I usually come across several small business owners in Singapore every week who ask me questions like ‘How much does Facebook Advertising costs ?‘, ‘How much do I need to pay to advertise my business on Facebook?‘ etc. So, I came up with an idea to write a blog post to explain the various factors that affect Facebook advertising costs.
If you are also among those who always wanted to advertise their business on Facebook but wondering about the costs involved, then this blog is post for you.
In this post, you’ll find out the average cost of advertising your business on Facebook and the factors that affect Facebook advertising costs.
In short summary, Facebook advertising may cost you as low as $0.20 per click or as high as $5 per click.
The cost of Facebook ads depends on several factors which we will be going through here.
Factors affecting the Facebook advertising costs:
- Ad objective
- Bidding type and amount
- Ad quality
- Business industry
We’ll dive into more detail on each of the above factors.
#1 Facebook Ad Objectives & How Do They Affect Ad Cost?
Facebook Advertising platform provides advertisers with the ability to select different marketing objectives. Each of these objectives have:
- A different KPI
- A different set of audience to whom your advertisements will be shown
Choosing different ad objectives may affect the overall Facebook advertising costs.
Important thing to consider here is that the smaller your pool, the more the cost rises. Choosing the right ad objective is the first step in making sure your ad cost stays low.
Below is the screenshot of option that Facebook provides to select your marketing objective when you create a campaign for your Facebook advertisements. Broadly speaking, you are given an option to choose Awareness, Consideration or Conversion.
When you must choose ‘Awareness’: If your product or idea is new in the market and you just want to use Facebook ads to build awareness for your product/idea among the users, you must select ‘Awareness’ as your marketing objective.
When you must choose ‘Consideration’: If you wish to bring specific traffic to your website, or engage with your targeted audience, get your apps installed, have your videos watches, get more leads (like newsletter subscription etc.) or send your message through Facebook messages widget, you can choose ‘Consideration’ as your marketing objective.
When you must choose ‘Conversion’: If you want users to take a final action towards buying your products or sending you enquires, ‘Conversions’ must be selected for your marketing objective.
Lets take an example.
Sam started a new business and want to get more clicks to your website and let people know about your services or products. In this case, Sam’s ideal marketing objective should be ‘Traffic’ under Consideration or ‘Brand Awareness’ under Awareness. Since he will select ‘Traffic, or ‘Brand Awareness’, Facebook will automatically send people to his website who click a lot but seldom send any enquiry or buy any product. In this case, the audience pool may be bigger and the advertising cost may be lower.
However, if Sam chooses ‘Conversions’ or ‘Catalog Sales’ under Conversions, Facebook will send the traffic to his website who are more likely to buy products from him or submit the inquiry form on your website. Since, in this case, Sam’s targeted audience size may be small, the cost to advertise could go higher.
I believe now you have understood well how you should choose the marketing objective for your advertising campaign and how it will affect your overall adverting budget on Facebook.
#2 How Facebook Ad Auction Works & How Do They Affect Ad Cost?
The second determinant of Facebook advertising costs is the ad auction. The cost which you bid for your advertisements. But one thing to note here is that its not just the ad auction alone that gets your advertisement more clicks at lower cost, but the cost and clicks depends on the overall value of your advertisement.
What’s the overall value and how we should take care about it?
- Ads bid – The amount that advertiser is willing to bid for each ad.
- Ad quality & relevance – How relevant is your ads to the targeted audience.
- Estimated action rates – How your targeted audience responds to your advertisement and complete the objective you’ve chosen.
OK, Facebook advertising is not like traditional advertising system where the highest paying advertisers get the advantage of showing up their ads more than the other advertisers.
Facebook considers two important things when showing ads:
- Creating value for advertisers by helping them to reach their targeted audience.
- Ensuring that the Facebook/Instagram/Audience Network users see the ads in which they are really interested.
Now since we have understood the importance of overall value of ad auction, let’s take a look over the two kinds of bidding that Facebook provides:
- Automatic bid
- Manual bid
While Automatic bidding lets Facebook set your bid for you to get more actions for your campaign, Manual bidding enables you to set the bid amount yourself.
#3 Facebook Audience & How It Affects the Ad Cost?
Choosing an appropriate audience plays an important role in determining the Facebook advertising cost. The higher level of relevancy your targeted audience has, the lower will be the Facebook advertising costs.
If you are not sure about your targeted audience, you can split your ad sets having different pool of audience to measure the performance of each ad set.
While its true that selecting an appropriate Facebook audience is not a rocket-science but one really need to think carefully while choosing their targeted audience.
Lets take an example again.
Sam sells automotive spare parts (precisely car spare parts) and want to get traffic to his website through Facebook advertising.
If he selects his targeted audience as ‘car lovers’, he will get targeted traffic on his website, right?
Well, not true! Why?
Simply because not all ‘car lovers’ category people may have:
a. Bought their cars already
b. Old cars that’s out of warranty and need spare parts.
Instead, it will be good for Sam to choose an audience who are ‘car lovers’ and have also shown their interest in ‘car maintenance’ as well.
Do you agree with me?
As I said already, selecting a right audience is not complicated but you need to think carefully before you start advertising them because it can affect the overall cost of your Facebook ads.
#4 Ad Quality and & How It Affects Ad Cost?
Now, this is one of my favorite pick.
You must pay a lot of attention on designing & writing your ad.
No matter how much you have bid and how relevant is your targeted audience, but if your ads are not appealing, nothing is going to work.
Facebook is visual. We all know. Therefore, we must make sure that all of our ads are visually appealing. Each of your ad must convey a message ‘Stop & read me please’. If your ads pass the ‘Stop & read me’ test, you will be getting more clicks & conversions on your website at lower cost (of course, the landing page is equally important but here we won’t be talking about them).
Ad Relevance Score
How your targeted audience respond to your ads determines the ad relevance score. Higher the relevance score is, lower will be the advertising cost. Facebook rates the ad relevance score from 1-10. The higher, the better.
According to Facebook,
“Relevance score is calculated based on the positive and negative feedback we expect an ad to receive from its target audience. The more positive interactions we expect an ad to receive, the higher the ad’s relevance score will be. Positive indicators vary depending on the ad’s objective, but may include video views, conversions, etc. The more times we expect people to hide or report an ad, the lower its score will be.”
Now since you know the factors that determine the Facebook advertising cost, you can be confident in running your ads wisely and if you have been already running your ads, you can bring down the advertising costs.
What if you are not able to get desired results from your Facebook ads?
Hire a Facebook advertising expert who can help you to get most of your advertising budget.