business to the other. But, to get optimum results, one should research on times when your prospects are online. Also, if your business involves scheduling appointments, a good practice would be to post ads during your businesses working hours.