As Facebook is the largest social networking site, understanding the costs of Facebook ads is essential for businesses and marketers.
I am Jane from Influence, the leading marketing agency in Phnom Penh, Cambodia. I’m writing this blog with the hope that you can understand how much Facebook ads cost, the factors that influence costs, and uncover tips for optimizing your ad spend.
How much does Facebook advertising cost?
The cost of Facebook advertising typically ranges from $0.94 to $2.00 per click, $1.00 to $5.00 per 1,000 impressions, $0.00 to $0.25 per like, and $1.86 to $5.00 per download. The exact amount you spend on Facebook ads is influenced by various factors, including your target audience, advertising budget, industry, and more.
How does a Facebook ad auction work?
In a Facebook ad auction, each bidder (and their ad) is evaluated based on three key factors:
- Bid: Your bid represents the amount you’re willing to pay for a user’s interaction with your ad. For instance, you might offer $1.50 for each click. Facebook emphasizes that your bid is a powerful tool for enhancing your ad’s performance.
- Estimated action rates: These rates indicate the likelihood of users engaging with your ads, such as clicking on your ad or downloading your app. To have a competitive ad, you need a high estimated action rate, which means creating an ad that is relevant to your target audience.
- Ad quality and relevance: Users’ positive and negative interactions with your ad determine its quality and relevance. A high score for ad quality and relevance can enhance your ad’s competitiveness in auctions.
If your ad accumulates the highest total value, taking into account these three factors, you win the auction. Consequently, Facebook displays your ad to your intended audience instead of a competitor’s ad.
While an aggressive bid can increase your total value, it also raises your Facebook advertising costs. Therefore, it’s advisable for your business to prioritize creating a relevant, high-quality ad first before fine-tuning your bidding strategy and bid amount.
Keep reading to learn more about what affects your Facebook ad costs, so that you can find out better solutions to reduce your costs.
What affects your Facebook ad costs?
Before making a Facebook ad, you may consider factors that affect the costs of your Facebook advertising. To create an accurate budget, it’s essential to understand how they affect the cost of Facebook ads. Here are some of those factors:
Target audience
Your target audience can make the ads cost more or less. If you want to show your ads to a certain age group or people with specific interests, it can change how much you pay.
For example, if you want to reach people between 55 and 65 years old, your ads might be more expensive than if you’re trying to reach those between 25 and 34 years old. This is because there are more Facebook users in the 25-34 age group than in the 55-64 age group.
When you use Facebook ads, you can choose to show them to people who like certain things or have specific interests like outdoor activities, meditation, charity, college football, or commuters. This feature can affect how much you spend on advertising. For instance, if you focus on people who travel a lot, it might cost more than if you target people who travel internationally.
If you aim for interests that are really important to your business, it can help you connect with the right audience. But if you go for broad interests, you might end up showing your ads to a lot of people who aren’t that interested and may not take the actions you want them to, like making a purchase. So, it’s essential to be selective in your targeting for a more effective campaign.
Ad budget
When you start an ad campaign on Facebook, you determine a budget for your advertising efforts. Whether your budget is $100 or $1000 per month, it will affect the cost of advertising on Facebook for your business. It influences your ad bids, how well your ads perform, and the overall outcome of your social media advertising campaign.
For instance, if your company begins a campaign with a $100 monthly budget, and you set a maximum bid of $1 per click, you’ll likely face challenges since the average cost per click (CPC) for Facebook ads is $0.94. This means your bid may not be competitive, resulting in fewer impressions and clicks.
Moreover, social media experts generally recommend a daily budget of at least $5 for businesses. However, with a $100 monthly budget, you’ll run out of funds by day 20 if you spend $5 per day, leaving you unable to maintain your ad campaign for the entire month.
While having a larger ad budget provides more flexibility, it’s still possible to make a smaller budget work for your business. It’s important for your company’s decision-makers to understand that a limited ad budget may yield fewer conversions due to its performance constraints.
Ad bid
Your ad bid plays a crucial role in determining the cost of Facebook ads. Facebook provides a few bidding options, such as:
- Lowest cost bid strategy (Automatic bidding): This strategy aims to secure the lowest cost per click or action and efficiently manage your budget. Many companies begin with this approach.
- Target cost bid strategy (Manual bidding): This strategy is used to reach your desired cost per click or action, but it’s limited to certain campaign types like app installs, conversions, lead generation, or product catalog sales.
