How Much Does it Cost to Advertise on Facebook?

cost to advertise on facebook

If you’re considering advertising on Facebook, we’ve got one reason why you should–1.65 billion that is. That’s the number of active, monthly users on Facebook in the first quarter of 2016. Rest assured, your ideal audience is among them. However, many advertisers, small business owners, and brands don’t know how much it would cost to advertise on Facebook. They assume it’s only feasible with a large budget, and this belief keeps their ads off the platform.

In reality, you decide exactly how much you want to pay to advertise on Facebook. The cost structure operates in a simple auction-based structure, however, the process of achieving your desired ad results at a desirable cost is more complex; it requires an auction strategy that supports, and can be measured against, your business objectives. It’s time to take a look at the factors that determine how much you’ll pay:

Ad Campaign Objectives

When you set up a campaign, you will choose the specific action or result you want to optimize your campaign toward. Below is a list of current advertising objectives that Facebook currently offers.

cost to advertise on facebook

Source: Facebook

Not all actions are created equal. The cost of a conversation will undoubtedly cost more than the price of 1,000 impressions (CPM). It’s essential to understand what campaign objective best correlates with your business strategy on a per-campaign basis. If you are able to quantify the estimated business value of your desired action, you will be in a strong position to assess what your maximum bid should be, and how much is reasonable to pay for each completed action. This is the case for manual bidding. However, Facebook’s automatic bidding will aim to maximize your campaign results based on the ad objective you select and your available campaign budget.

You have the choice between a daily budget, which caps your daily spend at a level you designate, or a lifetime budget, which caps your entire campaign’s spend. You can change either budget whenever you want to. The two budget types differentiate the speed and evenness of your campaign’s spend.

cost to advertise on facebook

Source: Facebook

When you are setting up a campaign, Facebook’s Suggested Bid section (under the “pricing” section in the ad creation process), estimates what you should bid in order to achieve the result your campaign is optimized for.

This brings us back to the initial point: you have the freedom to spend as little as possible, but that level of spending likely won’t get you the results you’re after. Apart from your campaign objective, what other factors affect how far your budget can take you?

cost to advertise on facebook

Source: Flickr

Your Target Audience

The targeting options you select for your campaign’s audience will affect how many people complete your campaign objective within your budget. You have access to a number of targeting options:

  • Custom AudienceCreate custom audiences from email addresses, phone numbers, Facebook user or app user IDs
  • Location, Age, Gender, & LanguageGeneral demographic options
  • InterestsSelect interests your company and desired audience share. These correlate with the pages, apps, etc. that Facebook users have connected with.
  • Behaviors: Target users by purchase behavior, device, etc.
  • ConnectionsTarget users who have liked one of your pages, apps, etc. Friends of these connected users will be able to see your ads along with the mutual connection.
cost to advertise on facebook

Source: Flickr

The audience you choose will be based on your brand or campaign objectives. For instance, if you’re aiming for clicks to drive traffic to your site, targeting a smaller, relevant audience would be in your best interest. If your brand wants impressions to drive awareness, a larger audience may be a better fit.

Experiment with the audience you select and the results your campaigns generate. Remember, that your ads are served based on real-time auction conditions. If there is high competition among advertisers for your desired audience, or components of it, it may increase the cost of generating a result, and therefore decrease the results that your campaign’s budget can reign in.

Ad Quality

The quality of your ad plays a big role in how far your ad budget can stretch. If Advertiser A and Advertiser B are both targeting the exact same audience, but Advertiser A has a higher quality ad, Advertiser A could pay significantly less than Advertiser B. Taking the time to ensure high ad quality is a no-brainer, right?

Let’s take a look at the 2 main factors that determine your ad quality:

    1. Relevance: your ad will be rated on a scale from 1-10, with 10 representing the highest relevance, to determine how relevant your ad is to your target audience. A strong rating may not guarantee strong results, but it will lower your advertising costs.
    2. CTR: Your ad’s click-through-rate is the other factor that weighs into ad quality. If your ad has a high CTR, the ratio of clicks to impressions, it signals to Facebook that your ad is resonating with your audience. Your costs will go down.

While you should always strive to be as relevant to your audience as possible to drive conversions and positive brand sentiment, keep this monetary incentive in mind.

cost to advertise on facebook

Source: Flickr

How Much Should You Pay?

Even once you understand how Facebook advertising works, it can be challenging to understand how much you should be paying. While the minimum cost per click (CPC) bid is technically $0.01 and the minimum daily budget for an ad set is technically $1.00, the amount you spend should be calculated based on the worth of your campaign’s result(s) relative to your business.

Calculate your ROI. If you’ve spent $500 on a campaign that generated $200 in sales, you’re left with a negative return on investment. It may take some A/B testing to get your campaign costs right, and a different approach to measure the social ROI of campaigns that aim to generate social engagement. However, if you keep your eye on your ROI and cost per action, you can tap into the lucrative Facebook audience with a budget that’s affordable for your venture.

Natalie Cullings
Marketing Analyst

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Posted on July 6, 2016 in Facebook, Marketing Technology

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