The Beginner’s Guide to Facebook Advertising Cost

The Beginner’s Guide to Facebook Advertising Cost

Reading Time: 9 minutes

Fact: Facebook is the most popular social media advertising platform in the world.

Coincidence? We think not! Facebook gives a lot of great advertisement opportunities.

Don’t have a lot of money? You’re welcome to run ads on any budget.

Want to create top-notch product ads that can drive new leads? Use Facebook Creative Hub and see what your ads will look like before you launch.

Run ads for several businesses at the same time? Go ahead, launch multiple campaigns in Facebook Business Manager and monitor your ads in one place.

Still, how can you calculate advertising expenses if there’s no clear Facebook ads pricing?

How Much Do Facebook Ads Cost?

You see, no one knows the cost of your ads. Advertising on Facebook is a pretty individual thing. There are six million monthly active advertisers according to Statista. And in each case, the cost of ads is different depending on the pricing method:

  • Cost per click (CPC). You pay every time someone clicks on your ad. This is the default pricing model.
  • Cost per mille (CPM). You pay every time the social media shows your ad 1,000 times. This metric is also called cost per impression.

If you want to know your ROI right now, you can use one of many ad calculators developed by Hubspot, Connectio, or another company. Just note that your results may be useful only in particular situations because calculating tools are often based on assumed variables.

We don’t recommend fully relying on such calculators. You should use them only for estimating costs. To figure out the exact prices for Facebook ads, you have to launch an ad campaign. But before you do that, let’s review the factors that determine these prices.

What Affects The Cost of Facebook Ads?

There are five things that define the cost of Facebook ads:

  1. Buying type (reach and frequency, auction)
  2. Marketing objectives
  3. Audience
  4. Quality of the ad
  5. Your industry

Let’s consider these factors one by one to understand how exactly they inform Facebook’s pricing.

Explore Major Buying Types of Facebook Ads

There are two ways for advertisers and marketers to buy ads on the world’s top social media platform: auction buying and reach and frequency buying.

Facebook Ad Auctions

Available placements: Facebook, Instagram, Audience Network, Messenger

Ad auctions are competitions where advertisers place bids to run their ads. In the standard auction model, the key to success seems obvious — pay the most and your win is in the bag. Well, it’s not that simple.

Your victory in an ad auction depends on three factors:

  • The bid. This metric allows ad buyers to value their ads before launching them.
  • Estimated action rates. This is the probability of how often people will see your ad and complete the action you’ve optimized your campaign for.
  • Ad quality and relevance. The system analyzes feedback about your ad to find out the level of user interest in it.

You should raise the value of each factor to maximize your odds of winning. In other words, bid reasonably, create an engaging ad, and choose the right audience. And when it comes to ad auctions, there are bidding strategies that affect ad costs:

  • Lowest cost bidding. This bidding strategy is for you if you want to save your budget. Facebook sets a bid per action at the lowest cost. If you worry that your bid may increase, you’re free to set a bid cap, which determines the maximum bid Facebook can spend in an ad auction.
  • Target cost bidding. This bidding strategy is for you if you want to buy ads for a steady price. Facebook sets a bid per action at the average cost. Keep in mind that this bidding strategy is for ad campaigns optimized for conversions, lead generation, catalog sales, or app install objectives only.

When choosing ad auction buying for your advertising campaigns, you get more options and flexibility. But you can’t predict the outcome.

Reach and Frequency Buying

Available placements: Facebook, the Audience Network (for Video Views objective), and Instagram.

Reach and frequency buying allows advertisers to get more control over their campaigns. For example, they can schedule ads, customize ad delivery, and adjust frequency settings. If you choose this buying type, you can set the cost to advertise on Facebook by yourself and predict the cost of your campaigns.

Choose the Right Marketing Objectives

All marketing objectives on Facebook are divided into three groups.

Awareness

This group includes ad objectives for sparking customers’ interest in products or services.

