How much does a Facebook advertising cost?

With its active user base of over 2.8 billion Facebook is one the biggest social media platforms for advertisers to market their products and services today.  Over 10 million advertisers are currently actively advertising on Facebook.  One does not need to be an expert for advertising on Facebook. The Facebook Ads Manager provides simple tools to create and run the Ads campaigns and track campaign performance. One of the main questions each first time advertiser has is how much does Facebook advertising cost?

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By reading this you will be able to understand the Cost mechanism of Facebook.  What are the factors that control cost?

What Does a Facebook Advertisement Cost to you?

When we talk about the costs, on average we can take Cost per Click(CPC) as $0.027 per Click and measure Cost per Thousand (CPM) about $7.19 CPM.

Though the above-average cost can give you an estimate but in reality as Facebook describes the cost of a Facebook advertisement  ‘it depends’ on several other factors.  You have to set a budget for running your advertisements.  Though the minimum spend is set to 1 USD per day by Facebook that is what you have to incur daily.  There is no cap on maximum spend on Facebook.  In his first half of Last year, Disney spent a whopping $211.8 million on Facebook advertising.

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It is imperative from the above para that there are some important factors that control the costs and can influence them significantly.

Factors controlling the advertisement Costs in Facebook

  1. Right Objectives
  2. Target Audience
  3. Ad Campaign budgets
  4. Ad placement
  5. Type of Bidding used for an Ad campaign
  6. Quality of Ad Campaign
  7. Industry

Let us discuss the above factors.

Choosing the right Objectives:

The Ad campaign objectives are one of the most important and vital factors.  If your objectives are not correctly chosen then you cannot expect a good return and can result in higher costs in ad campaigns.

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For selecting the right Objectives one must understand and know the Ad campaign goals, “What he tries to achieve?”.  An Objective is an action that you want people to take when they view your advertisements.  For example, if you want people to sign up for the subscriptions your advertisements should encourage people to go to your subscription page and sign up for the same.

Facebook Ad Manager has categorized the ad campaign objectives in three broader categories:

  • Awareness
  • Consideration
  • Conversions

This objective helps you in increasing your brand awareness and market presence by telling people about your product or service value and availability. This category includes:

  • Brand Awareness: Increase the business, brand, or service awareness among people
  • Reach: Increase the visibility to as many as many users in Target Audience

This objective lets people think more about your business and makes them look for more information. This category includes:

  • Traffic: Drive people from Facebook to your landing pages, websites, blogs, app, etc
  • Engagement: Show your ads to people who are more likely to engage themselves with your Ads.  This includes likes, comments, shares, offers, etc.
  • App Installs: Drive people to the app stores from where they can download and install apps.
  • Video Views: Share your business videos with people more interested to watch.
  • Lead Generation: Collect information from people interested in a product or service you offer.  This includes sign-ups for the newsletter
  • Messages: Encouraging people to connect with your business through WhatsApp, Messenger, Instagram Direct to increase interest in your business.

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Ads campaign created under this objective attracts high costs.  The objective is used to convert people interested in your business into paying customers by encouraging them to buy or use your product or service. This includes:

  • Conversions: Encourage people to do some action on your landing pages, websites such as add items to cart, app download, site registration, buy product or service.
  • Catalog Sales: Promote and display your products or services from an e-commerce store’s catalog for sale.
  • Store Traffic: Promote your brick-and-mortar business to people within the reach of your nearby local periphery.

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Target Audience:

This is one of the biggest objectives which tends to increase the Advertisement cost if not set at the very beginning.  Every business needs to know who is his target audience.  Why does one want to sell a baby product to an unmarried man or girl?

Facebook provides options while creating an Ad campaign to select the Target Audience attributes.  You can not only select the age, gender, language but can also include demographics, interests, or behaviors.

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Like a negative keywords option in google Ads, Facebook also gives you the option to provide details of the person who you want to be excluded from the Ad campaign.  Facebook will limit your ad campaign to only the included persona.

The costs will differ from gender to gender, age groups, demographics, interests, or behaviors.  In some cases, you find lower or in some cases, the costs will increase substantially.

Ad Campaign budgets

You have to set a Budget before you publish each and every Advertisement Campaign.  This budget can be set for the Daily or Lifetime of your Advertisement Campaign.

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Here you see a direct relationship between the Budget and results of your Advertisement Campaign.  The more the budget the more flexibility you will get for your Facebook Advertisement campaign.

We can understand this by example, let us suppose you have set your monthly ad campaign budget to $100 and a maximum bid of $1 CPC.  If your industry average CPC will be $2 then you can clearly see that your bid is not competitive enough.  This low bid will result in the least reach and low CPC rates.

Type of Bidding used for an Ad campaign

This is also one of the most important factors that can influence your Advertising Cost. A Bid can be made manually by Advertiser as well as automatically by Facebook.

Facebook has clearly defined that the highest bid will not be the deciding factor of the winner of the bid in an auction.

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Instead, Facebook describes that the Ad which creates more value, equal opportunities to advertisers, provides positive, relevant experiences for users.

The winner of the bid is announced based on the Relevance Score awarded to the Advertiser measuring three factors.

  • Ad Campaign Bid: Average Industry bid vs. your monetary bid
  • Estimated action rates: The rates of a person to take action or complete your objective are being calculated by Facebook.

Ad Quality and its Relevance

While awarding the bid facebook checks the relevance and quality of the Ads campaign with the user’s feedback.  The most relevant and best Ads will be declared winners and shown to the users.

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Through this article, we have tried to put some light on the Advertising Cost of the Facebook platform.

This topic is very wide and at the same time complex too to wrap up the How the Cost mechanism works in Facebook.

We have not only answered How much does a Facebook advertising cost? but also have covered the important factors that will control the costs which can influence the cost significantly.

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Though we have covered most of the Costing Mechanism if you are new to Facebook Advertising (especially if non-tech savvy) it is advisable to take professional help initially.

On the contrary, it looks simple but setting up relevance and quality Ads will need a number of permutations and combinations of attributes.  Absence of which can not only result in a waste of lots of time but also the loss of money incurred.

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