Facebook Ads Cost: How Much Should You Spending? : Ankita Mankotia

As business owners, one of the most important things we do is promote our business. After all, if we don’t have customers, sooner or later we won’t have a business either. However, small businesses don’t need to spend the kind of money that larger brands do.

Not only do they generally cover a smaller geographical area or niche, but budget issues necessitate a level of thriftiness.

With that said, one of the more effective ways to advertise is on social media, including Facebook. However, it’s important to spend the right amount of money. Are you spending too much on Facebook Ads? Or not enough?

In this blog post, I’ll walk you through what to consider when budgeting for Facebook Ads, offer some actual Facebook Ads cost data to review, and provide some tips to help you stay within your budget. Keep reading to learn more!

10 Factors That Influence the Facebook Ads Cost

We all know that advertising is necessary to get our products and services in front of potential customers.

And while there are many different platforms to choose from, Facebook is one of the most popular – and for some expensive. So, what factors influence how much you pay for your Facebook ads?

1. The Audience You are Targeting

Because Facebook Ads are auctions where you compete with others, some demographics are more desirable or “expensive” than others.

For example, Facebook will generally charge you more to reach people who are mid-career and have a lot of disposable income. Meanwhile, the low-income demographics will typically be cheaper.

Keep in mind, though, that the definition of “most desirable” can change based on what you are selling. Some businesses do, after all, concentrate on low-income people or the very young.

Be careful to target your Facebook ads properly to boost effectiveness and manage to spending. To do this, make sure you craft a buyer persona as part of your overall Facebook ads strategy.

2. Your Ad Bid

It goes without saying that if you bid higher than you need to you might be overpaying! Bidding wars cause people to overpay in just about any industry: the fact that home purchases became notorious for this over the last couple of years underlines my point.

However, Facebook ad bidding works a little bit differently, in that you don’t pay the absolute maximum bid price every time. Rather, your bid is the maximum you’re willing to pay, and Facebook bids for you up to that maximum. You might, as a result, pay a slightly different rate from one block to the next.

3. Ad Placement

Facebook Ads cost differs depending on where those ads are displayed. For instance, you will pay a different price for a mobile news feed placement than a desktop one, and a third rate for the right column ad.

In other words, Facebook charges different rates based on what each piece of advertising real estate is worth. Choose options that will meet your business needs while providing the best value.

4. Ad Objective

The objective you choose at the beginning of a campaign has a huge influence on how the Facebook Ads algorithm serves and thus charges you for your ads.

For instance, if you pay only for conversions, then you’ll pay a lot more per action than brand awareness campaigns, which are effective with mere impressions.

On the other hand, Facebook will likely serve your ad to more people during an awareness campaign because it helps them get paid than they would in a conversion-based objective. This means that your Facebook Ads cost can balance itself out.

5. Festive Season

Want to lower your Facebook Ads costs during the holiday season? Good luck! There’s a good reason why the winter holidays, in particular, are very expensive for advertising: people buy stuff.

As in, just about anything, whether the reason is a religious observance or the receipt of year-end bonuses at work. There are similar principles at work for other holidays, too.

If you want to advertise during these times of the year, you should budget a higher Facebook Ads cost. Of course, that extra cash usually pays for itself because you won’t risk giving up market share to your competitors.

6. Ad Quality Ranking

One thing Facebook does well is trying to provide a quality experience on the website. This is true because if people don’t enjoy hanging out there, they won’t come.

For this reason, Facebook has an Ads Quality ranking, which expresses what percentage of competing ads are of higher quality than yours.

Having a high-quality rating can help you better target your audience because you won’t have the level of guesswork.

Of course, with better targeting, you’ll get lower Facebook ads to cost for the results.

7. Ad Quality

Ad visuals and copy are an art. The more engaging they are the more clicks they get and thus costs come down. In other words, when Facebook knows they’ll get paid for more clicks, they’re happy to sell those clicks at a lower cost.

Or, as Facebook puts it, better-quality ads get more favorable auction treatment, and low-quality ads cost more with a lower distribution. Therefore, maximizing your Facebook Ads cost involves paying careful attention to quality.

8. Ad Budget

If you limit your budget when the platform is serving your ads at an optimized cost, it limits your ability to lower overall costs. The same goes for the opposite.

