What Does It Cost to Advertise on Facebook?

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Daniel Wade

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Daniel Wade

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June 12, 2020

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Understanding what it will cost to place ads for your business on Facebook is integral to making the all-important return on investment (ROI) estimation required for that decision. How can you decide if a Facebook ad will be worth the cost if you don’t have an accurate idea of what that cost will be? 

If you have used advertising, of any type, in the past you will readily recognize that the short answer is always - “that depends.” It depends on several factors. The ROI for advertising is always dependent on how well you hit the right target and how much your product or service is needed at the time. It depends on the quality or effectiveness of the images, videos and ad copy used. Most importantly, however, it depends on what your objective for the ad or ad campaign is.

Your objective, or what you want the potential customer that views your ad to do when presented with your ad, will be the single most important element when determining the ad campaign’s ROI.  Determining the correct objective is critical when you are using Facebook’s guided ad creation tool. This helpful tool will step you through the entire process of creating an effective ad, but you must begin with the correct objective in mind.

When creating a Facebook ad you will be presented with a choice of three categories of objectives.

  • Awareness: Objectives that generate interest in your product or service.
  • Consideration: Objectives that get people to start thinking about your business and look for more information about it.
  • Conversions: Objectives that encourage people interested in your business to purchase or use your product or service.

If Awareness seems to be the best way to describe what you want to achieve with your ad, you will then be given two additional choices to consider; Brand awareness and Reach.

  • Brand awareness: Reach people more likely to recall your ads and increase awareness for your brand.
  • Reach: Show your ad to the maximum number of people in your audience.

A good example of a company that may choose this ad objective is a niche clothing manufacturer.  If you make a particular style of handbag, for example, you will probably want your ad to make women more aware of your product so they will look for it at a retail outlet.

If Consideration is a better description of your objective, you will then choose from the following:

  • Traffic: Increase the number of visits to your website or get more people to use your app.
  • App installs: Send people to an app store where they can download your app.
  • Engagement: Get more people to see and engage with your post or Page. With engagement as your objective, you can:
  • Boost your posts (Post engagement)
  • Promote your Page (Page likes)
  • Get people to claim an offer on your Page (Offer claims)
  • Raise attendance for an event on your Page (Event responses)
  • Video views: Promote videos that show behind-the-scenes footage, product launches or customer stories to raise awareness about your brand.
  • Lead generation: Collect lead information, such as email addresses, from people interested in your business.
  • Messages: Get more people to have conversations with your business to generate leads, drive transactions, answer questions or offer support.

The Consideration category is primarily used to get potential customers to take that next step toward making a purchase. If you run a plumbing service, for example, you will likely choose the Lead Generation objective in the Consideration category. You will want your potential customers to submit information that can be used by your sales team to follow up on their needs.  

Conversion objectives get customers to make the commitment you are looking for or convert from being a prospect to a customer. These objectives are:

  • Conversions: Get more people to use your website, Facebook app, or mobile app. To track and measure conversions, use the Facebook pixel or app events.
  • Catalog Sales: Show products from your catalog based on your target audience.
  • Store visits: Promote multiple business locations to people who are nearby. 

You will choose Conversion if your offering is conducive to making an online purchase or at least deciding to make a purchase or use your service. Getting people to click over to your website is a good use of the Conversion objective.

If you feel like this has been a long way around to get to what a Facebook ad costs, well - you’re right.  But the cost, or more importantly the ROI, will make no sense unless you understand the various objectives and what they can do for your business. If you are trying to grow your home services business in a local market, you will not enjoy a reasonable return on your advertising investment if your ad is designed to give you a nationwide maximum reach. You might end up being well known, yet not enhance your business at all.

A recent study from a social media management platform looked at the average costs for their client’s Facebook ads in 2018. These costs were broken down by objective. Your actual cost will necessarily vary, but from this data, you can see a Rough Order of Magnitude (ROM) for Facebook advertising.


Facebook CPC by Campaign Objective

 

As you would expect, converting a prospect to a customer through an ad is the costliest objective and simply generating some website traffic is the least costly. It is important to note that not all clicks include a purchase. Many advertisers will use the conversion objective to employ Facebook pixel or app events to measure how much Facebook traffic is directed to their app download page or to a particular landing page on their website. This gives them a metric from which they can track where their sales eventually come from.

From these ROM costs you can now start to evaluate your potential ROI, that is to say, answer the “is it worth it?” question. 

If, for example, the click conversion rate for your local plumbing business is 10% and the average customer spends $150 with you, you can easily see that spending $0.77 per click is a great investment. Remember that this is contingent upon getting the right ad in front of the right people.

On the other hand, if you are trying to sell a $3.00 item online at your website, spending $1.51 for each click may not be wise.

In the end, you need to clearly understand what you want your advertising campaign to accomplish for your business. Create a campaign to meet your objective. Zero in on your target market. Then run some tests to determine your very own ROI. It will take some time to create the right ads and get them to the right people, but without advertising, your business will likely never grow. 

In future articles we will discuss the Facebook bidding processes and ad optimization strategies - so check back often!