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Social Media Paid Advertising Cost
Facebook advertising is a common part of many small businesses’ marketing plans. 3.7 million businesses run advertising campaigns through Facebook, spending a combined $5.5 billion to reach potential customers using the social media platform.
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Such numbers are impressive… but intimidating. So much competition for attention on the platform means ever-increasing costs. This doesn’t mean you need a million dollar Facebook advertising budget to drive traffic, leads and sales through your app.
This guide shows how much you should budget for Facebook ads, with tips on how to reduce the cost of your campaigns without sacrificing results.
Despite what you see in your news feed, Facebook doesn’t want to overload its audience with ads. There are limited ad placements that businesses can sponsor on Facebook and Instagram.
Each advertiser submitting their campaigns competes for a specific ad placement in front of their target audience. If two beauty brands appeal to millennial women in the news feed, for example, they are competing in an auction.
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Price is not the only factor taken into account when deciding the winner of an auction. To award an ad spot, Facebook determines the overall value of the ad — in other words, how much the target audience would like or interact with the ad.
The algorithm tracks the quality of the ad (including previous feedback) and the estimated action rate (how many people take an action on the ad – like, share or comment). The campaign that best ticks these three boxes has the highest value and gets the ad space.
The more advertisers competing in the auction, the higher your Facebook advertising costs will be. Advertising on Facebook in industries such as finance, insurance and home improvement tends to be more expensive for this reason.
Seasonality also plays a role. Advertising costs historically skyrocket in the last months of the year. Black Friday and Christmas shoppers bring more advertisers to the platform, increasing the number of competitors in the ad auction.
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Research suggests that advertisers should expect to pay: $0.94 per click or $12.07 per 1,000 impressions. Facebook charges advertisers based on two metrics: cost per click (CPC) and cost per click (CPM) – otherwise known as cost per 1,000 impressions.
As previously mentioned, seasonality and competition play a major role in the price of a winning bid in the Facebook ad auction – especially since website traffic is a desirable outcome for many advertisers. If expensive advertising costs are a concern, launch campaigns in the first half of the year.
Many online stores use Facebook as a platform to build brand awareness. That makes sense — the app boasts 2.8 billion monthly active users, many of whom use the social media platform to interact with their favorite brands.
If your goal is reach and awareness, expect to pay $12.07 to reach 1,000 people through the Facebook app.
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While there are only two metrics that determine how advertisers pay for ads, other financial metrics come into play when understanding the cost of your Facebook ad campaigns. Brands use the platform to generate email subscribers—prospects they can sell to over the long term without factoring in recurring advertising costs.
Research estimates the average cost per lead for a Facebook ad to be $5.83. But get your audience targeting right and this could be dramatically reduced.
Alex Trpkovic, Growbuds’ chief marketing officer, explains how the brand launched “a major Facebook ad campaign in early to mid-October, right before the Black Friday and Cyber Monday holidays.
“The idea behind the campaign was to get as many people as possible to subscribe to our email newsletter,” says Alex. “We spent just over $4,000 and acquired over 2,600 new email subscribers, which recently exceeded our ad spend on this campaign by 7x. For these subscribers, we have a special segment that allows you to track their sales.
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“Because we weren’t interested in CPC or CPM, the metric we valued most was cost per subscription—we were tracking it at around $1.55 per subscriber.”
💰Are you afraid of excessive expenses? Set a maximum daily budget and bid limit for your ad campaigns as part of your bid strategy. You will only enter auctions with the maximum bid, so you will never overpay for running an ad.
Once Facebook becomes a reliable source of new customers, playing around with digital marketing budgets seems risky. You don’t want to turn off the tap and let the competition claim that ad spots are proven to work for your business.
The good news is that a few small tweaks to your campaign can reduce ad costs without sacrificing results, leading to a better return on your investment. Here’s how to do it.
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The first step in creating a new Facebook ad is to select a campaign objective. This is the overarching goal of your campaign – the result you want to achieve by buying ads on the platform.
Experimentation with these goals and a clear result you want to achieve affects the cost of advertising on Facebook.
The algorithm matches your target with users who meet these criteria. For example, if you’re bidding on sales, your ad is more likely to be shown to Facebook users who have previously made purchases through the platform.
As a result, the average CPC varies for each campaign objective. AdEspresso found that awareness campaigns would pay $1.85 per link click. However, choose a link click target and Facebook will find users in your target audience with a history of clicking ads – so the CPC for these campaigns is only $0.21.
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David Sweet, vice president of marketing at Eterneva, adds: “The wrong choice of advertising target, such as choosing leads when your goal is brand awareness, can have a negative impact.
“This mistake is often linked to not understanding your target group before choosing a campaign. Doing due diligence in identifying your target audience and aligning your marketing goals with your campaign objectives before launch will increase engagement, add value and reduce costs.”
Facebook’s algorithm considers ad relevance scores when calculating bids. The smaller and more relevant your audience, the better your chances of winning the ad auction.
“Start your targeting a little wider than you might think,” says Josh Jurrens, founder of Marketing Caliper. “This gives Facebook a little more room to find the users most likely to take your intended action before narrowing your targeting. Starting too narrow will lead to high costs and fewer conversions.”
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Let’s put this into practice and say you are an online business selling instant home coffee makers. With this custom audience, you see the expensive cost of Facebook advertising:
Sales data shows that most of your customers are based in Los Angeles; customer surveys show that they buy from you because they don’t have time to grab a Starbucks coffee on their morning commute.
Likewise, your audience size will shrink dramatically, but your ad relevance score will increase – especially if you use this customer data in advertising (more on that later).
The Facebook pixel collects data about visitors to your website and matches it with their Facebook profile – including the pages they visited, which items they added to their online cart, and how long ago they visited. All this data can be used to run personalized retargeting campaigns.
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“In my experience, I found that remarketing ads were the cheapest to run,” says Usama Ejaz, co-founder and CEO of SocialBu, in an email interview. “All other types of ads were simply very expensive, even compared to Google ads.
“Let’s say you want to run a campaign for sign-ups or orders. If you’re running conversion ads, this can get expensive. But if you run an ad for simple clicks on a relevant post on your blog, it can be cheaper. Now combine that with a remarketing ad that targets visitors to your blog post used in the first ad and you’ll save a ton of $$.”
Note: When running retargeting campaigns, periodically upload your customer list and exclude them from your ad set. Thus, paying customers will not remain concentrated in the same target audience as potential customers.
“Double the audience types you exclude. Some brands worry that they might turn off potential customers, but if there are certain demographics or interests that might indicate they’re not a good fit for your product, turn them off.” Brooks Manley, Senior Blog Editor at Brew Interactive
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Once you’ve onboarded your audience, use the information you’ve gathered about them to make your campaign relevant. (That’s why retargeting campaigns work so well—you’re showing personalized ad creative based on their experience with your brand.)
Use this data to create your ad – everything from your ad creative to your message is informed by your customer data.
Continuing with the same example: post-purchase surveys show that 60% of previous customers bought your coffee machine because it was recommended by an influencer. So connect with said influencer and create a short clip promoting your product. Run a video ad to your target audience because they likely already know, like, and trust the influencer you’re working with.
Don’t have the time or budget to refer influencers? Replicate your audience’s tone of voice
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