The use of social media has become a part of daily life. And advertising on Facebook or Instagram is a permanent part of the marketing strategy of companies: from micro-businesses to global corporations. According to official data, more than 3.7 million businesses run advertising campaigns through the Meta network (Facebook/Instagram/WhatsApp), spending $5.5 billion on it, reaching hundreds of thousands of potential customers.
At first glance, a lot of competition on the platform means significant advertising costs. In fact, this is not quite the case – advertising algorithms work in such a way that it is possible for micro-businesses to work with small budgets (literally from $1) to attract potential customers.
What should your Facebook advertising budget be? How is it formed and under the influence of what factors is the advertising price determined? Read more about this.
The Facebook Ads platform remains the most popular among advertising social media. Facebook's advertising tools have no analog, even TikTok (its only competitor in terms of reach) cannot offer such detailed targeting options. Over the years, Facebook Ads Manager has gone through many iterations to become a simple and convenient tool for millions of marketers around the world.
Everyone needs advertising. Even if you have a startup and the product does not yet have regular customers, you should start with Google and Facebook Ads. Since Meta, the parent company, in addition to Facebook, also owns Instagram (the most popular platform for sharing photos and videos) and WhatsApp (the famous messenger), advertisers get a full range of advertising tools. Every marketer can now advertise to people of any age, with any specific interests, living in any region, and with any needs. Meta has been collecting information about its users for many years, successfully integrating the received data into advertising tools.
The main advantage of advertising on Facebook is the possibility of detailed targeting and targeting the desired audience segment.
In addition, there are factors that make investing advertising budgets on Facebook an ideal solution. More about them:
* material from the website http://www.statista.com
Business is always about numbers. Therefore, to find out whether you should invest in Facebook advertising, it is worth looking at the cost per click (CPC). Prices vary widely depending on industry, target audience, season and even time of day, as well as overall goals, but some rough budgets can be planned.
* material from the site https://www.webfx.com/
If it is important for you to understand how much advertising costs on Facebook, you need to study the algorithm of its formation. At the time you click Publish, your ad enters an auction system, where the “lot” is the audience to show the ad to, and advertisers bid their price to “buy” it. The highest bidder (among other factors) wins the auction and is the first to show the ad to the selected audience. Next, the sequence and prices for each advertiser are formed.
The Facebook platform makes sure that there are not too many ads. There is a limited amount of advertising space for businesses that can run ads on Facebook and Instagram.
Each company (advertiser) competes for effective placement of advertising for its audience. If two brands target the same audience, they are competitors. But price is not the key factor that affects ad impressions. If that were the case, small companies and micro-businesses would have no chance of competing with global corporations. The platform determines the cost of advertising for a particular advertiser as a weighted average of the value of advertising. The value of advertising shows the extent to which advertising meets the interests of the target audience and the likelihood of interaction with it.
* based on the website shopify.com
During the auction, many other factors influence the formation of the price. Advertisers note that the cost of advertising on Facebook can fluctuate on different days, months, and seasons.
The wider the targeting, the cheaper the advertisement will be, but at the same time, it will not contain key characteristics. Avoid narrowing the audience for personalization as much as possible because you risk getting a small reach and low performance (often even zero). It is usually cheaper to advertise on a cold (saved) audience compared to retargeting campaigns (custom audiences).
The industry you work in also affects the cost of advertising. Some industries are considered competitive, others less saturated. Typically, advertising costs increase as the average receipt for your product increases. And also – depending on how high a price you can pay for one potential buyer.
* material from the website https://www.wordstream.com
There are plenty of advertisers! Want to run an ad for children's toys? Disney will work with you on the same audience ($213 million in advertising spending in 2020). Have a home goods store? Your competitor is Walmart, which spent $41 million on Facebook advertising. But don't panic. The secret of success lies in creating such advertising that will distinguish you from the competition. It often happens that it is easier and faster for a small business to create it than a large corporation. Use this advantage!
If you look at advertising in terms of a calendar year, then in the third and fourth quarters, costs increase significantly. As competition intensifies before the holidays, brands increase their budgets to get maximum exposure.
According to AdEspresso schedule, growth does have a well-defined nature, so keep this fact in mind when preparing your marketing budget for the year.
