Figuring Out How Much Facebook Advertising Costs
by Tim Hands
March 2, 2017
If you are interested in venturing out into the world of Facebook advertising, there are a few things you should know. Actually, more than a few. Several. No matter how high the level of your enthusiasm is, it isn’t as simple as just coming up with a (reasonable) budget and letting it fly. There are some complicated hurdles to clear first.
The list below covers the finer points of Facebook advertising you’ll need to understand prior to jumping in with both feet. We’ll make it easy and categorize everything the following ways:
– How much will it cost to use Facebook advertising?
– Setting your bid and ad budgets to reach a successful ROI.
– How much it will cost to generate “likes.”
How much will it cost to use Facebook advertising?
Well, that depends. A good rule of thumb is to assume $.65 per click, at least in America. The most credible way to measure this comes from the Salesforce Advertising Index. $65 gets you approximately 100 clicks. But like we mentioned, it depends.
The cost scales between $.16 and $1.00 per click. Of course, these prices are mightily affected by what industry you are attempting to compete in, as well as the general size of your demographic/audience. Overall ad quality plays a role, too. In general, it breaks down like this:
Cost Per Click (CPC) – How much it costs for 1 click to your site.
Cost Per Mille (CPM) – How much it costs per 1,000 impressions/views of your ad.
Believe it or not, the entertainment industry offers the lowest rate for Facebook advertising. You probably know why. These types of ads are often of the glitzy variety, things like sensationalized click-bait headlines, videos, and “fake news” from media outlets. These ads are enticing to wide audiences and practically invite all sorts of engagement (unfortunately, perhaps).
Next in line would be appliances. This is an easy one. Practically everyone owns a toaster and a microwave. Right there with appliances is cars and car parts. Once again, it makes sense. Most people drive cars so naturally, you should expect to see a lot of ads in that industry.
It begins to get trickier when dealing with specialized services, such as lawyers/legal representation and physicians. When it comes to these industries, audiences tend to be directly targeted, in turn, making competition fierce. More competition means a higher premium on ad space, which means higher prices for those looking to hop on board.
Local Small Businesses Pay More
As we mentioned, narrowing down the audience and zeroing in on a specific market elicits an ad-buying chain effect. The reach is more compact. Advertisers might only be trying to promote to an individual state, city, or even neighborhood. This is when it pays to have a high budget or, know exactly how to “wow” and audience.
Facebook actually helps simplify this strategy, allowing you to hone in on these cities and specific zip codes. This is a good thing: ad dollars aren’t wasted on folks who live hundreds of miles away from where your business operates. Whereas conversely, an ad spot on radio, TV, or the local paper may wind up falling flat, yielding a much lower ROI.
The primary downside is that local businesses are trying to keep up with everyone else in their respective areas. Bidding tends to be highly-competitive (expensive). Costs per click can run as high as $1.00. If you’re working with a meager budget, staying in the game is a pricey proposition.
This is not even counting big-time brands getting in on the action. Their involvement drives cost-per-click up significantly higher because they have the flexibility to spend, spend, spend and run “test ads” to see what works. If they discover a particular ad is not delivering a promising response, no problem, big businesses can re-adjust and try again. Because of this, performance usually increases, which lowers their CPC after a while.
Setting your budget for Facebook advertising
Figuring out your budget for Facebook advertising is an important next step in the process. It is what may help decide how far a campaign can go past the initial launch phase. One thing that definitely works in your favor is the fact that Facebook advertising provides a substantial amount of wiggle room. If you do it right, the cost can be as low as a buck a day. Then again, you can also spend a whole lot more than that, too.
Putting a budget in place
Daily maximum budget — Ads run until your maximum budget hits it limit each day for a pre-determined number of days.
Lifetime budget — Ads simply run until the max is achieved or until an ad’s end date arrives.
It is up to you to figure out how to want an ad to set forth, daily or lifetime. Budgeting is everything. Not surprisingly, marketing professionals who know Facebook in and out believe a lifetime budget is the way to go. This allows Facebook’s sophisticated algorithms to determine the best times an ad should be activated, as opposed to you deciding to show said ads on specific days and times.
