With 2.91 billion active monthly users, it’s easy to understand why so many businesses focus the bulk of their marketing efforts on Facebook. So chances that your target audience is on the social media platform. However, there’s more to Facebook that makes it the king
of digital marketing: it’s targeting capabilities far exceed those of Google AdWords or Bing. You can target audiences using Facebook Ad Manager by age, gender, interest, and other demographics that make advertising on Facebook effective and precise.
We know what you’re thinking right now: how much of your marketing budget do you need to invest in Facebook advertising to make it work?
Well, that depends… a lot of factors can influence your ads cost on Facebook, such as the type of ad, your goals, the bidding process, your ad budget and so on. Facebook doesn’t give you a set price when you are setting up your campaign, so your daily budget that worked for a small business might not generate the same results for another, even though they activate in the same niche.
There are no easy answers or simple solutions… But by the end of this guide, you will understand better what the cost of advertising entails – how to analyse the factors that might influence your quote, and what to expect.
Let’s dive right into it, shall we?
The Average Cost of Advertising on Facebook In 2021
Although the costs may vary from business to business there are some averages that you can analyse to get an idea of how much you can expect to pay to get your Facebook ads in the front of the right audience.
According to a 2021 report, the average cost per click (CPC) is approximately 1.72 cents globally. Although this is the average cost per click, the data shows that CPC’s can vary dramatically depending on the campaign objectives.
Now, if you want to pay the lowest cost for your Facebook ads campaign, then reports show that Sundays and Mondays are the cheapest days with the lowest average Facebook CPC.
So, now you have an idea of what you can expect to pay for advertising on Facebook. However, these numbers are not set in stone. Multiple factors can influence your Facebook marketing budget, so you may end up paying more or, on the contrary, less than the average. It may all sound like a guessing game, but it isn’t if you understand how advertising on Facebook works and what to expect.
We’re talking here about your campaign objectives, the Facebook ads bidding process, your audience, your industry, and the ads quality. We’ll also look at some tips that can help you lower the costs of Facebook advertising.
Without further ado, here’s an in-depth look at the factors that can influence the cost of advertising on Facebook.
How Your Campaign Objectives Affect Your Facebook Advertising Costs
There are three types of ad campaign objectives: awareness, consideration, and conversion. The purpose of awareness ads is to put your business in front of the right audience and gain greater brand awareness.
Facebook ads that focus on consideration have the purpose of getting prospects interested in your brand and more familiar with it.
If you set your campaign objectives to conversion, then you want your audience to take a specific action when seeing your ads. This is influenced by ad space – whether it’s filling up a form, downloading an app or buying a product or service.
Let’s imagine that you are a small business that offers babysitting services… You want to target two types of audiences with your Facebook campaign: those that want to hire a babysitter long-term and those that only need one occasionally.
Now, let’s imagine that Facebook needs to choose between two types of target audiences to show your ads, both of which match your customer profile. The main difference between
them is that one clicks on the ads but rarely converts. However, the other type rarely clicks on Facebook ads, but when they do, they go through with the entire process.
If that is the case, then Facebook will consider your campaign objectives to decide to which type of audience to show your ads to. If your goals are to generate traffic to your website, then the social media advertising platform will show your ads to those who are most likely to click on them and spend time browsing your landing page. If, on the other hand, your objective is to generate leads, then Facebook will show your ads to the prospects most likely to convert.
Understanding the Facebook Ads Bidding Process
Don’t assume that the highest bid will get the best ad placements – it doesn’t work like that. Facebook isn’t looking at how much you are willing to pay to get your ads in front of your audience. Instead, it wants to ensure that your ads are relevant to its users and add value to their lives. The only way to meet these two goals is by ensuring that both objectives are factored into the ad auction process.
Facebook will consider three factors when deciding what ads to show:
The Bid: In other words, how much money you are willing to pay to reach your target audience.