The choice of bid strategy, along with the bid amount, can influence whether your Facebook advertising costs are higher or lower. Typically, manual bidding may result in higher costs, while automatic bidding is designed to make the most of your budget.
Before you settle on a bidding strategy, it’s essential to have a good grasp of how the Facebook ad auction system operates. Understanding the algorithm behind Facebook’s advertising services can help you create a more effective ad strategy and allocate your advertising budget wisely.
Ad objective
When crafting an advertisement on Facebook, you must select one of the main ad objectives.
After determining your objective, the next step is to specify a particular goal, which includes:
- Awareness
- Consideration
- Conversions
In many instances, achieving more valuable ad goals, such as driving in-store visits or product purchases, tends to result in higher advertising costs. This is because actions like making a purchase deliver immediate benefits to businesses.
However, as you construct your ad campaign, it’s crucial to recognize the significance of building brand awareness and fostering consideration. When you engage with users in the early phases of their decision-making process, you can pique their interest in your brand and guide them further down the path to making a purchase.
Even though the purchase occurs later, it brings substantial and concrete value to your business. Additionally, it can potentially reduce your Facebook advertising costs since most companies typically spend less on goals related to awareness and consideration than on conversion-related goals.
The primary distinction lies in the time it takes for a conversion to happen. Conversion-related goals connect you immediately with users actively seeking to make a purchase, whereas users in the awareness and consideration stage may require a bit more time before converting.
Ad placement
Ad placement plays a significant role in determining the cost of Facebook ads. Facebook offers six possible placements for your ads, including:
- Instagram Stories
- Facebook desktop newsfeed
- Facebook right column
- Facebook Messenger
- Audience Network
In social media advertising, Facebook holds a valuable edge due to its ownership of Instagram. Through Facebook, you can conveniently create Instagram ads and Facebook ads, streamlining the process for you.
Instagram commands a higher Cost Per Click (CPC) in the world of Facebook advertising. On average, companies pay an extra $0.80 per click to have their ads displayed on Instagram. For Instagram Stories, the CPC increase is approximately $0.78.
Ads on Facebook have an average CPC that’s roughly $0.30 less than Instagram. It provides a versatile platform for promoting your business. Your ads can be showcased not only on Facebook but also on Facebook Messenger, a popular messaging app within the social network.
- Audience Network
The Audience Network, which extends the reach of your ads to websites and mobile apps, maintains an even lower CPC compared to Facebook and Instagram. In most instances, businesses spend an additional $0.20 per click, based on the average advertising cost for Facebook.
Facebook suggests using “Automatic Placements” for your ads. This means Facebook’s system decides where your ads should go to get the best results and make the most of your budget.
But if you want to spend less on Facebook ads, you can choose where your ads appear. You can turn off “Automatic Placements” and decide if your ads should only be on Facebook, Instagram, or the Audience Network yourself.
Ad quality
The quality and relevance of your ads affect how much you pay for advertising. If your ads are good and get people’s attention, it will cost you less money.
Facebook rates your ads from 1 to 10, with 10 being the best and 1 the worst. They look at how people react to your ads to give this score.
To get the most out of your Facebook ads, it’s really important to make ads that get high scores for quality and engagement. You should also keep an eye on your score regularly for the best results.
To check your relevance and engagement scores, follow these steps:
- Open Ads Manager
- Pick the ad you want to check
- Click on the Columns menu
- Choose Customize Columns
- Select Relevance Score
- Click Apply
- Review your Relevance and Engagement Score
Remember, Facebook needs about 500 ad impressions before it gives you a score. While your ad is running, Facebook keeps watching how users react to it to see if it’s relevant. That’s why it’s important to regularly review and adjust your ad based on the feedback. By being proactive in this way, you can enhance the performance, results, and costs of your Facebook ads.
Time of year
The time of year can make Facebook ads cost more. When it’s the busiest shopping time, businesses spend more on ads. Since many businesses want ad space, it becomes a competitive place, and that can lead to higher ad costs because they bid aggressively and have bigger ad budgets.
Some of the most expensive days for Facebook ads are:
- Black Friday
- Christmas
- New Year’s Eve
- New Year’s Day
Even though these seasonal factors can make your Facebook ads cost more, your business probably wants to reach more customers during these busy times. To do that, you might need to increase your advertising budget for these months or take a closer look at your ad strategy to make your ads better.
