This is the most frequently asked question concerning the advertising platform, and it's a valid one. Of course, businesses and advertisers want to know how much they need to spend to see results, as well as what kind of results they can expect based on their budgets.
While this is an excellent question, it is sadly difficult to answer. Facebook Ad expenses do not have a set price, and they are continually changing as the market changes. This implies that ad costs vary, and with so many elements influencing cost, you can notice big fluctuations in cost-per-click (CPC) on similar campaigns, or even the same campaign at different times a month apart.
Even though the advertising system is in upheaval, we're still going to dig deep into this subject. This post will look at what factors influence Facebook advertising expenses, some benchmarks, and ranges of what you may anticipate paying, and how to keep your ad costs as low as possible.
How Facebook's Auction System Functions
Ad costs on Facebook are never steady since they operate on an auction system in which advertisers bid to have their ads shown in a limited number of available positions.
After all, the number of ad placements available in any one audience's feed is limited; with more than 1.49 billion monthly active users scrolling through the site regularly, there are only so many total placements available. It's a large quantity, to be sure, but there are also a significant number of advertisers with a lot at risk.
A wide variety of factors affect the current cost per action (or CPC) at any one instant, resulting in the perfect storm of an ad system that is difficult to anticipate.
However, while designing their ad campaigns, marketers submit bids on positions, and whoever is ready to pay the most theoretically gets the placement (and just has to spend $0.01 more than their opponent).
Take note that I said potentially. I say that because this isn't always the case; Facebook has enough stock that most advertisers can get a piece of the pie, and features like ad relevancy can result in advertisers getting placements and results at reduced costs than they'd bid. We'll go through some of those elements in greater detail later.
Don't worry if you're not sure what to bid. Unless you go into advanced ad options during their construction and elect to manually set bids or bid caps to keep at a specific cost, Facebook will take care of that for you. They'll place you at competitive bids for the audience you're targeting and the campaign you're running, so it's a fantastic alternative to employ if you're unfamiliar with bidding methods.
Benchmarks for Facebook Advertising Costs
The cost of Facebook advertising might vary greatly. I'm repeating myself because it's critical to register so that if you find ad charges lower than what you're paying here, you don't panic and assume the system isn't functioning for you. We'll go over this further later.
Meanwhile, here are two things to bear in mind about how much you'll pay for Facebook Ads.
The amount you spend is determined by your budget. Some bid as little as $1 every day (as demonstrated by Dennis Yu's famous approach), while others spend tens of thousands of dollars per week. The budget is entirely up to you.
Ad cost, also known as CPC/CPA, determines how much you get for what you're willing to pay and how much you pay for a single action.
Here are the average CPCs and CPAs, according to data:
The average Facebook Ad CPC across all industries is $1.72, with some costing more (such as banking, which tops the rankings at $3.77) and some costing less (such as retail, which costs $0.70), according to WordStream. This accurately reflects how costs differ by industry.
According to AdEspresso data, certain objectives and actions cost more than others, with impressions costing the most on average at $3.79 and link clicks costing only $0.44. This is a wide range, especially given that impressions peaked at $5.99 in 2017.
Numerous case studies provide "conclusive" data that differ from one another, such as one from Blue Corona stating that costs per click in 2017 were $0.27 while 1,000 impressions cost more than $7, and another from FitSmallBusiness revealing that the average CPC in 2018 was $1.86 (which is roughly where I've seen it personally).
The Most Influential Factors Affecting Ad Costs
I've witnessed firsthand how much Facebook advertising expenses may fluctuate, as evidenced by the data above.
I've had two comparable campaigns come out with significantly different CPCs, with one hovering around $1.49 and the other clocking in at nearly $6, and we couldn't figure out why. I've also seen how a simple tweak in copy can reduce a CPC from more than $12 to less than $2.
This is to inform you that ad expenses change and can be difficult to forecast. That being said, there are some elements we know that relate to how much you spend for certain activities on the platform.
Relevance
The relevancy of your ad campaign to your audience will undoubtedly affect how successful and effective your ad campaigns are, so that's reason enough to analyse how aligned your ads are with your audience. But there's another reason: a high relevance score equates to a cheaper ad cost.
Numerous studies have consistently shown that adverts with a better relevance score have a lower CPC. This means you'll receive more bang for your buck, therefore it's worth your time to ensure your relevancy scores are high. Focus on niched-down marketing with specific messaging to do this.
Your Chosen Audience
The audience you're targeting can have a quick influence on ad expenses, however, this is beyond your control; you must concentrate on those you want to reach. If targeted customer groups are in high demand (as Millennials and new parents are right now), your costs will rise.
