If you are considering a Facebook ad campaign for your business, you are probably wondering about the cost of Facebook advertising. What do Facebook ads really cost? The answer is that the cost of Facebook advertising for your business depends on a variety of factors. In this article, we’ll discuss the factors that affect Facebook advertising and how much Facebook ads might cost for your business.
What Does Facebook Advertising Cost?
These days, if it seems like everyone is using Facebook for digital marketing and advertising, that’s because it’s probably true. If you want to drive traffic to your website, placing ads on your target audiences Facebook page or desktop news feed is the way to go.
Facebook advertising is more popular than ever. In the second quarter of 2020, nine million advertisers were using Facebook to promote their products and services. That statistic is up from seven million in the first quarter of 2019.
So, if you are considering joining the legions of advertisers using Facebook, you are probably wondering: what does Facebook advertising cost?
The simple answer is this: the cost of your Facebook ads will depend on which bidding model you choose (as well as some other factors.) Let’s discuss the different bidding models available for Facebook ads:
Cost-per-click Facebook ads are pretty self-explanatory: this number is the cost per each link click. On average, Facebook ads cost $0.97 per click.
On the other hand, if your ad campaign focuses on impressions, the average cost is $7.19. This is what you pay when 1,000 users see your Facebook ad.
The average cost-per-like (or CPL) on Facebook is $1.07.
The average cost-per-download on Facebook is $5.47.
While these numbers can give you an idea of what advertising costs on Facebook, it’s important to keep in mind that these are averages, not exact figures of what your ads might cost. There are several other factors that could impact that cost of Facebook ads, like ad placement, target audience, your industry, etc. (We’ll discuss these other factors later in this article.)
If you want to know the exact amount you will need to spend on a Facebook advertising budget, it is best to consult with a digital agency who specializes in Facebook advertising.
How Does the Facebook Ad Auction Work?
Next, let’s discuss how the Facebook ad auction works. Once you know how to get started with Facebook’s ad auction, you can determine how much your Facebook ads will cost.
Here are the steps to getting started with the Facebook ad auction:
- First, log into Facebook Manager to create a campaign and an ad.
- Then, choose your daily budget. This is the maximum amount you will spend on Facebook ads each day.
- Next, choose your audience. You can narrow down who will see your ad by demographic, interest, and device.
- Then, add your content: this is your ad copy, images, or videos.
- Facebook will approve your ad.
The Facebook ad auction happens once there is an opportunity to display an ad. Here’s how it works: Facebook will grade each possible ad’s bid, estimated action rates, and the quality of the ad. Then, Facebook will determine each ad’s relevance. Next, Facebook will determine each ad’s total value (this is its bid, estimated action rate, and quality combined.) Facebook will choose a winning ad and display it!
Now that you know how the Facebook ad auction works, you can see which qualities are the most important for your ads and their costs: bid, estimated action rate, quality, and relevance. So, if you can optimize each of these factors, you will lower the cost of your ads and also improve the likelihood of it being seen.
What Factors Affect the Cost of Facebook Advertising?
Next, let’s discuss the eight factors that affect the cost of Facebook ads. This will help you understand better how much you will need to budget for your Facebook ad campaign.
Your target audience has a large effect on the price of your Facebook ads. If you are hoping to target a certain age, gender, or interest, this will affect your ad cost. For example, ad campaigns that target women are more expensive than those that target men. Your campaign could also be more expensive if you are targeting an older demographic. Ads targeting those between 55 and 65 years old are more expensive than those focusing on younger adults. (Why? That’s because Facebook has fewer users in the older age group than in the younger ones.)
In addition to targeting your audience by age or gender, Facebook offers more targeting options. You can also target your custom audience with specific interests, like the outdoors, community service, sports, and more. For example, if you want to target people who travel often, you can do so. Make sure to take advantage of the options to focus your ad campaign as specifically as possible. Don’t waste your money on clicks or views that won’t help convert customers.
One of the first steps of creating your Facebook ad campaign is setting your ad budget. No matter how much you set your budget to be, it will affect your ads. For example, the less money you spend on your bids, the less likely it is that your ad will receive impressions and clicks. It is highly recommended that you set a daily budget of at least $5. If you are only budgeting $100 for the month, you will run out of money by the 20th day of the month. So, make sure to use your budget wisely.
Your ad bid also affects the cost of your ads. There are a few different bidding strategies.
The first kind of bid strategy is the lowest cost bid strategy, or automatic bidding. This will cost your business the lowest amount per click, and makes efficient use of your ad spend. Many businesses choose to begin with this strategy.
The other kind of bid strategy is the target cost bid strategy, or manual bidding. This helps you reach your desired cost per click. However, you can only utilize this strategy for app install, conversion, lead generation, or product catalog sale campaigns.
Typically, manual bidding is more expensive than automatic bidding. However, before you choose one of these strategies, let’s talk about how the ad auction works. You can create a better advertising strategy if you know how Facebook’s advertising algorithm works.
Facebook rates each bidder and ad with three factors: the bid, estimated action rates, and ad quality and relevance. The bid is how much you are willing to pay for someone to engage with your ad. For example, perhaps you will choose to bid $1 for every click. Your bid is one of the most important ways you can improve how your ad performs.