* material from the website https://www.wordstream.com
Businesses spend more on advertising during peak holiday periods. The increase in demand leads to an increase in the level of competition and aggressive bids, resulting in increased budgets and the cost of advertising on Facebook.
Take this data into account when creating advertising activities.
The same Facebook ad can cost differently throughout the day. Advertisers note that bids are slightly lower between midnight and 6 a.m., as there is less competition at this time (but not always, you need to analyze each ad).
Ads are displayed automatically 24 hours a day, 7 days a week, but you can customize the schedule at least for each day separately.
* material from the website blog.hootsuite.com
For example, it will cost about $35 to show an ad to 1,000 Americans. But if you only have $1, there are options to reach 1000's of people in many other countries if your target audience is there.
Average costs per country vary widely, from $3.85 in South Korea to 10 cents in India. Details on the chart:
* material from the website www.statista.com
Facebook has several options for choosing a bidding strategy:
For the most part, manual bidding means higher costs, while an automated strategy makes better and more efficient use of your budget. It's all about Facebook's algorithms, which have been collecting data on successful and unsuccessful advertising activities for years.
Different strategies are considered:
The main goal: to use the entire budget and get as many results as possible. There can be two options:
Including:
Here, you independently determine the amount of spending on ad auctions. By setting a maximum bid, you prevent Facebook's algorithms from changing it. Automatic bid limits should only be used when there is enough data to make such a decision.
Yes, different ad formats have different engagement rates, which is one of the key pricing factors. To understand which advertising format is suitable for your business, you need to run several advertising campaigns and track the results.
Advertisers can choose from the following formats:
The campaign goal has a direct impact on pricing, as algorithms work to achieve that goal in the desired ad placements for potential users.
Increasing brand awareness or attracting customers will cost less than promoting a product or service for purchase. Of course, it is easier to get the user interested in an ad than to motivate them to click the “Buy” button.
When forming an advertising strategy, remember the sales funnel. It is important to reach users in the early stages of the purchase decision, when the price of the interaction will be cheaper. Over time, you will be able to increase interest in the brand and motivate the purchase of the product or service thanks to special audiences.
* material from the website https://www.wordstream.com
Advertisements can be placed in the following places:
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News feed News In-stream video Right column Marketplaces Stories Messenger Audience Network |
News feed Stories Sponsored messages Audience Network Recommendations Rewarded video In-stream video
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Instagram (news feed and stories)
Facebook (news feed and stories, often Messenger)
Audience Network (Audience Network — Facebook partner sites)
Some placements for advertising are more expensive, others are cheaper. According to AdEspresso, Instagram is the most expensive at about $1.15 per click.
* the material is taken from the website adespresso.com
With a small budget, Facebook algorithms may need more time to go through the training phase to get the initial results. In addition, the budget for the entire advertising period works somewhat worse than the daily budget. If your advertising is set up effectively, the costs will be minimized over time.
The quality and relevance of advertisements (according to Facebook) directly affects the size of the advertising budget.
Facebook's algorithms count the number of clicks, likes, comments and shares of ads to generate a quality score based on:
It is clear that you need to make stylish, effective and modern creatives and launch them to different types of audiences. High ratings will result in a more competitive rate, which can directly affect losses.
Hootsuite has revealed the results of a study on the quality or relevance of a Facebook ad. The company created two versions of the same ad: one with a relevance and engagement score of 2.9 and one with a relevance and engagement score of 8. The average cost per click for the low-ranking ad was $0.14, while the average cost-per-click for the high-ranking ad was $0.03. That's a big difference, isn't it?
Ads work as long as you pay for them. Plan your marketing strategy so that social media grow organically as well, bringing sales and new followers. For this, it is necessary to constantly monitor and optimize the content on the page, improve advertising campaigns, and work on increasing the number of subscribers. Advertising + constant development of social media = effective development of business sales.
This is a question that worries marketers and business owners around the world. The figures that will be provided below are average and indicative, but they can form an idea of the necessary budgets.
Facebook bills advertisers based on two metrics: cost per click (CPC) and cost per thousand impressions (CPM). It's hard to compare ad spend across industries because there are so many variables, but in general:
Average prices can differ dramatically – the whole thing is what exactly and how you advertise.
