How Much Does Facebook Advertising Cost? A Definitive Guide
A common question that arises when discussing Facebook advertising, generally right after "Do Facebook ads work," is “How much do Facebook ads cost?”
Well, if you only had $20 cash and went out to lunch, how much would it cost? Unless you plan on running out on a bill, it will never cost you more than you have to spend. How much food you’ll get is another story.
It’s not a question of how much Facebook costs, but how far your money will go. Marketers who discourage using the platform on the basis of it being too costly are probably the same people who claim that fishing is a waste of time with their line in an oil spill.
If you go into Facebook advertising, or any type of online advertising for that matter, with a clear focus and follow a simple strategy, the cost-efficiency of the platform will astound you. If you run into it blind, you’ll find yourself losing money faster than Michael Jordan at a casino.
In this post, I’ll outline:
- Some average costs associated with Facebook advertising, including average CPC on Facebook.
- The most costly mistakes to avoid while creating Facebook ads, along with
- Best practices that will put you in a position to win and optimize Facebook costs regardless of your objective, and
Costly Mistakes of Advertising on Facebook
The first mistake you can make going into Facebook ads is not having a clear strategy. If you go in guns blazing with no real concept of what you’re doing in terms of targeting and ad copy, you may find yourself in a hole pretty quick. It would be like going into a football game unprepared.
The diagnoses for troubled and costly ads are usually not as complex as you might suspect. Marketers overspend when they:
- Target way too broadly
- Don’t implement custom audiences
- Don’t have a base retargeting strategy
- Don’t test
Targeting Too Broadly
This trap is easy to fall into if you’re new to Facebook advertising. Facebook boasts a ridiculously vast amount of targeting options that could leave you like a dog who found their way into the cookie cabinet.
You’ll want to pay attention to a few things when you’re outlining your general targeting, but always keep in mind that wasted impressions are wasted money.
Age Range: Make sure the age range you select is as close to your target demographic as possible. It sounds like a no-brainer, but the last thing you need is to be showing up to people who don’t understand or have any relevant use for your business.
Interests: Targeting vague interests that are “kind of sort of” like what your audience might be into is a mistake. If you’re selling boats, you wouldn’t want to target everyone who likes the beach.
Spend the majority of your time making your targeted interests as relevant to your desired audience as possible. With interest targeting, it’s easy to get stuck in the broad-thinking mindset. Really take the time to envision yourself as your targeted user. Brainstorm all of the possible topics relevant to this user and search for them. You’ll find that a few specific interests are better than a dozen extremely broad ones.
Location: Targeting outside of your market can be another costly error. If your audience is only located in a certain state, don’t target the entire U.S. This may be one of the biggest rookie mistakes in the game because the specificity of being able to target with such impressive granularity is absent on other platforms.
If your core demographic is English speaking (or any other language), you’ll certainly want to include that as well. Selecting a language or number of specific languages is critical to trimming down your Facebook audience. It will allow you to further define the type of individual who will be most likely to be interested in you.
Ignoring Reach: Keep an eye on the “estimated audience reach,” as this will let you know your approximate audience size. If you’re advertising Zumba lessons in small town U.S.A – population 12,000 – your audience size of 25 million is a bit aggressive. Keep an eye on the meter as you make changes to the targeting, it’s important to know which variables have a significant impact.
Failing to Test Facebook Ads
This is easily the most effective way to throw away your ad budget. I lay awake at night thinking about all of those poor souls who put their faith, dignity, and entire budget into unproven campaigns. It breaks my heart.
The truth is, you don’t have to gamble your money away on something that “might” work. The pressure to get results is always there, but the practice of testing the waters before you cannonball in might save you the shock of how cold the end result might be. Slowly get into the pool, you might stay longer.
Optimizing the Cost of Facebook Ads
The problem when it comes to Facebook ads is that if you don’t know where or how to start, you’ll likely end up shooting yourself in the wallet. The solution is simple though, and a little attention to detail can have a dramatic effect on your campaigns.
Average Facebook advertising costs
Aside from the optimization of your ads, there are average costs associated with Facebook advertising. In order to further clarify those numbers, let’s take a look at the different ways you can be charged.
When creating or editing an ad set there is a section devoted to “Optimization & Pricing” as seen in the figure below:
Depending on your campaign objective there are a few options as to how your ads will be delivered:
As you can see, when you build out an audience, you aren’t necessarily targeting everyone in it, per se. Facebook takes your desired price optimization and delivers your ads to the specific people it deems as most likely to commit the action you selected. So for example, if you have chosen “Website Conversions” Facebook will deliver your ads to individuals who are “most likely” to commit that action. The same goes for “website clicks”, Facebook takes the pool of people your audience and shows the ad to those who are most likely to click or engage with it.
No matter what your objective is you are put into an auction system where, based on a variety of factors (mostly what I have outlined for optimization), dictate the price you pay to “Reach” the segmented group of people associated with your desired outcome (i.e Clicks).
The number of people who take the action affects how much you pay to reach the audience, and how much your overall result will cost.
Within your objective you have the ability to choose to be charged for different metrics:
You have the ability to be charge CPM, which will show your ad to your “reachable audience” as many times as possible and you get charged per 1,000 impressions. This type of pricing option should be chosen for extremely targeted audiences, or a group of people you know are going to interact or convert. With that being said you will have to keep an eye on the frequency with this option because it will climb very quickly.