There isn't much you can do about this, but a smaller audience can drive up costs while a significantly wider one can keep them a little lower. This could be a fantastic alternative if you can increase your audience size without compromising relevancy.
Objective & Optimisation Choices
The objective you select for each campaign does more than just categorise it; it optimises all of the advertisements beneath it for specific goals such as increasing visitors to your website or driving traffic to your business. They'll also determine which precise behaviours, such as link clicks, ad recall, or 10-second video views, you may optimise for later.
Different activities will sometimes be more expensive in the long run than others. I once discovered that paying for impressions rather than clicks made a conversion campaign to a cold audience more inexpensive, though this isn't always the case. Try out several tactics to determine what works best for you.
Placements
Because some placements are more expensive than others, they can have an impact on CPC. Instagram placements, for example, have generally been more expensive than Facebook counterparts (though this difference is shrinking in some circumstances), and the audience network is less expensive.
Your Bid
Facebook allows you to essentially have them handle the bidding for you. If this is what you want, go for it; it's a fantastic alternative for advertising in general, but especially for those who are new to the system.
If, on the other hand, you opt to create a bid cap to ensure that you don't pay more than a specific amount for a single placement, you can influence ad cost by keeping your ad expenses at a level you need them to stay. It should be noted that while this can reduce expenses, it may also reduce placements in the long run and that employing the law of averages can occasionally get you good outcomes at a good average cost.
Current Competition in the Marketplace
This is yet another issue that is absolutely beyond your control. Everyone else's turbulence will affect you, and it's difficult to forecast how. Peak advertising periods often see an increase in ad cost, which is why you may expect CPCs to rise near the end of the year or around other major marketing holidays.
Easy Tips to Keep Facebook Advertising Costs Down
Don't give up hope just yet if you're feeling overwhelmed by how much ads cost or how unexpected the charges can be. Well-designed ad campaigns can produce outstanding results at low enough prices that you still get a significant ROI, and there are actions you can do to keep your ad expenses as low as possible.
These strategies include:
Implement retargeting campaigns. While some of your advertisements should be aimed at a cold audience, retargeting marketing can be an excellent way to generate results while keeping expenses down. Because your audience is more inclined to engage because they are familiar with your brand, CTR and relevancy increase while CPC decreases.
Spread out your placements. Unless you're running a Stories-only campaign or focused on carousel advertising for a certain ad group, add a few extra placements to the mix to change things up (and save expenses!). Certain ad placements, such as the audience network, have lower-than-average CPCs and will assist you in lowering your average expenses without sacrificing results.
Take note of the relevancy score. I cannot emphasise this more. A high relevance score will not only signal that your ad is pertinent to your target audience (and hence likely to produce results), but it will also actively cut your CPC. Maintain a relevancy score of 7 or higher, with "or higher" being the essential phrase.
Split the test. Split testing (or A/B testing) is the process of running two similar ad campaigns with only one variable changed to observe how they perform. With Facebook's relatively new split testing function, you can easily test dozens of variations of the same ad at the same time, determining which images, videos, copy, and audience targeting perform best. Split testing will assist you in determining what works so that you can harness that moving ahead and, as a consequence, keep your overall costs low.
Keep in mind that the more focused your text, the better. When people have issues with their advertising campaigns, it's usually one of two things: the audience or the copy. And in many cases, it's a combination of the two. You'll get better results if you build niche audiences and then write hyper-targeted copy that speaks directly to them. More information can be found here.
Conclusion
We did advise you that there would be a lengthy, in-depth solution to a basic inquiry, but you now have the best answers available based on current data.
When looking at these figures, keep in mind that they are aggregates of data from research papers and pools of small audiences and that expenses might fluctuate substantially and unpredictably depending on factors such as geography or time of year. Some industries even routinely have considerably higher CPCs than others, which is completely natural.
If your costs are higher than typical but consistent for you—and you're satisfied with them—no there's a need to shake things up too much as long as you're making a profit. Try to be aware of issues such as ad campaigns and use our suggestions to keep your prices low. As long as you do this and don't see any significant surges, you'll find your lowest ad cost and be on your way to maximum profitability.
We hope this has helped you set your expectations on Facebook Advertising costs. Nothing should prevent you from experimenting with Facebook Ads for your business. If you require additional support, DigitalxMarketing can assist you in getting started.
DigitalxMarketing Ltd has its head office in Wellington NZ with its support and resource centre based in the Philippines. DigitalxMarketing implements the latest digital strategies, tactics, tools, platforms and technologies to deliver integrated digital marketing services so your digital footprint can be found online.