How cheap is Facebook advertising

Facebook takes a similar approach to most other online advertising networks. They don't give you a set offer for a price when you want to advertise on their platform. Instead, you will find that the cost of your Facebook advertising will vary based on a number of factors.

Moz provides some insightful statistics on the comparative costs involved in reaching people through different types of media. Although the numbers for 2014 are now a bit out of date, they still give an accurate picture of where the Facebook advertising costs compare to the competition.

Moz figured out the cost to reach 1000 people per media type:

- Newspaper - $ 32.00

- Journal - $ 20.00

- Radio - $ 8.00

- Cable TV - $ 7.00

- Google AdWords - $ 2.75

- LinkedIn Ads - $ 0.75

- Facebook Ads - $ 0.25

We recently shared an overview of the cost of YouTube ads. If you want to advertise on YouTube, you need to set a budget and then bid on commercials. In many ways, advertising works similarly on Facebook.

So, technically, the cost of your Facebook advertising is equal to the amount you're willing to spend. It's not so much about how much it will cost you to advertise as it is how many adverts you get for your money. Obviously, bidding too low means you can't spend all of your budget because there will always be someone willing to pay more than you.

TLDR;

  • In the United States, the average cost per click (CPC) for Facebook advertising in Q3 2016 was 27.29 cents, compared to a CPM of $ 7.19.
  • The average cost per click worldwide is around 28 cents.
  • On Sunday and Monday the CPC’s were cheaper than other days of the week
  • Depending on the campaign goal, there were very different KPCs (these are data for Q4 2016):
  • Range - $ 1.01
  • Lead Generation - 79 cents
  • Video Views - 61 cents
  • Offsite conversion - 37 cents
  • Impressions - 25 cents
  • Link clicks - 12 cents
  • Post engagement - 4 cents
  • Page engagement - 3 cents
  • The average cost per like (CPL) in the US was 20 cents - half the rate in Germany
  • The average cost per app installation varied greatly by country, ranging from $ 5.40 in the UK to 44 cents in Brazil. In the US, they were $ 2.28.

Below is a quick guide to calculating the cost of Facebook advertising:


Facebook bidding

There's only so much space in people's Facebook feeds for ads and sponsored posts. This is especially true for competitive keywords.

For this reason, Facebook operates an auction system in which potential advertisers submit bids in order to obtain the right to carry out their advertising campaigns. Therefore, there are no set costs for running Facebook ads. It all depends on who else wants to advertise.

You start the process by setting a daily budget. This is important. Without this budget, you run the risk of finding a successful campaign that could cost you far more than you can afford.

You can also choose whether you want to start your campaign today and run it continuously, or whether you want to run a campaign between specified start and end dates.


How the Facebook ad auction works

Facebook doesn't just give advertising space to the highest bidder. It wants to make sure that its users are still getting the best experience. Therefore, Facebook picks the winning bids based on the ads that it believes offer the greatest overall value. It creates a balance between advertisers who reach people who are receptive to their message and users who would be interested in seeing that message.

There are billions of ad auctions happening behind the scenes on Facebook every day. In fact, there is an auction every time someone opens their feed. Facebook weighs all competing bids for a slot and selects the ad that it believes will offer the best value for the target user.

As an example, Facebook became aware of my research for this article. So the top ad on my Facebook page right now is "Learn How You Can Capitalize on Facebook's New Chat Bot Opportunities".

Facebook analyzes three factors:

  1. The gradual bid of an advertiser
  2. How relevant an ad is to a person
  3. The likelihood that the person would take the conversion action that was optimized by the ad

Facebook rates each ad based on these factors. They give the ad slots on each feed to the ads with the highest ratings.

This means you don't have to have the highest bid to win a slot for your ads. You just have to be right for the audience.

If your ad ends up getting the highest score for a slot, Facebook will calculate your fees based on the bids everyone has placed. This means that you don't necessarily have to pay your maximum bid amount.