In other words, if you have a favorable Facebook Ads cost, then you should keep the deal you’re currently getting. Keep in mind, that a favorable cost will involve both prices and return on investment.

Further Reading: 9 Ways to Enhance Your Facebook Ads ROI

9. Industry

Different industries have different costs based on the demographic that you are competing for. For example, brands that sell to younger customers, or those with a lot of disposable income, will likely pay more.

On the other hand, some brands like senior care supplies will likely pay less, since there are fewer people who are interested in those products. Also, senior supplies don’t have the profit margins or discretionary spend factor.

10. Your Competition

Needless to say, your Facebook Ads competition is always in flux and is something out of our control. If your competition is bent on pushing everyone else out of the Facebook Ads space, they’ll bid high and you’ll have to adjust.

On the other hand, a financially struggling competitor might try and scoop up deals. This is where trial and error during the bidding process, and some analytics insights, can really help.

7 Ways to Reduce Your Facebook Ads Cost

Now that we have an idea of what Facebook Ads cost, what can we do to help reduce the cost of our own Facebook Ads? It’s important to pay competitive rates because rates that are too high eat up profits.

However, if we pay too little, then we might be missing out on revenues or failing to optimize. Here is a checklist of ideas to help you.

1. Choose the Right Campaign Objective

Facebook advertising campaigns can be optimized based on the objective you choose to pursue, but if you choose the wrong objective, your results might vary from the ideal.

For example, if your goal is to have someone install your application, then it probably doesn’t make sense to do a brand awareness (often CPM) campaign.

On the other hand, a B2B brand is more likely to go with CPM or CPA, often to generate leads. The idea here is to get the right results at the right price.

2. Narrow Down Your Audience

The narrower the audience, the greater the chance that it resonates with a greater % of people, thus lowering ad cost because of the increased ad engagement.

If you remember, Facebook gives better rates for high-quality advertising. Obviously, this depends on you narrowing down your audience correctly. Otherwise, you can serve ads to people who have no interest in your products at all.

Not only does this reduce your quality ratings, but it drives up costs for some objectives.

3. Lower Your Ad Frequency

You might think of “frequency” as the number of times per day or week that you serve up a particular ad. However, as Adespresso points out, ad frequency in this case refers to the number of times a particular customer sees the same advertisement.

And, the more times people see the same ad, the less sensitive they get to it.

The blog writers even pointed out that some people get irritated at the advertiser and say so on the ad. Therefore, serving the same ad too many times not only costs more but also backfires.

4. A/B Test Ad Creatives and Placements

It should go without saying that A/B testing as much as possible will always help. Often, an ad creative turns out to not be as effective as you think it should be.

For example, you can use a bit of humor that turns out not to be as funny as you’d expect, or that accidentally touches a nerve with some people. Short of that, though, there’s good and better in most advertising contexts.

To reduce your overall Facebook ads cost, be sure to perform A/B testing.

5. Automate Your Facebook Ad Management

There’s a reason why developers have made so many Facebook marketing tools: like most other marketing efforts, Facebook Ads can be fickle. While we can always follow certain principles, the competition and market forces are always changing.

In addition, Facebook policies and other variables can shift, too. Using various automation can help you get a handle on Facebook Ads costs and, at the same time, maximize your ROI.

6. Run Retargeting Campaigns

Getting a lot of engagement on your ads but no conversions? Try a retargeting campaign to this “warm” audience that you have built.

One of the easiest ways to do this is using Facebook Pixel, which tracks site visitors so that you can retarget them with Facebook ads.

The nice thing about Pixel is that you can add the code to your website, and then only need to reap the rewards.

7. Cap Your Bid

Force Facebook to only show your ads at the maximum cost you want to pay.

You might not get delivery of your ads, but it will ensure a lower cost. If you need to advertise but only have limited cash, then this is something you might experiment with.

However, if you find that your ads aren’t getting shown at all, or that the frequency is simply too low, consider raising your budget. Sometimes, you can only reduce your expenses to a certain degree.

Conclusion

One of the hard things about Facebook Ads cost is that it’s often hard to determine how much you need to pay because of the many pricing variables.

Fortunately, with good planning, proper targeting, and smart bidding it’s possible to keep your costs in a range you can afford. Just be sure to balance affordability with effectiveness.