But it is with a daily budget in which you hold the most power because it is up to you how much you’ll spend. A lifetime budget results in different amounts being spent on different days. Both the daily and lifetime budget options can be constantly tweaked or even shut down whenever you want. Pay attention to which method works for both your overall advertising expenses and campaign goals.
Here are some tips to help you along:
- Individual Facebook accounts may have have more than one campaign. You can enforce spending limits for an entire account.
- Daily budget limits for a campaign run continuously, so watch out. Facebook will keep charging until you end the campaign. Therefore, it might be smarter to figure out ahead of time how much you are comfortable spending for the period one of one month, then create a lifetime limit you can stick to.
- Experimenting with PPC options free of charge prior to settling on an ad is recommended. Even though Facebook coupons are no longer available, $50 Bing credits permit you to try out ads for free. You can then use these results to help optimize ad forays on Facebook and various other networks.
Setting up your bid is an important part of the process, for this is how you will decide on the precise amount you are willing to pay for an ad. If you are new, Facebook is here to help with a suggested big amount. This amount is determined predicated upon industry, location, and audience. Depending on how confident/experienced you are, you can change this suggested amount or go with it and see what the return is.
If you have your own metrics to rely on and feel up to the challenge and would like to set your own bid price, remember these two tips:
1. CPC vs CPM
Cost-per-click — Cost per one click on your site.
Cost per mille — Cost per 1,000 views (impressions) of your ad.
Facebook offers the option to pony up for “likes” and clicks as well as impressions. This is where specificity really comes into play. Should the objective of a campaign be simply to drive clicks, you are obviously going to want to bid towards that. Facebook pulls their weight by showing your ads to audiences that are more inclined to view them. On the other hand, going for impressions means a higher reach, but not necessarily to your targeted demo or followers.
2. Bidding higher or lower
Adjusting the bid amount is going to affect how an ad performs. It is all about competition. Remember, other advertisers are doing their letter-best to get a hold of the same people you are. Just like any auction, online or otherwise, higher bids put you in a better position to get what you want. Increasing the bid stacks the odds in your favor of an ad performing well. You might want to raise your bid if performance has been underwhelming.
But if your budget is being constrained or your brand is covering a lot of bases with different campaigns, you may decide to lower the bid amount. If you are seeing promising returns where you are at, there is no reason to keep a high bid amount. Just be careful — lowering it too much can drive those views down before you know it. Research is necessary. So is patience.
How much does a Facebook “like” cost?
Contrary to popular belief, there is no option to directly purchase Facebook likes. Clicking on the “Get More Page Likes” button actually only bills you for cost-per-mille (impressions). The difference is that Facebook uses this option to test out audience results among algorithm-decided demographics, hence upping the odds your page receives more likes. This is then adjusted to try and get you the most “likes” at the best price.
There are some in the industry who believe that purchasing actions which stay on Facebook are more affordable than going after clicks to an outside domain. This price difference can range as a high 30%. One reason for this is likely due to Facebook wanting to keep users on the platform, so they charge a cheaper amount to sweeten the pot. Another is simply that let’s face it — people on Facebook usually prefer to stay there and check out pages along with their own feeds. Either way, plan on a $.50-$.80 price per Facebook like.
There is really no set cost
It all comes down to the fact that Facebook advertising, like every other industry, costs as much as you want it to. From $1 on upwards, it is all about how much you can spend, how you have planned a campaign, the research necessary to drive audiences towards your brand, and how long you are willing to try out new ideas. A $5 budget can get you 30 clicks. It can also get you 15 clicks. How established your business is and the manner in which you communicate what it is you are trying to say also matters.
Get started with a budget that makes sense, record the results, and make decisions going forward based on that data. Produce a concise yet attractive message consumers can relate to while you’re at it, so that whatever your ad budget is, people like what they see.
March 13, 2017