The CPC (cost per click on an ad) on Facebook is $0.94, according to revealbot.com. It is cheaper than advertising on LinkedIn, Instagram or YouTube (according to data from statista.com):
Seasonality and competition play an important role in driving value in the Facebook ad auction. In the first half of the year, the rates are lower, increasing only in the “high season” – November and December.
* According to shopify.com
CPM (cost per 1000 people) is used by brands that need to increase awareness. The Facebook platform has 2.8 billion monthly active users (according to www.statista.com), so it is attractive for advertising. Many users utilize Facebook to interact with their favorite brands. So if you want to reach a larger audience, expect to pay from $12,07 per 1,000 potential customers who see your ad.
Brands use the Facebook platform to collect contact information of potential customers. This is how businesses can build long-term relationships outside social media.
Wordstream.com reports the average cost per lead in Facebook advertising across all industries at $19.68, ranging from $12.91 for food and beverage to $56.89 for news resources.
As soon as you get the first new customers from Facebook, your dependence on advertising activity becomes increasingly important. We want more advertising and more customers, but not more expenses. This is where you need to start optimizing advertising campaigns and minimizing costs.
The algorithm matches the selected ad target with an audience that meets these criteria. If you are targeting sales, your ad will appear on Facebook to users who previously bought something.
This is why the average CPC varies for each target. According to AdEspresso, brand awareness campaigns pay around $1.85 per link click. However, opt for a different goal, like link clicks, and you can expect a bid of $0.21. According to Revealbot, the average value of interacting with a Facebook post in 2022 was $0.12, a cent higher than last year. This trend is likely to persist, allowing us to project activity for 2024.
As the business grows, the list of goals that should be used changes and expands.
At first, you should correctly target a wide audience, but later you should work on narrowing it down. When advertising activity is narrowed too early, it will cause high costs and fewer conversions.
For example: you sell educational services for children, including programming courses.
First, you select a broad audience: parents with children aged 6-12. After receiving the first sales and customer analysis, you make changes and the audience becomes more specific: parents with children aged 6-12, interested in IT technologies and private schools, child development and professional growth. Yes, the potential size of the audience decreases, but advertising will become specific and useful.
The Facebook pixel must work from the first day the ads are launched on the site. It will collect Facebook advertising account data, including pages users visit, products added to cart or purchased. All this data is easy to use to build an effective personalized advertising strategy.
If you run an ad on a conversion, it can be expensive. But lower-cost pay-per-click advertising in combination with a special audience (people who are already familiar with your brand) can bring much better results for the company and save a lot of money.
Importantly! Create a separate custom audience of people who have already bought and exclude them from your remarketing audience. Then you will not use the advertising budget on those who have already bought.
Collect information about buyers to provide them with even more relevant advertising:
Use data to create the kind of Facebook ad that's sure to grab attention. Such an interaction will cost less and be less likely to be ignored.
One of the downsides of expanding your audience is that companies quickly become repetitive.
A potential customer who sees an ad multiple times in their news feed is likely to become frustrated and more likely to scroll past the ad. Facebook's advertising algorithm will take this factor into account and give preference to newer, fresher ads from other advertisers.
Of course, some people need to see an ad several times before buying, but they don't always see the same thing. So try to keep your ad serving frequency to three or less. As soon as the frequency rate gets too high, stop the ads, make new ad creatives and run new Facebook ads.
Facebook's built-in A/B testing feature helps advertisers find winning combinations. So for each campaign, experiment with the following elements and track your ad spend:
Analyze all the data and adjust the advertising strategy.
* material from the website wordstream.com
Motivating to go to the site is only half the battle. It is necessary to make the conversion convenient and simple for the client:
The effectiveness of the campaign will be higher when you have a reliable site and a positive customer experience with it.
* material from the website wordstream.com
Set a maximum spend limit, daily budget and bid limits for your ad campaigns. So, you won't overpay for displaying an ad.
The functionality of similar audiences (Lookalike) enables the system to create groups of users who are similar to people who have performed a certain action related to your business. For example, these can be people similar to those who liked your Instagram page or who bought a product on the site.
Testing and choosing the most effective forms of ads is the key to profitable advertising. Experiment with different ad layouts and content to see if you can lower your ad spend. Run at least three Facebook ads per audience.
Advertising strategy should be based on the sales funnel in marketing. A logical structure will automatically and easily move the potential client along the path from awareness to purchase.
