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A Comprehensive Guide to Facebook Advertising

One of the top questions that are asked when discussing Facebook advertising is, How much does it cost? Unfortunately, there is really no answer, one size doesn’t fit all!

But all is not lost! There are two things that can be said definitively about the cost of Facebook advertising.

  1. The results of a fully optimized campaign will speak for themselves and deliver an ROI you wouldn’t be able to achieve with traditional media.
  2. Facebook Ads will never cost you more than you can afford, thanks to budget settings that can’t be exceeded without your permission.

When trying to figure out your Facebook advertising cost, you’ll need to take into account several factors. But first, it’s necessary to understand how the Facebook ad system works.

How Facebook Ads Work

Facebook Ads is often compared to Google Adwords, the reason for this is that they both use algorithms to determine how to show your ads and even which ads actually get shown. The main difference between the two platforms is that Facebook Ads cost much less when compared to similar Google Adwords Campaigns. They can also be targeted much more specifically to the desired audience.

The main purposes of Facebook advertising are to:

  • Help business advertisers to reach and obtain results from their target audiences.
  • Create positive and relevant experiences for Facebook users.

Once an Ad has been created, Facebook holds an “auction” for ads competing for the same space and attention. Your budget is not a large factor in deciding who ends up taking ad space. This is both to be fair to those with small budgets and provide only the most relevant content to Facebook’s users. The auction also helps to serve the purpose of managing relatively little space against many bidders.

Factors That Influence Facebook Advertising Cost

When ads are submitted to Facebook they analyze them against a few major factors:

Advertiser Bid

The advertiser bid is how much you’re willing to pay for ads. Facebook uses this to determine how interested you are in showing your ad. Bids can be set manually or automatically, depending on your understanding of the Facebook advertising platform.

If you choose to bid automatically, Facebook decides the bid amount with the goal of using up your designated budget to get the best results. With manual bidding, you determine what you’re willing to pay per ad placement.

To achieve the best results, consider the following:

  • Don’t bid too low. Otherwise, your ad may not get the exposure it deserves. Ultimately, you get what you pay for.
  • When you bid high, Facebook won’t necessarily use that total amount. It will still get the lowest amount possible for the auction, relative to the next highest bid. This is similar to how Google Adwords works.

Ad Quality & Relevance

A lot of people are unsure about how this score is generated, Ad quality and relevance refers to the perceived level of interest people will have when they see your ad. You can view your relevance score through the Facebook Ads Manager. Factors such as clicks and playbacks can contribute to a higher score.

Audience Targeting

Audience targeting directly refers to the number of people you are trying to reach. You can target Facebook Ads according to multiple demographics such as age and gender. You can also target page connections, interests and behaviours. Combining one or many of these factors can help you narrow your target audience.

Ad Placement

There are many choices for ad placement, and this is directly reflected in the advertising cost, each placement’s noted ability to get attention and convert.

Facebook offers the following ad placements:

  • Facebook Newsfeed (Web and Mobile)
  • Right Column (Facebook Web)
  • Instagram Newsfeed
  • Audience Network
  • Messenger

Schedule and manage ads in Facebook's Ads Manager and Power Editor.

Facebook recommends including ad placements on Instagram and the Audience Network in order to fully optimise your ad spend. With both of these enabled, Facebook says you’ll be able to reach a larger audience at a lower cost.

How to Pay for Facebook Ads

Facebook has multiple payment structures and understanding which one is best for you can be confusing. Each option has an effect on your Facebook advertising cost and the effectiveness of your ads.

1. Cost Per Click (CPC)

This option is where you only pay when a user clicks on one of your ads. With this pricing model, they don’t have to convert or purchase just click. With this in mind, users who simply view an ad don’t count towards what you will end up paying, which means exposure is essentially free.

2. Impressions (CPM)

This options will charge you based on every 1000 views of your ad, typically this option costs than a CPC option, and is ideal for when you’re looking to build brand awareness and are looking for the maximum number of people to see your ads.

How to Set a Facebook Advertising Budget

Now you have an understanding of how much Facebook advertising is going to cost, your next thought will turn to, “How much should I spend on Facebook advertising?” But this is the worst thing you can do! The question that you should be asking yourself is, “What do I want to achieve?”

To determine your budget you should set goals which are both measurable and timely. Examples of these goals would be:

  • Increase Facebook Page Likes
  • Increase Website Traffic
  • Increase app installs
  • Increase Sales/Leads

Next step is to think about your current Facebook community. It is easier to create conversions if you already have a larger, engaged Facebook audience. Community building should be the main focus as this will offer more long-term benefits than trying to appeal to one-time fans are potentially going to unlike your page later on.

What Influences My Facebook Advertising Cost

Facebook Ads are still one of the most cost-effective ways to get your message out there, and its accurate targeting functionality makes it the best social media platform for social advertising.

Facebook Ads cost is determined by three factors which are:

  1. Audience
  2. Relevance
  3. Estimate Action Rate

So what does this mean? Well if you have targeted your ad to a specific group of people that it is more likely to have a higher relevance score, which will cause the audience to interact more and ultimately convert.

This also lowers cost and increases your ROI. That said, costs can vary due to multiple factors such as seasonality, placement, location or target audience.

There You Have It!

So whether you’re new to Facebook advertising or looking for more information, I hope this has given you an insight into the potential social media advertising has for your business!

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