Industry and competition
While the usual cost of Facebook ads is around $0.94, you can get a better idea of how much your Facebook advertising will cost by checking the average price for ads in your specific industry. This information gives you a more accurate estimate and can help you plan your social media marketing budget.
Depending on what kind of business you’re in, Facebook advertising can be an affordable way to make more people aware of your brand, get potential customers, boost sales, and more. Even if you’re in a competitive industry, having a social media strategy can still be beneficial.
Your competitors, also known as other businesses in your industry, use Facebook advertising because it brings them positive outcomes. This landscape of competition plays a big role in determining how much Facebook ads cost.
While it’s important to pay attention to what your competitors are doing with their ad budgets, your ad strategy shouldn’t be based solely on what they do. It’s essential to set your strategy apart and be open to trying out different approaches in order to discover a successful bidding strategy.
Time of day
Bidding prices typically decrease from midnight to 6 a.m. because there’s often less competition during these hours, though this isn’t always the case. By default, ads are set to run all day and night, but you have the option to create a personalized schedule that specifies the exact hours you want your ads to appear.
Location
Facebook ads cost also depend on where your target audience is located. The average costs to reach 1,000 people vary significantly from one country to another, ranging from $35 in America, $3.85 in South Korea to 10 cents in India.
How to reduce your Facebook ad cost
Once Facebook proves to be a dependable way to attract new customers, adjusting your digital marketing budget can seem like a gamble. You wouldn’t want to allow a competitor to take the advertising slots that have been proven effective for your business.
The positive news is that with a few minor adjustments to your campaign, you can reduce advertising expenses without harming the outcomes, resulting in a more favorable return on your investment. Here’s how to achieve that.
Select the right campaign objective
When you start a new Facebook ad, the first thing you do is pick an objective for your ad campaign, like what you want to achieve when you buy ads on Facebook.
Trying out different campaign objectives and being very clear about what you want to achieve affect how much it costs to advertise on Facebook. Facebook’s algorithm matches your objective with people who are suitable. For instance, if you want to sell things, your ad is more likely to be shown to Facebook users who have bought stuff through the platform before.
This is why the average CPC for each objective can be different. Campaigns with the objective of awareness would pay about $1.85 per click on a link. But if you pick the goal of getting people to click on a link, Facebook will find users in your target audience who have a history of clicking on ads, with the cost of $0.21 per click.
Narrow your audience targeting
If you want to make your Facebook ads work better, you should aim for a smaller and more specific group of people when you’re deciding who to show your ads to.
Imagine you sell coffee machines online that make quick coffee at home. If you’re noticing that your Facebook ads cost too much when shown to a broad audience, such as all adults in Cambodia, you can make improvements.
You have information showing that most of your customers are in Phnom Penh, and they choose your coffee machines because they’re in a rush in the mornings. In response, you can narrow down your target audience to people living within 10 miles of Phnom Penh, who have an interest in coffee, and earn at least $1,000 annually.
By doing this, your audience size becomes smaller, but your ads become more suitable for the people who see them. This can make your ads perform better, especially if you use the details you know about your customers in your ads.
Use retargeting campaigns
The Facebook pixel gathers information about the people who visit your website and links it to their Facebook profiles. This includes the pages they looked at, what they added to their online shopping cart, and how long it’s been since they visited. You can use all this data to create personalized retargeting campaigns.
For example, let’s say you want to run a campaign to get people to sign up or make orders. If you run ads with the goal of getting conversions (like sign-ups or orders), it can be quite costly. But if you run an ad that directs people to an interesting blog post on your website, it can be cheaper. Now, add to that a retargeting ad that focuses on the people who visited that blog post from the first ad, and you’ll save a lot of money.
Other effective methods for retargeting Facebook users and reducing ad costs include:
- Dynamic product ads: Display the products that a shopper added to their online shopping cart but didn’t buy. Reminding them of what they bought could encourage them to return and make a purchase.
- Targeting people who visited a specific landing page: For instance, people who browsed your coffee machine and coffee mug categories might see different ads tailored to their interests.
- Reaching people who visited your website in the last 30 days: The shorter the time between their website visit and seeing a retargeting ad, the more likely they are to remember your brand.
Keep in mind that when you run retargeting campaigns, it’s a good practice to regularly upload your customer list and exclude them from your ad group. This way, paying customers are not mixed in with potential leads in the same retargeting audience.