How to allocate the advertising budget by advertising activities on Facebook? Approximately like this:
* According to madgicx.com
The task: informing as many special interest customers as possible.
Different formats work well here, but the most effective are video ads that show the product in an interesting way, or carousel ads for e-commerce.
The task: encourage a conversion action (buy, download, book, etc.).
Special audiences based on:
The task: offer to perform a conversion action (buy, download, book, etc.).
It is necessary to actively present your product or service, use additional methods of stimulation: bonuses, discounts, free delivery or gifts.
The task: use customer information for additional sales.
Launch dynamic advertising of those products from the catalog that would also be of interest to the user, automatically offering the necessary additional goods or services.
Can't work with large advertising budgets? This is not a problem for Facebook. Start with $1 and get results for that amount.
For example, if you focus on industries where the price of a click is $0.5, then you will get 2 conversions per day to your site or resource. It will be 60 transitions in a month. So, what do you choose: 0 or 60 possible leads? The answer is obvious.
If you are ready to invest more than $1, then the advertising algorithms will finish the learning stage faster and will be able to bring high results, focusing on this budget.
Instead of just looking at the lowest cost, consider ROI as a measure of the effectiveness of your Facebook ads.
We have two options: financial and social return on investment.
1. Financial return on investment (investment in Facebook advertising and business results, such as profit or revenue).
If you know how much your customers typically spend, you can calculate whether each conversion is worth the money spent. For example, $10 per conversion is quite a large number, but if the profit from the purchased product is $30, then the return is 1 to 3.
2. Social return on investment (building customer loyalty and effective interaction with your followers)
ROI measures the amount of social engagement (likes, comments, and shares) you get from your Facebook ads relative to your investment. To understand effectiveness, you need to decide how much social interaction your brand needs. Example calculation: $50 was spent promoting a Facebook post, and it received 80 likes, 15 comments, and five shares (total of 100 interactions), each interaction costing you $0.50. Is the price right for you?
Facebook advertising is a comprehensive marketing tool for companies of any size and in any field of activity. The platform makes it easy to find customers with different income levels, interests, and locations. A large audience discovers new products and services on social media.
To minimize ad costs, experiment with different ad campaign objectives, formats, and creatives, comparing their cost to the results you've had in the past. Very soon, you will develop winning combinations that will form the basis of the marketing strategy of your business and audience.
Facebook advertising costs are highly dependent on a variety of factors, but looking at figures ranging from $0.50 to $2.00 per click gives you something to plan for and compare.
However, the only effective way to find out how much Facebook advertising will cost for your business is to test it yourself by running several campaigns. Remember that many factors affect the cost of advertising, but the main ones are:
We wish you many successful advertising campaigns for minimal advertising budgets!
Facebook advertising has consistently held the spotlight in the realm of brand and business promotion for years. It's a no-brainer for any business to advertise where their target audience hangs out, and with a whopping 2.8 billion users globally, as reported by statista.com, Facebook stands out as a prime advertising platform.
The cost of advertising on Facebook will depend a lot on your industry, the goal of the campaign and many other factors. Facebook ads typically cost between $0.50 and $2.00 per click.
You can use Facebook Ads Manager:
That's it, the ad will pass moderation and start working.
Ads with a personal touch consistently boast the highest engagement rates. When an ad aligns with the needs and goals of your audience, it not only grabs attention but also invites a thorough read.
Speaking of engagement metrics, the reign of video content persists. The catch is, the video should be captivating and cater to the specific needs of your customers.
Minimum budget: $1. We recommend starting your campaigns around this amount, but be sure to consider the competition in the market and the possibilities for this budget.
If you have already run ads, analyze the results obtained with different ad costs per day. Multiply the budget by 2-3 and analyze whether the performance has increased (it often does not). The optimal daily budget for small companies can be considered from $3 to $5, for medium ones – from $20 to $50, for large companies with a large reach – from $100. In any case, focus on the forecast results when creating advertising to form an advertising budget.
You can run advertising campaigns with a budget of $1 per day.
To enhance results, scrutinize the outcomes and key metrics of each ad. It's crucial to bear in mind that audiences resonate more with banners that align with their needs and goals. Thus, delve into a meticulous analysis of the potential customer's profile to tailor the best offer.
And more:
If your goal is exposure and awareness of your business, expect to pay about $12,07 to reach 1,000 people through the Facebook app.