The Ad Quality: Facebook will review user feedback to determine the quality and relevance of an ad. You will then receive a Relevance Score between 1 and 10 for your ads (1 being of the lowest quality and 10 being highly relevant.) Facebook doesn’t ban poor quality ads, but it forces advertisers to pay more than normal if they want to get their ads in the News Feed. Of course, the higher the ad relevance, the lower the price.
Estimated Action Rate: Facebook will try to guess how likely a person is to click on an ad based on their past behaviour. For example, if your objective is to generate traffic to your landing page, then Facebook will try to identify those prospects from your target audience that have clicked on ads like yours in the past and show the ad to them.
However, keep in mind that there are periods when the demand for advertising on Facebook will increase exponentially. We’re talking here about Black Friday, Christmas, New
Year’s Eve, the Super Bowl or the AFL Grand Final for example. So, if you want to make the most out of your efforts and reach your audience without breaking the bank, then consider advertising when the demand isn’t at an all-time high.
Bidding Strategy Options
You can choose from four options when you bid your ads:
Cost per click (CPC): you pay every time someone clicks on your ad, regardless of if they take any action or not.
Cost per 1000 impressions (CPM): you pay after 1000 people have seen your ad, regardless of if they clicked on it or did something else.
Cost per like (CPL): you pay every time someone likes your ad.
Cost per Action (CPA): you pay every time someone takes a specific action that you define before running your ad. For example, every time people who have landed on your website through a Facebook ad adds something to their basket. Of course, you are going to need a very specific call to action to make the most out of this bid.
Each type of bid can influence your final costs. Naturally, you are going to get more impressions or likes than clicks or action, so you can expect your costs to reflect that. You will pay more for CPC or CPA than for CPM or CPL as these types of actions don’t happen as often as getting a like, for example.
Your Audience and How It Can Impact the Cost of Facebook Advertising
Most advertisers understand how the bidding process can affect their costs and are very careful when they set their ad objectives. However, most seem to ignore the impact their audience might have on the cost of running Facebook ads. They think that the more extensive the audience they target, the higher the chances of conversion – wrong…
Let’s return to our previous babysitting example: You may think that it would be a good idea to show your ads to parents. After all, they need your babysitting services the most, right?
But when you do that Facebook will target EVERYONE who has a kid, regardless of other relevant factors. For instance, parents of toddlers are more interested in hiring a babysitter, whether full-time or occasionally, than parents of teens.
If you are going to show your ads to all parents, without specifying other factors, then you can expect to pay more than the average for your Facebook ads. It will take you a while to master this part of the process… Trust me, it will get easier and more comfortable with time.
How Your Industry Can Affect the Cost of Your Facebook Ads
It all has to do with the size of the market and the interest people have in your type of products or services — the bigger the market, the lower the costs, giving you a greater return on investment. So, if you are an electric cars dealer, then you can expect to pay more to reach your audience through Facebook ads than a regular cars dealership as the market is significantly lower.
How to Lower Your Facebook Ad Budget
The truth is there isn’t any cheat sheet – you can’t tweak a few things and expect to get good results for a fraction of the cost. The only way to get there is through trial and error, by combining different factors and seeing what works and what doesn’t. It can be a long process… After all, there are over 359 attributes for defining your target audience alone.
So, what can you do?
That’s easy, hire someone who knows what they’re doing.
Facebook advertising specialists, like the ones we have here at Australian Internet Advertising, have years of experience in perfecting their targeting knowledge. It’s not only that they understand how Facebook advertising works, but they’ve set up countless campaigns – they know what it takes to get a high Relevance Score and get your message in front of the right audience for the lowest cost.
You may think that doing everything on your own is going to save you money, but you may lose more than you’re investing in the long run. Consider the time it takes to figure out how to set up a campaign, choose the right demographic attributes, and adjust your budget.
Meanwhile… you could have just hired someone to do it, leveraging the benefits, and optimised your time.