Ensure your campaigns are relevant
Once you’ve pinpointed your specific audience, utilize the insights you’ve gathered about them to create campaigns that are relevant. (This is why retargeting campaigns are effective—personalized ad content is displayed based on their interactions with your brand.)
Dive deep into customer research and understand their:
- Interests
- Style of communication
- Challenges and concerns
- Objectives and ambitions
- Preferred influencers
Use this information to craft your ad—from the ad design to your message, everything should be guided by your customer data.
Continuing with the same example: After surveys of past customers reveal that 60% bought your coffee machine because an influencer recommended it, consider collaborating with that influencer to create a brief endorsement video for your product (an endorsement video is a type of video content where an individual, often an influencer, expresses their approval, support, or recommendation for a product, service, or brand.)
Share the video ad with your target audience, as they are already likely to recognize, appreciate, and trust the influencer you’ve partnered with. If you lack the time or budget for influencer endorsements, copy your audience’s communication style to enhance the relevance of your campaign (which, in turn, can reduce advertising costs).
Reduce ad frequency score
One drawback of narrowing down your Facebook ad audience is that your campaigns can become repetitive. When a potential customer sees the same ad multiple times in their news feed, they may become annoyed with the monotony.
For this reason, Facebook’s advertising algorithm takes into account ad frequency scores. It prefers to display newer, more novel ads that haven’t been shown excessively to the target audience.
Monitor the frequency scores on your reporting dashboard. When they start to go beyond two or three, it’s time to freshen up the campaign with new ad text, images, or videos. The goal is to maintain a sense of novelty and engagement.
A/B test ad creatives and placements
Facebook advertising involves both a scientific and creative approach. With many variables in play, it’s challenging to determine the “perfect” ad—one that drives results for your online store without breaking the bank. However, you can move closer to creating an effective ad through A/B testing.
Facebook’s built-in A/B testing feature assists advertisers in finding winning combinations. So, for each campaign, experiment with the following aspects and observe how they affect your ad costs:
- Ad content: Test different elements such as images, videos, or carousels to see which engages your audience better. Compare long-form and short-form content or consider using influencer-generated content or user-generated visuals.
- Ad placements: While the news feed is the primary choice for advertisers, test whether your ads receive more attention in other places, like the Audience Network. Data indicates that in-stream videos can be more cost-effective when you’re billed based on reach. It’s also worthwhile to explore Instagram Stories if your goal is to achieve clicks at a lower cost.
Enhance the experience after clicking
Bringing visitors to your website through Facebook ads is just one part. If you direct potential customers to a slow-loading website or one with a generally unpleasant user experience, it won’t lead to increased revenue, regardless of how attractive your ad campaign is.
Here are some simple methods to enhance the experience after clicking for visitors who arrive at your site through a Facebook ad:
- Guide shoppers to personalized landing pages: Don’t let your audience click on a product featured in a Facebook ad, only to be redirected to the brand’s homepage and left to search for the product themselves. Always ensure that you direct visitors to the specific product page, making it easy for them to discover what they’re interested in.
- Ensure fast loading times: Even a one-second enhancement in website speed can boost conversions. Speed up your site by compressing images, eliminating unnecessary Javascript code, and minimizing the use of third-party apps.
- Optimize for mobile devices: The majority (98.5%) of Facebook users access the platform through mobile devices. Ensure that your online store is mobile-responsive and can adapt to smaller screen sizes.
- Provide a one-click checkout option: When the checkout process is smoother and involves less hassle, it reduces the likelihood of people abandoning their purchase.
You can consider using Influence’s website service if you need a solution to optimize your website. This will definitely enhance your visitors’ post-click experience.
Final notes
In conclusion, understanding the costs of Facebook ads is crucial to any digital marketing strategy. It’s not a one-size-fits-all equation, and numerous factors can influence the costs of Facebook ads.
While Facebook ads can be a powerful tool for businesses, it’s the combination of strategy, creativity, and data-driven decision-making that will help you make the most of your advertising budget.
As this can be challenging for you, please remember that Influence is always here to provide you with the best Facebook ads services that will perfectly fit your budget. Our contact information is below.
Head office: 1st Floor. KVBC Business Center, Keo Chenda St Phum 3, Sangkat Chroy Changvar, Khan Chroy Changvar, Phnom Penh, Cambodia.
Hotline: (+855) 67 74 00 00
Email: [email protected]
Website: https://theinfluence.ai