  • Brand awareness. Facebook shows your ad to users who are more likely to remember it.
  • Reach. Facebook shows your ad to the maximum number of people in your audience.

Consideration

These marketing objectives help to plant a thought in customers’ minds so deep that they’ll Google your company.

  • Traffic. Drive users to your website or app.
  • Engagement. Promote your post or page.
  • App installs. Get more people to download your app.
  • Video views. Boost awareness of your business by promoting video content.
  • Lead generation. Get info from your leads to convert them into buyers.
  • Messages. Get users to communicate with your company.

Conversion

This group of objectives motivates people who are already interested in your business to buy or use your products or services.

  • Conversions. Get people to use your website or app.
  • Product catalog sales. Show your products to your target audience.
  • Store visits. Advertise your business to a local population.

How can you spend less on ads and guarantee your company a high ROI? Just choose the right objectives. Depending on your goal, you can pair ad objectives from different groups. For example, if you want to increase brand awareness, you can pick Reach and Engagement to show your posts to as many users as possible.

Target Your Facebook Audience As Narrow As Possible

When creating your ad set, you should target a specific segment of Facebook users by narrowing the age, location, interests, and other parameters. If you show your ads to a narrow audience, you’ll have a good chance of reaching high CTR and conversion rates with low competition.

Facebook advertising cost - Audience Insights

In case you need more information about your audience, you can use the Audience Insights tool. It will shed light on demographics, geography, page likes, purchase behavior, and other activity of your customers.

But no matter how well you target your ad, it’s worth nothing if it can’t draw people’s attention.

Maintain Facebook Ad Quality: Design and Copy

The Facebook promotion cost also depends on the quality of your ad, which is measured by its relevance score. We’ll consider what’s behind this metric below. First, we need to learn how to make someone click on your ad.

If you want to create an ad, you should design an attractive image (or video) and write a clear message. That’s enough for a good ad. If you want to create a perfect ad, you should create a story — a symbiosis between an eye-catching visual and powerful copy.

An Eye-Catching Visual

Just as kids love illustrated books and buyers pounce on vivid product packaging, online users enjoy visuals. And here’s the dilemma: should you choose images or videos?

Video can be a powerful weapon for attracting new leads. In most cases, video content is a better choice than images because videos give more opportunities for storytelling. An ideal video ad is short, colorful, dynamic, and informative.

But sometimes images can influence a user’s mind as effectively as videos. And here’s where text plays a major role.

Powerful Copy

Always remember who will read the texts you post in your ads. Keeping this in mind will help you set the style of your narrative. Keep your texts short and use a call-to-action (CTA) technique.

If you want to know more about writing ad copy, read one of our previous posts where we address must-have elements for writing copy that sells. It contains several great examples of video, image, and text ads that will help you to write your own appealing content.

Facebook Advertising Cost and Your Industry

It costs different amounts to advertise different products and services. This makes sense because a pack of sweets and a tour to Europe vary in their cost tremendously.

According to Fitsmallbusiness.com, Facebook ad pricing looks like this:

Facebook advertising cost - industry

How to Reduce Facebook Advertising Cost

Now that you know the building blocks of Facebook ad pricing, let’s find out how to spend money on ads wisely. Remember that the system wants advertisers to show the right content to the right people. If you follow this rule, you’ll be rewarded with the cheapest cost of advertising on Facebook.

Below are a few recommendations that can help you save your budget.

Raise Your Ads Relevance Score

One of the methods that may reduce the cost of your ads is improving their relevance score. This metric indicates how relevant an ad is to the people who see it. How is it calculated?

Facebook collects both negative and positive feedback, ranking an ad from 1 to 10. For example, if your ad gets lots of impressions, the score will rise. If users hide your ad, its score will fall. The more relevant an ad is to your audience, the less expensive it will be.