Important factors that affect the cost of your Facebook advertising

Your bid

When you set your bid amount, you can choose to do it automatically or manually. If you choose Automatic, Facebook will choose the bid that will help you get the most ad spaces at the best price. This means that Facebook is trying to spend your entire budget amount with the aim of maximizing your results.

You can opt for manual if you'd prefer to set a limit on how much you're willing to pay for individual results. For example, you could limit your bid to $ 4 per click.

Remember, if you set a very high manual limit, it is unlikely that you will end up paying that amount. Facebook adjusts the auction so that the successful bidder does not pay more than he has to.


Your target audience

There's no point in trying to get your ads out to everyone. No matter what your product is, there will always be some people more relevant to your campaign than others. Even large companies like MacDonald's limit their advertising to the types of people who are most similar to their typical customers.

Also, you need to be aware that you will face significant competition in some niches. The stronger the competition you face, the higher the cost of the ads will be. You can pay prices such as $ 50 for certain legal terms.

The wider your customer network, the more companies of different types will compete with you for advertising time.

Of course, the target audience is a critical factor when it comes to your advertising. There's little point in targeting a cheaper but irrelevant audience if you think your best market is too expensive to target.

Relevant audience drivers that can affect your advertising costs include:

  • Location
  • Age
  • gender
  • Your interests
  • Connections (e.g. you already liked your Facebook page)
  • languages

The quality level and relevance of your ad

Think of those pesky commercials screamed in the face that you often have to endure on TV. They annoy you there, but there is little you can do about it other than change the channel of the program you want to watch. Things are different online. When Facebook bombarded you with annoying, poor quality ads, you can close Facebook and switch to another website without much thought or concern.

Facebook doesn't want that. Therefore, they do not recommend ads that they consider to be of poor quality.

Facebook doesn't prohibit bad ads out of the box, but it does add a cost premium, which reduces their weight in the Facebook advertiser process.

Facebook gives you for each of you switched display a relevance score between 1 and 10. This is an indication of how relevant they think your ad is to the target audience (10 is highly relevant). The higher your Relevance Score, the lower the cost of running your ad. You can see your Relevance Score in your Facebook Ad Manager. It is worth taking note of this to provide you with a guide to help you improve your ads in the future.

Your relevance rating is fluent. It changes whenever people interact with your ad in either a positive or negative way.

The click-through rate also affects your relevance. The more people click on your ad, as a percentage of the impressions, the more Facebook will consider your ad relevant to your audience.

Facebook creates a estimated action rate. This is your best estimate of the likelihood that a particular person will take the action for which you are optimizing your ad.

When Facebook is trying to decide how relevant your ad would be to a particular person, it looks at that person's past behavior. For example, if your goal is for someone to click your ad, Facebook will analyze the people to see if they have clicked on ads like yours in the past.


Seasonal factors

Sometimes the cost of your Facebook advertising depends on the behavior of others. There are times of the year when there is massive demand from companies to advertise on Facebook. Conversely, there are quiet times in the year. As in all advertising markets, the cost of advertising increases during the peak demand periods and decreases during the quiet times when Facebook wants to encourage advertisers.

These are typically comparable to the seasons of your company. Your peak sales hours will most likely be your competitors' peak sales hours as well. Hence, you will all want to advertise at the same time.

In particular, expect to pay more if you intend to advertise:

  • Thanksgiving Day (in the US)
  • Black Friday / Cyber ​​Monday
  • Christmas
  • Boxing Day sales
  • New Years Eve and New Year's Day

Ad placement

Source: blog.kissmetrics.com

Facebook makes it clear that ad serving has an impact on your overall advertising costs. They offer you the following areas of ad serving, and they recommend that you allow them to display your ads in all of these locations to lower your average costs:

  • Facebook desktop news feed
  • Right column of the Facebook desktop
  • Facebook news feed for mobile devices
  • Instagram mobile news feed
  • Audience network
  • Messenger

Of course, you'll want to make sure your audience is using Instagram and Messenger before agreeing to your ads being placed there.