Your estimated action rates show how likely it is that a user will interact with your ads. For example, maybe you want people to click on your ad or download your app. If you want your ad to be competitive, you need a high estimated action rate. That means you need to create an ad that will compel your audience to convert.
Lastly, the positive and negative interaction of users will help Facebook determine your ad’s quality and relevance. If your ad achieves a high ad quality and relevance score, it will help increase the success of your ad in auctions.
If your ad scores the highest in each of these three areas, your ad will win the auction. Then, Facebook will show your ad (rather than one of your competitor’s) to your target audience.
Though an aggressive bid does help increase the likelihood of your ad being seen, it also increases your advertising costs. So, you need to create an extremely high-quality and relevant ad.
Objective and Goal
There are three different ad objectives you can choose between when you create a Facebook ad: awareness, consideration, and conversations. After you choose your objective, then you pick a specific goal. If you choose awareness as your objective, your goal is either brand awareness or reach. Or, if you choose consideration as your objective, then your goal choices are traffic, app installs, engagement, video views, lead generation, messages, or product catalog sales. If you choose conversions as your objective, then your goal choices are store visits or conversions.
Most of the time, the harder to attain ad goals (like a purchase or store visit) means a higher ad cost. That’s because these actions have an immediate value for your business. For example, a product purchase immediately benefits your company by making you money. However, as you choose your objectives and goals, don’t forget how important brand awareness and consideration are. In the early stage of the sales funnel, you reach your target audience. Later on in the sales funnel, you can grow your relationship with your audience and convince them to buy your product or service.
Though it might not result in real money right away, it does help increase your company’s value. It also helps lower the cost of your Facebook ad campaign, since you will pay less for awareness and consideration-related goals. The only downside is the turnaround time. With a conversion goal, you are more likely to immediately connect with someone who might make a purchase.
Where you choose to place your ad, or your ad placement, also affects the cost of your Facebook ads. There are multiple Facebook ad types. Since Facebook owns Instagram, you also have the options of placing your ads on that social media platform. This is a huge benefit for you, since you can create both Facebook and Instagram ads, which will save you a lot of time.
There are six different places your ads can be placed:
- Instagram stories
- Facebook desktop newsfeed
- Audience Network
- Facebook right column
- Facebook Messenger
Instagram has the highest cost per click. On average, you will spend $0.80 per click more to place your ad on Instagram. For Instagram stories, the cost is nearly as high.
On Facebook, the average cost per click is roughly $0.30 less than it is on Instagram. Facebook offers a versatile platform, and as an added benefit, your ads can appear on Facebook Messenger, too.
The Audience Network allows your ads to be displayed on websites and mobile apps. It also typically has a lower cost per click than Facebook and Instagram.
Though you do have the option of choosing where you want to place your Facebook ad, Facebook also allows you to choose Automatic Placements. This is a tool that lets Facebook’s system choose for you where your ad should go. However, if you want to decrease your Facebook ad costs, you can disable Automatic Placements. When you turn it off, then you can decide where you want your ad to go.
Facebook determines the quality and relevance of your ads, which will in turn affect how much your ads will cost. If you create an ad with a higher score in these areas, your ad will be cheaper to run. (However, you most likely will spend more money creating the ad.)
Facebook will give your ad a score between one and ten to grade your relevance and engagement. Ten is the best, and one is the worst. If you want to see the best results from your ad, you want to achieve the highest possible score. Here’s how to see your scores:
- First, go to Ads Manager.
- Then, choose the ad you want to see.
- Next, choose the Columns drop-down menu.
- Click Customize Columns.
- Choose Relevance Score.
- Click Apply.
Now, you should be able to see your relevance and engagement score. However, your ad will need approximately 500 impressions before scoring your ad.
Facebook will continue to adjust your score based on user interaction as long as it’s live. That’s why it’s important to monitor your scores regularly. This will help you make adjustments and improve the results of your Facebook ad campaign.
If you need help creating high-quality content for your Facebook ad, it is best to use the services of a digital agency to help you.
Another factor that can affect the cost of your Facebook ads is the season. Many companies spend more on advertising during peak shopping times of year, like the holidays. This means that costs can go way up around the holidays as a result of aggressive bids and large campaign budgets. The following are some of the most expensive days to run Facebook ads:
- Black Friday
- Cyber Monday
- Boxing Day
- New Year’s Eve
- New Year’s Day
While we have already mentioned that the average cost of a Facebook ad is $0.97, you can get a better estimate of your own Facebook ad costs by checking out the average price of other ads in your industry. This will help you determine a better estimate, which will help you build your budget.
For example, the average CPC in the apparel industry is very low, at $0.45. The consumer average CPC of a finance and insurance ad, however, is very high at $3.77. Fitness ads fall somewhere in the middle, at $1.90.
If you are in an industry where Facebook ads tend to be more expensive, don’t give up. Depending on your industry, Facebook still offers a cost-effective option to help you build brand awareness, drive conversions, and more. Keep in mind that the reason so many companies utilize Facebook ads is because they work.
Create Better Facebook Ads with SEO Design Chicago
One way to ensure that you are creating high-quality, relevant Facebook ads and utilizing your budget wisely is to hire an expert digital advertising agency to help you create your Facebook campaign. SEO Design Chicago can help you design an effective Facebook ad strategy for your business.