Facebook Ad Cost Guide

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Created in 2004, Facebook is often seen as a relic of the past, infested with people left behind by times. In contrast to other rising social media sites like Reddit, TikTok and Instagram, it seems illogical to rely on Facebook advertisements to expand your business. Yet, companies continue to do so.

Contrary to our perceptions, Facebook is still a great place for advertisements. On what basis am I making this claim, you might wonder. Well, it’s because of the sheer amount of data they have on people and many marketing platforms they have access to! When users share their life events, indicate their relationship with someone, or edit any part of their profile, they are giving valuable data about themselves. Marketers get the privilege to tap into these data, that will go a long way in creating targeted marketing campaigns. In other words, Facebook has collected loads of data on people with their long-standing existence, which means that they are more capable than any others, in reaching the right people. Facebook is also a social media marketing behemoth. It owns Instagram and has a substantial audience network!

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Now that you’re convinced of the power of Facebook ads, your next question as a brand owner would probably be, how much do they cost? For you, I have two pieces of news – good and bad news. The bad news is, it can be pretty expensive (I mean, it’s a social media marketing behemoth). The good news is, I’m here to tell you how you can minimise the costs!

For those who have never heard of the Facebook ad auction, let me give you a brief introduction of how it works.

Before the ad auction, advertisers (aka brand owners) will have to: 

  • Create a campaign and ad, indicating:
    • Daily budget
    • What actions they’ll pay for (e.g. views, clicks or downloads)
    • Define their audience (based on demographics, interests, the device used, etc.)
    • Submit their visual works (e.g. images, videos, etc.)
    • Submit their ad

On Facebook’s side, whenever they have an ad slot opened, the ad auction happens. Facebook will grade each ad based on the following:

  • Potential ad’s bid
  • Estimated action rates
  • Ad quality

The three aspects will be used to determine ad relevance and ad’s total value, which will, in turn, be used to choose the winning ad. By breaking down the ad auction process, it’s clear that adjusting some of these metrics will help in reducing advertisement costs:

1. Audience

Your ad expenses vary with the type of target audience you chose, according to a study by AdEspresso. To illustrate this, say if your campaign’s target audience is women, your cost per click may increase by $0.55 (which is approximately $0.15 more than if your ad campaign focussed on men).

When choosing the audience for your Facebook Ad, there are some questions for you to ponder on. Do you want a broad audience, which may increase your outgoings? Will targeting them generate revenue? What if they click on your ads without acting on your calls-to-action or driving your sale?

2. Ad Objective

Under Ads Manager, you’ll be prompted to choose your marketing objective. It looks something like this.

Facebook offers a multitude of marketing objectives. Hover your mouse over one to learn more about its uses.

Some ad goals can rack up your ad costs. Ad objectives that will give business immediate revenue, such as product purchase, are the most valuable ad objectives and hence, they usually cost more.

If you’re a new business, you shouldn’t be jumping straight into such high-value objectives, solely because you want more revenue. If you think about it, building brand awareness and consideration is also a crucial step in earning a purchase. What are the chances of users buying your products if you fail to reach out to them and connect with them? The only difference between these two focuses would be the turnaround time for conversion. However, in exchange for longer turnaround time, you get compensated with excellent brand awareness and lower ad costs. 

3. Ad Placement

The variety of platforms your ads can appear on if you were to advertise with Facebook is definitely attractive. With Facebook, your ads can reach out to people on the following platforms: 

  1. Facebook: News Feed, Instant Articles, Marketplace, Video Feeds, Right Column, Stories, Search Results and In-stream Videos
  2. Messenger: Inbox, Stories
  3. Instagram: Feed, Explore, Stories, Sponsored Messages
  4. Audience Network: Native, Banner, Interstitial and Rewarded Videos

It may be tempting to select all platforms for your ad to appear on, but the sad truth is that the wall called “budget” stands between our desire and reality. So before you create an ad with Facebook, be sure to know who your target audience is, and which platforms are they more likely to use, so that you can choose the best platform for your brand and get the best bang for your buck.

4. Ad Quality

Previously, we talked about how Facebook grades your ad quality before assigning a value to it. The higher your ad quality, the lower your ad costs. A good quality ad should have high relevance and engagement score, which will be calculated based on positive and negative ad feedback. 

One important thing is that Facebook will always be monitoring your ads, so long as it’s live. You’ll have to check back regularly and fine-tune your ad to ensure that the feedback you receive in general, is positive. Not only will this helps with lowering the advertising costs, but it can also significantly boost your ad’s performance and results. By the way, you can check your ad’s relevance and engagement scores at Ads Manager!

5. Season

Remember what we talked about the ads auction process? Potential advertisers will place their bids, and this plays a massive role in securing an ad slot with Facebook. True to the basics of economics, demand and supply can significantly augment the price of advertising with Facebook. During peak shopping seasons, businesses are more daring to invest more to entice customers. This means that the demand for ad slots are high, which can inflate the cost of Facebook ads.

While peak shopping seasons can differ from countries to countries, some special days are universal to all. For instance,

  1. Christmas 
  2. Black Friday
  3. New Year’s Eve and Day

Now that you’re armed with a basic understanding of how Facebook charges you for your ads, your next step would be to define your target audience, based on your ad budget and your brand needs. For the lost sheep out there who are utterly clueless about setting a target audience for your brand, be sure to check out this article!

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This Article is Written By

Caroline Quek
Caroline Quek
Once in a blue moon, she comes out of hibernation and embarks on fanatical reading sprees. During her free time, she can be found squealing over horror movies and K-drama scenes.

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