Various bidding options

When you set a bid on your ads, there are several options you can base your bid on:

  • Cost per click (CPC) - You pay every time someone clicks your ad, regardless of what they do after you click.
  • Cost per 1000 Impressions (CPM) - You pay an amount for every 1000 people who see your ad, whether they click on it or not.
  • Cost per Action (CPA) - choose a specific action (conversion) that you want and you will pay every time someone takes that action. For example, you could pay for each person who signs up for a Facebook ad on your website by clicking through.
  • Cost per Like (CPL) - You pay every time someone likes your Facebook page.

Of course, since the different measures result in different actions there will be quite a variation between the different numbers. One would expect there to be more impressions than clicks, so the price will reflect that. Since conversions are less common than clicks or impressions, you'd pay more for a CPA bid.


Optimizations

Facebook gives you the opportunity to focus your campaign on some general tweaks. Each of these tweaks will automatically optimize your campaign for a specific bid option and goals.

  • Conversions - Facebook targets your campaign to people they believe will complete your desired conversion. In this case, they assume that you will be paying with CPM.
  • Impressions - Facebook targets your advertising to a wide audience and charges you CPM
  • Link clicks to your website - Facebook picks people who they think are most likely to click through to your website. They charge CPC.
  • Daily unique range - Facebook focuses on serving your ads to people up to once a day - and charges you CPM for that.

Key metrics that tell you whether your ads are worth it

When it comes to determining how "good" or "bad" the cost of your Facebook advertising is, you need to look at your return on investment (ROI) and cost per action (CPA). This assumes that you have the cash flow to pay your bills for your Facebook advertising, with your budget count being realistic and manageable.

For an ad to be effective, the ROI must be higher than the CPA. Let's say your ads are sending people to a landing page where they'll buy your product. Of course, the additional sales made through that landing page must exceed the cost of the Facebook ads they send to the landing page.

The more you can do to reduce the cost of your ads, the higher your ROI should be.

In many cases, however, a Facebook ad campaign is aimed at getting them further down the funnel rather than trying to generate sales. In this case, it can be more difficult to determine the "income" generated by an ad. They should be more interested in your "social ROI" - the amount of social engagement your ad gives you relative to your investment.

Of course, each company will have a different level of social ROI that it deems acceptable. Perhaps it is easiest to compare the social ROI of one campaign with the social ROI of a previous campaign.

For example, you could pay $ 100 for a campaign. As a result, you might get 120 favors, 50 comments, and 30 shares. In this case, you will get 200 engagements for your $ 100, which equates to a social ROI of 50 cents.

Of course, you can find some types of engagement more valuable than others and weight them accordingly in your calculations.


AdExpresso's 2016 statistical results

D Espresso analyzed a significant amount of data in 2016 to see what companies are paying for their Facebook advertising. They included the data in their ebook, FB Ads Cost: 2016 Benchmarks.

Some of their key findings (all expressed in $ US) were:

  • In the United States, the average cost per click (CPC) for Facebook ads in Q3 2016 was 27.29 cents, compared to a CPM of $ 7.19.
  • The average cost per click worldwide is around 28 cents.
  • On Sunday and Monday the CPC’s were cheaper than other days of the week
  • Depending on the campaign goal, there were very different CPCs (these are data for Q4 2016):
  • Range - $ 1.01
  • Lead Generation - 79 cents
  • Video Views - 61 cents
  • Offsite conversion - 37 cents
  • Impressions - 25 cents
  • Link clicks - 12 cents
  • Post engagement - 4 cents
  • Page engagement - 3 cents
  • The average cost per like (CPL) in the US was 20 cents - half the rate in Germany
  • The average cost per app installation varied greatly by country, ranging from $ 5.40 in the UK to 44 cents in Brazil. In the US, they were $ 2.28.

It's important to note that there was significant discrepancy between AdEspresso's Q3 2016 and Q4 2016 results for some of these statistics, suggesting that Facebook advertising costs vary widely over time.


Further reading: You can also find a comprehensive guide to advertising on Facebook here