Daily unique reach takes care of the frequency issue and you are only shown once per day. In my experience, experimenting with the different delivery methods, I find that the one that closely aligns with your campaign objective outperforms the others.
In order to give a high-level view of average costs, let’s look at some 2015 averages (which can be found here):
Average Facebook Ad cost per click: $0.27
Average click-through rate: 1.5%
Average click-through rate for Facebook Website custom Audience ads: 1.25%
Our own client data is similar, but with slightly higher costs per click and slightly lower average CTR's.
These are merely averages however, and this post was designed to help you be greater than average. With the tips mentioned, I’ve been able to get CPC as low as $0.05 and Cost-per-Conversions around $2.00 at best. In the lifetime of a campaign it is normal to see CPA’s rise and fall slightly, when you’re CPA starts to rise considerably though, it’s time to pause the campaign.
Building a successful account is just like building a house. You’ll want to have a strong foundation to start or it will collapse and your cat Mr. Peaches will have to wear a body cast for 8 to 12 weeks.
The strongest support for any campaign is leveraging what you already have. You want to go into Facebook looking to find individuals who are similar to either customers you have, or the customers you would like to have. Centralize your strategy around retargeting.
The best way to construct a strong retargeting foundation is through a website tracking pixel and custom audiences. If you don’t have the Facebook tracking pixel on your website, get one. Seriously. Not having one is like looking for Bigfoot without a camera.
If you need help implementing the pixel, I briefly outlined it in this blog post about Facebook for lead generation.
Let the pixel run on your website for a period of time (about a week or two, depending on the volume of traffic) and before you know it, you’ll be able to create a custom audience from it.
Leads & Lookalike Audiences in Facebook Advertising
The next step is to upload a custom audience of either customer emails or emails of leads you have. The strategy is to refine the guessing-game of interest-only targeting. Construct the base profile of the individuals you are looking for, THEN you can add layers of interests and behaviors if need be.
To upload a custom audiences, go to the tools section of your ad manager:
Select “Audiences” and proceed to the “Create Audience” tab in the top left corner of the page:
You’ll find that you have a few options for importing your customer list or list of potential leads:
If you choose to “upload a file,” keep in mind that the file has to be in either .txt or .csv. format.
It’s not uncommon for businesses to feel uncomfortable uploading their customer information into anything. There is a level of trust between you and your customers, and it’s understandable that you may feel hesitant to give Facebook their information. However, the process of doing so will actually create a better experience for both sides. Facebook is only using the emails to connect them with current users. So technically, they already have all of their information – you’re just finding them.
Once your customer audience is uploaded into Facebook you can exclude them from your targeting. This means that they will never see your ads and you won’t waste impressions.
The strategic reason for uploading your customer list is to create a lookalike audience from it. Facebook takes the matched users in your custom audience and with the plethora of data that the platform bolsters, finds users who are similar to those you have uploaded.
Underneath where you created your custom audience, you’ll see the option for lookalikes:
Next, select the custom audience that you uploaded and the country in which you would like to target:
You are only able to create one lookalike audience per country, so if you target within multiple countries you’ll have to repeat the process for each:
As a best practice, start out with the audience meter as small as possible. This will give you the highest precision and the best possible lookalikes.
Repeat this process for those website visitors you’ve been collecting as well (no upload needed, just select it). The only difference is that you DON’T want to exclude this audience.
Next, create a lookalike to expand your reach. You can easily access these audiences when you are constructing your ad set:
As you attain more customers and website visitors, you will have to update these lists similar to how you initially uploaded them.
Now you’re ready to layer interests and behaviors to get your lookalikes to even further resemble who you’re looking for…
Once you have these audiences constructed, the best way to achieve cost-efficiency is to test. Set up multiple ad sets with similar but variable target audiences. Set the daily budgets low so that it disperses across these ad sets and construct one to three competing ads for each (with different copy/ creative). Facebook automatically favors the higher performing ad, so it will be easy to cut ties with the others. The ads and ad sets who are winners will float to the top, allowing you to optimize and transfer your full budget into what is already PROVEN TO WORK.
The primary factor to achieving the lowest possible cost for your ads comes from your Relevance Score. The specifics of achieving a high relevance score lies within how “engaging” your ads are within a given ad set. Relevance Score is ad-specific, meaning that you could have three ads within an ad set with different relevance scores based on the nature of their copy and the degree with which they have been interacted with. This is why it is important to have try-outs and file down on your all-star performing ads. This practice will also improve your skills from a copy and creative perspective, challenging you to make better and more creative ads.
Attention to Detail
You should make your ads as visually captivating as possible. Remember, you’re competing for attention and engagement. This isn’t Google, they aren’t searching for value – you’re bringing the value to them.
Don’t forget about copy either. Although looking good is half the battle, your ad needs a great personality in order to be popular. Having compelling creative and lousy ad copy (or vice versa) is like putting cheese whiz on lobster.
Spend time on your ads. It’s what makes you a marketer. If you half-ass it your chances of success may literally be one in a million…
So...How Much Does It Cost to Advertise on Facebook?
The cost of Facebook advertising is reflective of your ability to reach and engage with your target audience. Although “cost” heavily relies on your goals and what you constitute as success, these universal strategies that I’ve outlined above should put you on the goal line. The rest is up to you.