There are six steps to checking your Facebook relevance score:

  1. Go to Ads Manager.
  2. Choose the ad you want to check.
  3. Click Columns.
  4. Click Customize Columns.
  5. Check Relevance Score.
  6. Click Apply.

If an ad’s relevance score is too low, there’s something wrong with its quality or targeting. In this case, review the ad’s copy and design or re-target the ad set to boost the relevance of the ad to your audience.

Setup Facebook Pixel

Facebook Pixel is a piece of code you can add to your website to track the actions of your website audience. For example, if someone purchases a product or clicks a button, you’ll know about that in your Facebook Pixel dashboard.

After adding Pixel code, you’ll get two crucial advantages:

  1. You can learn more about your website visitors and understand their needs, which leads to better conversions.
  2. Facebook will better understand which part of your audience is likely to take action. This allows for creating custom audiences from active users of your website.

Improved tracking lets you revise your budget and, consequently, lower the cost of Facebook advertising.

Add an Audience Overlap Tool

Audience overlap signifies that your ads compete with each other, having appeared in the same ad auction. To help advertisers spend their budgets effectively, Facebook breaks down the competition by choosing the ad with the best performance history and blocking other ads from showing.

To activate an audience overlap tool, walk through these four steps:

  1. Go to your Audiences.
  2. Check all the necessary boxes.
  3. Click Actions.
  4. Click Show Audience Overlap.

If you’ve reached a very high percentage of overlapping ad sets, you can either consolidate or refine them. Note that your audience has to include at least 10,000 people so that you can receive overlap information.

Perform A/B Tests and Experiment with Different Ad Variants

A/B testing is used to compare two (or sometimes more) elements and find out which of them works for customers and which doesn’t. Marketers test everything: entire websites, separate web pages, mobile apps, and, of course, ads. But professionals also A/B test prices to optimize their budgets.

In your case, you can test the performance of:

  • Existing ads. Track the results you’ve received from the posts you’ve already launched. Stop using ads that don’t convert. Take all the best from the ads that work to create more engaging ads in the future.
  • Re-designed ads. Change the appearance of existing ads. Experiment with different designs. Write different messages. Combine visuals and texts from different ads.

To recap, try to perform tests on your ads and their appearance to better learn the likes and dislikes of your audience. Better performance results in better conversions and lower ad costs.

Use Video Ads

Videos are the best way for a company to lure potential customers who scroll their news feeds day and night. Facebook fosters the production of video advertising because people react to this type of content more readily.

For this reason, video content can significantly increase your click-through-rate and conversions. However, you should keep in mind one thing — videos are effective only at scale.

The next logical question that may come into your head is:

How can I save money using videos if they’re much more expensive than images?

First of all, we’ll repeat the golden rule once again — showing ads to the right people lowers the cost. Second, the video production industry has experienced groundbreaking changes in recent years.

Today, smartphones are gradually replacing professional cameras. Filmmakers are using drones instead of expensive and clunky equipment. At Softcube, we’re already using artificial intelligence to create video ads, substantially reducing their cost and enabling advertisers to produce and launch hundreds of video ads at short notice.

Final Thoughts on the Cost of Facebook Ads

How much does it cost to advertise on Facebook? The answer to this question lies, surprisingly, in your ad campaigns and your ads themselves.

When setting up your campaign, pay attention to all the components that determine the cost of ads: buying type, ad objectives, and target audience. Each of these components has its own effect on the final ad price. If you’re serious about optimizing your ad budget, you should also embed Facebook Pixel in your website and activate the Audience Overlap tool in your Business Manager.

When creating your ads, consider their quality and value. Valuable content lures the right people, thus dropping the cost of your advertising. After a while, check your relevance score to make sure that you’re on the right path. This metric will help you to understand the trends your audience is following.

That’s it. We hope you’ll create awesome high-quality Facebook ads and attract lots of new customers to your project, business, or company using the recommendations from this guide. Take care!

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