How Much Do Facebook Ads Cost?

By May 17, 2018 No Comments
how much do facebook ads cost

How much do Facebook ads cost? Like all ad strategies, the total cost is ultimately up to you. But how these costs are derived and how much you need to spend to be effective is a different story. Understanding what factors affect how much Facebook ads cost can help you lower costs without lowering conversion rates.

When you know how your industry, business, and location fit into Facebook’s ad strategy, you’ll be able to answer a more important question–how much do Facebook ads cost for me?

How Much Do Facebook Ads Cost: The Basics

When asking the question, “how much do Facebook ads cost?” it’s important to first understand your audience and goals, and how Facebook prices ads. On Facebook, every ad in front of every user first competes in an auction. This takes place in a fraction of a second, and Facebook decides which user sees which ad, and how much the advertiser pays for that spot. Each of these appearances is called a bid.

Facebook prices these bids partially on how effective your ads are, and how many people it reaches. In this blog, we’ll ask “how much do Facebook ads cost?” using a local company as an example. We’ll see how much the company would have to spend to reach their audience, how they can spend less on each ad while reaching more people, and when their budget might be too large to be effective.

Objective and Optimization

how much do facebook ads cost facebook objectives

Setting the right objectives is an essential part of your Facebook ad campaign.

Facebook requires you to set an initial objective for your ad campaign first and foremost. While you only have to decide at this stage what you want your ad to do, you should have measurable metrics in mind. When you know what you want from your ad, you’ll know how much each ad is worth and how much you can spend. When asking “how much do Facebook ads cost for me?” this is one of the best tools to help you decide.

In this example, our company’s goals will be based on traffic and priced by clicks. Consider carefully what you want your campaign to do and set your objectives accordingly. This is important not only to boost conversions, but because it will make each ad more affordable. With their users’ experiences in mind, Facebook gives preference to ads that perform better, and therefore higher-performing ads pay less per bid.

Bidding and Budgeting

how much do facebook ads cost budget

Your bid and budget decide how much Facebook ads cost for you, but not necessarily how effective they are.

You ultimately answer the question, “how much do Facebook ads cost?” through your budget, while your bid decides how much you can spend on each appearance of your ad. It’s essential to find the bid and budget combination that makes sense with your audience and your goals.

how much do facebook ads cost bid cap

Facebook’s optimization algorithm can optimize your ads, but only with the right budget and bid.

Generally, Facebook’s optimization algorithm will place the best bid for you, but only so far as your budget and bid cap allow. If you don’t have a high enough bid or budget to compete for space in your industry or demographic, your ads won’t get clicks or conversions. If you have a high budget and high bids with a narrow audience and limited competition, you’re over-spending on auctions you could win for much less.

For Facebook’s algorithm to determine the right bid for your budget, it needs about 2 to 3 months to run. Any budget changes will also change the bid. A higher budget will raise each bid, allow you to compete in more auctions, appear in front of more customers and, if your ad is effective, ultimately get more clicks.

How Much Do Facebook Ads Cost: Budgeting and Audience

how much do facebook ads cost lansing lifetime 600

Our local company will start with a budget of $600.

In our example, our local company will start with a month-long ad and a budget of $600. For easier estimation, we’ll let Facebook determine our bid and we won’t set a bid cap. Keep in mind that if you’re focused on lead generation and conversion, you’ll want to know how much each lead is worth, and use this as a bid cap.

With a budget of $600, Facebook estimates the ad for our local business will receive between 20 to 80 clicks. As you price your ad, keep in mind there are a variety of other factors which influence costs per click, such as the industry you’re competing in, how well the ad is made, and how well your audience responds.

Facebook ads can be very affordable, but they still require an investment. If you’re wondering “how much do Facebook ads cost and what’s the minimum I can pay?”

how much do facebook ads cost minimum?

Facebook can tell you the minimum amount you’ll need for your campaign.

Facebook can answer that question for you. For a local, month-long ad, it’s right around $150 dollars, but this will vary by location and population. If your budget is too low to perform, you’ll receive an error message and you won’t be able to publish your ad.

Targeting the Lansing area, the Audience Definition bar at the top indicates we’ve narrowed our audience well enough, but can we do better? Targeting only one gender will cut our total audience in half and, if we’ve defined our buyer persona correctly, make our ads perform better, which will also lower bid costs.

how much do facebook ads cost lansing lifetime

Targeting only one gender increases our clicks and reach without raising the bid or budget.

When we keep our $600 budget the same but narrow our audience, our estimated reach and link clicks actually increase. However, if we narrow our audience too far or hit the wrong audience, the reverse will occur. Narrow your audience carefully and you can make your budget go further.

What if we keep our audience the same–targeting only Lansing–but double our budget? With an $1100 budget, we will receive more clicks and achieve a wider reach, but only about 40% better than our $600 ads with better targeting.

how much do facebook ads cost 1100 budget

With our budget doubled, our clicks and reach only increase by about 40%.

Finally, what if we double our budget to $1100 and narrow our audience to men only? Our estimated reach and clicks improve significantly, but don’t quite double the results of our $600 budget ad targeting only men. This means we’re getting less out of our ad dollars at this point, and each dollar will be less effective.

Increasing your budget will cause Facebook to automatically increase your optimized bid amount and you’ll win more bids, but this doesn’t mean you’ll get more clicks. Narrowing your audience is, in many cases, a better solution than increasing your budget.

how much do facebook ads cost 1100 budget targeting

With double the budget and more specific targeting, our clicks and reach improve, but they don’t double.

How Much Do Facebook Ads Cost: Beyond The Budget

Higher Quality Ad = Lower Bid

While it’s well-known that higher quality ads drive better performance, there’s even more reasons to make better quality ads in Facebook. Facebook scores ads on multiple metrics and those that perform better pay fewer costs. This is attributed to a better user experience–users like using Facebook more when ads are attractive, functional, and relevant. As your ad runs and performs well, you may notice a lower overall price-per-bid.

Functional, Relevant Landing Pages

If you don’t have an accurate way to measure your goals, Facebook can’t tell if your ads are working and therefore won’t consider them effective. Make sure your Facebook Pixel is working and tracking the right events. Use the Chrome extension to check it before starting the ads. Make sure your landing page is appealing and relevant to the ad. Besides being penalized for a lack of relevance, customers will click away from your landing page and your ads will be less effective.

Time Spent

To get the full picture of how much a Facebook ad costs, you’ll need to consider all the resources you’ve spent on your ad, not just your bid and budget. How many hours will it take to design a high-quality, effective ad? How long will it take an employee to learn Facebook’s ad structure? How many hours can you delegate to testing and targeting your ad? If the time spent doesn’t fit with the ROI, it may be time to enlist the help of experts.

So, how much do Facebook ads cost? And how much do Facebook ads cost for you? You can choose your budget, but how much time and experience you need to make your ad dollars deliver is more difficult to gauge. Managing ads yourself can introduce you to a steep learning curve and make you pay more for ads than you need to. Instead of spending hours learning Facebook’s pricing and optimization structures, it may be more cost-effective to work with experts in digital ad management.

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