The Cost of Advertising

Eh, advertising costs can be a touchy subject. Mainly because the answer will vary based on one’s marketing plan and the platform they choose to advertise from. Now, you may want to start advertising soon, but you have to learn to walk before you can run. To find out what your advertising expense may look like, you need to know your budget. However, before you know your budget, it would help to know your advertising strategy before you take that first step. 

cost of advertising

Coming up With an Advertising Strategy 

Marketing typically carries your business’s revenue. Additionally, marketing is a task-oriented objective, meaning, you focus on completing specific tasks that contribute to the larger goal. By organizing those tasks, you are essentially cooking up an advertising strategy. An advertising strategy is an ever-evolving methodology used by businesses to create awareness of a product or service. It is a cartographic representation of your goals and the supplemental processes by which you will implement them. It is all things informative and persuasive

For your advertising strategy to be effective, you need to efficiently reach your leads within an allotted amount of time, attain their point of view, then turn those leads into conversions. It is by no surprise that businesses utilizing extensive SEO and keyword research will come to see that their advertising campaign can be successful. Your greatest tool is the ability to develop brand awareness through understanding the demographic and psychographic environments of contemporary markets. 

This is an extremely summarized way to go about things, though it does get the point across. You see, your advertising budget is an extension of your marketing budget. Marketing is the embodiment (coming on a little too strong here, though it will make sense) of the efforts you put into gaining your customer’s undivided attention: graphic design, social media posts, and even articles such as this. Now, these great avenues to reach people on an intimate level all cost money. Though, where is this money coming from? That is a great question. It is time to get a little technical!

What Is the Deal With Gross Income?

Nope, there is nothing nasty about it. It is, however, the total money accumulated in which business expenses have not been taken into account. Your advertising expense operates within the same realms as your gross income. 

Gross Income Formula:

Gross Income = Total Revenue (Total Sales) – Cost of Goods Sold

As a Percentage Margin:

Gross Profit Margin = (Gross Income/Total Revenue) * 100

Relying on some basic math skills, you can see just how much you have accumulated over the year! Upon finding that out, it is where you will then have to be the most proactive. Taking consistent records of your ROIs is how you will later pay the appropriate expenses that come after advertising. Speaking of which, now will be the appropriate time to introduce the advertising budget!

advertising cost

What Is the Advertising Budget?

The advertising budget constitutes any things related to the marketing mix. Think of the order of operations as such: place, price, product, and promotion. Otherwise known as the 4 Ps. You need to know for what purpose your service or product has been made and to who it needs to be advertised. The 4 P’s, or the marketing mix, is used to find out exactly how that is done. Once you have properly used SEO, you have already done a lot of the footwork needed to get your business on the right path. That is when you can develop your advertising strategy. Afterward, you can develop your marketing budget.

A budget is great for estimating costs with the actual costs for your advertising campaign. So, before you head out on your merry way trying to get into advertising, you need a budget. But, that budget needs a good strategy to make sure you are not wasting your gross income. 

Let’s look at none other than the U.S Small Business Administration, who, alongside additional information from Small Business Trends reports, stated that average businesses spend roughly 1.08% of their revenues on advertising, with variations throughout different industries. Case in point, retail outlets spend more (about 4%) while restaurants spend 1.93%. Web Strategies reports average marketing spending in 2018 was 7.9% of revenues, with B2B product companies spending 6.3%, B2B services companies spending 6.9%.

How Much Does It Cost to Advertise?

Digital marketing has changed the face of advertising for the better. There are some variables that go into finding out the cost of advertising. For instance, there is something called cost per impression. Cost per impression (CPM), is defined as the cost that someone will pay after having their ad shown per one thousand ‘“impressions.” It is used to find out one’s cost per click (CPC) or click-through rate (CTR). Earlier, we mentioned what gross income was. Well, gross impressions are a metric used to monitor ads and determine reimbursement rates for both publishers and the ad firms that deliver the ads on behalf of the customers. CPM is how many 

There are over thousands of different online platforms that a business could use in order to thrive in digital marketing. Though, to make it easier to bear, here are 3 of the best platforms you can invest in your advertising ventures.

advertising budget

How Much Do Facebook (Meta) Ads Cost?

Facebook is one of the leading titans in digital advertising. With over 2.9 billion users, the possibility of reaching your intended audience is both possible and improbable. The amount of people means more opportunities, but it also means there’s a potential of not reaching any due to the immense size of its base. Facebook allows you to control your budget through spend, goal, or manual-based bidding strategies

With spend-based, you are given two options between high volume or highest value. Where you can increase your delivery and conversions from your budget and spend your budget on the highest value purchases, respectively. With goal-based, you are given two options as well, between cost per result goal and return on ad spend (ROAS). If you are using cost per result goal, you are able to keep the cost near the cost amount despite market fluctuations, though goal limits may not be honored. If you choose ROAS, your ad spend may stay around the average throughout your marketing campaign. 

Finally, for manual bids, you have access to a bid cap. This way, you have control over who gets your ads and when. Facebook won’t be so quick to bid from your account. You can spend anything from $5 to $25,000 if you wanted to. Upon creating your budget, you will then bid for each CPM. After your bid, you can target specific people to receive your advertisements. They will also estimate the people you can reach and potential results before you even purchase the ad. 

What Is the Average Cost?

The average CPM for Facebook is $8.60.

facebook ads cost

How Much Do Instagram Ads Cost?

Seeing as Instagram is owned by Facebook, there are similarities that you can take advantage of that carry over from Facebook. For instance, Instagram has incredible targeting to get your ad where it needs to go. However, what you may find different from the older platform, will be since there are more users on Facebook, there are not as many (by roughly one billion, so not that far off) on Instagram. Which in turn, leaves room for less competition. Instagram has a higher ad interaction as well. Despite its lower CPM, its CPC is much higher. 

Though, with there being less competition, you will find yourself paying higher advertising costs. You also can link your account and have access to Facebook’s ad manager, which in turn allows you to utilize the same technology that gave Facebook one of the top spots in digital marketing. Not only that, but CPC is higher on the platform than its sister company

What is the Average Cost?

The average CPM for Instagram is $8.96.

instagram ads cost

How Much Do Google Ads Cost?

While using Google ads, you only pay if someone interacts with your ad. So, by means of CPC. Its CPC is also rather low sitting at roughly $2.32. Though you will not be able to pay your maximum bid. However, you will see that Google is the most expensive via CPM. For ads on search results and keywords, you are likely looking at $38.40 CPM. There are other aspects that will affect your Ad Rank. Your Ad Rank dictates where your ad lands in relation to other competing ads. Just as keyword research is pivotal to you ranking high on Google. The same goes for your Ad Rank. You are bidding on that keyword, directly connected to your ad. As for the other aspects that affect your ads, you must look at the relevance of your keywords,  LSI (Latent Semantic Indexing) keywords, and the device the ad was interacted on.

What Is the Average Cost?

The average CPM for $38.40.

Let SEO Design Chicago Help You With Advertising Costs

There was a lot to cover in this article. There is no easy way to answer what average costs are. You set that price. However, there are certain guideposts that you can take into consideration as to not feel so lost at sea. At SEO Design Chicago, we can be that light that shines in the right direction when figuring out advertising costs.


  • How do you come up with an effective advertising strategy?
  • What is the gross income formula?
  • What is the advertising budget?
  • How much do Facebook Ads cost?
  • How much do Google Ads cost?

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