If you spend much time on the internet, it may not surprise you to learn that as of 2019, Facebook still holds the attention and loyalty of a high percentage of internet users. While the actual numbers may vary according to different sources, it looks as though the percentage of people who rely on the social media giant are close to 70 percent, if not higher.
This means that if you are not using some of your advertising budget to market your business on Facebook, you are likely missing out on a powerful opportunity. You can start by building your base when you engage with your followers organically. Then, you can target an even broader audience by paying for Facebook ads.
It’s true—there are many different ways for a business to sell more product online. Whether it’s using ecommerce SEO services, social media marketing, or email marketing campaigns, there’s no shortage of options. But, if you need to reach people quickly, paid advertising offers a unique opportunity that’s only limited by your budget.
As with any marketing campaign, you need to set up a budget for Facebook advertising. By exploring the information below, you can develop a sense of how much Facebook ads will cost your business. More importantly, you may begin to explore your return on investment (ROI). After all, the point is to bring in more conversions and revenue as a result of making this advertising decision.
How Do Facebook Ads Work?
Before you start thinking about the cost, you should become familiar with the fundamentals of using Facebook ads. What does placing an ad on Facebook involve? Fortunately, you can find much of the information you need right on the Facebook Business ads page. The platform provides the means to create ads based on your needs, as well as your skill/knowledge level.
- Objective: First, you should select the primary objective you have for an ad campaign. Your main goal might be to boost sales or to increase brand awareness, for example. Facebook’s ad objectives page can help you to determine this important detail.
- Audience: Next, you need to think about your target audience. You can find plenty of information on the Facebook Business ad-targeting page to assist you with this.
- Placement: After you establish your audience, you should figure out where you want your ads to be placed. To explore this aspect of developing an ad, you can refer to the platform’s ads placement optimization page.
- Budget: Once you decide the initial few details, then you should set a budget for your campaign. Facebook’s ad pricing page can help you get started on this.
- Format: When you know your budget, you can explore ad formats to select the one you want. You can browse the ad formats page on Facebook Business to view your options. The available formats include photo ads, video ads, ads that tell a story, and ads via Messenger. Additionally, Facebook lets you create ads with images or videos showcased on a carousel, ads displayed in a slideshow, and ads that enable your viewers to explore your products/services as a collection. You can also provide your users with “playable” ads, which allow them to view a sample of what you offer. After you choose a format, you have the additional option to enhance it with an Instant Experience, which is optimized for mobile devices. You can learn about this feature on the Facebook Instant Experiences page.
- Order/Ad Auction: At this point, you should be ready to place an order for a Facebook ad. When you do this, the ad is subsequently entered into an ad auction. Facebook’s ad delivery page explains in depth how this works. Here’s an overview: Your choice of target audience determines whether your ad is placed in any given auction. Whether your ad is selected depends on a variety of factors, including your bid, the estimated action rates, and the quality of your ad.
Optimizing for Conversions
Perhaps the most critical factor related to any ad campaign is the resultant conversion rates. Conversions of some sort are typically the main reason for running ads. Therefore, learning how to optimize your Facebook ads for conversions is vital. To explore this topic fully, you should refer to Facebook’s page about ad delivery and optimization.
Basically though, you need to make a decision about what type of conversion you wish to optimize for, and in turn, your selection informs the system on how to proceed. Simply optimizing for conversions in a broad sense is not an option. Also, keep in mind that while you might be tempted to optimize for purchases, you may get better results for requesting optimization for page views, for example. Since you need page views to ultimately secure purchases anyway, this can be a more viable strategy that produces more consistent results.
Run Split Tests Often
As with virtually all advertising campaigns, it’s always essential to perform frequent split tests. Facebook makes this easy for you to do, so there is no reason to avoid this useful practice. The split tests divide your audience into random groups, ensuring fairness and accuracy. This testing is not based on cookies, but on users, and the results are culled from multiple devices. The split tests you run on Facebook support an array of objectives. You can see the full list on Facebook’s split testing page, but the business objectives include conversions, traffic, lead generation, and engagement. You can test one variable with five different strategies, and Facebook recommends running tests over four days for the most accurate results.
Keep Ad Relevance Diagnostics in Mind
You might have read about the Facebook ad relevance score in the recent past. It’s important to note that since early August of 2019, Facebook replaced this metric with ad relevance diagnostics. On their relevance score page, they stated that they did this to make the process “clearer and more actionable.”
According to Facebook’s ad delivery page, ads that are relevant can cost less while producing better results. Thus, a more relevant ad has the potential to win an ad auction, even when others have bid higher for their ads.
As discussed on Facebook’s ad relevance diagnostics page, greater relevance is generally associated with better performance, but it isn’t always the primary factor. Thus, it is best to use this feature to diagnose ads that aren’t performing well (as opposed to ads that are high performers and don’t require diagnostics). You can use ad relevance diagnostics to determine which of your chosen objectives need improvement.
Always Monitor Your ROI
Naturally, your main goal is probably to experience a return on investment (ROI). In this case, an even more specific and accurate term to use is return on ad spend (ROAS). To determine your ROAS for your Facebook ads, you first need to find and gather all of your data that is relevant to your ads. According to Fit Small Business staff writer Kelly Main, these details include:
- Your cost per click (CPC) or a different pricing format if applicable
- Your monthly ad spend
- The conversion rate of your ad (the percentage of monthly clicks that lead to sales)
- The customer lifetime value (CLV), which refers to the net profit attached to each customer for the duration of his/her time as your customer
Once you gathered the necessary data, you need to determine your estimated monthly clicks. You can do this by dividing your monthly ad spend by your average CPC. If you want to calculate an estimate for the number of customers your ads have led to each month, you should multiply your conversion rate by your number of monthly clicks. To get an estimate of your ad’s potential revenue, you need to multiply the average CLV by the new customers acquired via the ads. To figure out the return on your ad spend, you can subtract the amount you spend monthly on ads from the revenue you’ve generated.
By consistently paying attention to your ROI/ROAS, you should be able to detect whether changes need to be made.
Understanding the Cost of Facebook Ads
Now that you know the details you should monitor to maximize your investment, you should also take a look at some average figures. Ms. Main asserts that Facebook ads yield an average cost per click of $1.86. She also states that the average cost per thousand clicks is $11.20, and that Facebook’s minimum ad spend per day is $1.
However, the cost of Facebook advertising is not, by any means, set in stone. The costs differ according to several variables, including month, day, hour, and location. In addition, the bidding strategy you choose can affect your bottom line. Also, your industry and audience have a bearing on how much you pay for advertising on Facebook. The ad placement you select is another determining factor.
Final Thoughts on the Cost of Facebook Ads in 2019
One of the key points you should remember is that your advertising cost is your decision. Facebook leaves you in charge, so you can adapt the available options to meet your circumstances. You are free to establish your bids and budget, and Facebook will not spend more than your selected maximum. Because the ads are only displayed to relevant customers, you can get results no matter what your budget is. By creating quality ads and monitoring your ROI, you can ensure that your Facebook ads reflect your needs and objectives. Ultimately, Facebook is still a leading resource for advertising, and you can use its ad platform to increase conversions in 2019.