In this article we will reveal:

• Why Facebook is effective social marketing tool with over 2 billion users
• The factors that influence cost when using Facebook ads and how your industry may factor into your advertising costs
• Why retargeting is an important part of your ad spend and can increase your overall ROI

Facebook Ad’s is an incredibly effective digital marketing tool for many industries.It is an advertising platform that is inbuilt to Facebook’s networks. You will have seen them when you are scrolling through.

 As it's a highly used social media platform your target audience can be guaranteed to be comprehensive. It’s also a platform where many users are relaxed and pursuing their own interests. This means that your ad won’t be perceived in quite the same light as an ad on another platform. You can also target many people who share interest in products that your company offers, so you know you have interested parties. It really is one of the most effective ways to get brand recognition and followers. 

If you are new to the world of digital advertising, don't worry. It may seem like a complex system on Facebook Ads but as a formal Social Media Manager, I can assure you, it’s less scary than it seems. Once you know what options there are in Facebook Ads and the best way to run campaigns for your business it's quite effective and easy. There are pitfalls that I will outline to avoid overspending your budget as well. Read on to find out how much you may spend and how to make the most out of Facebook Ads.

What are my options in Facebook Ads?

Your options are based on two main factors in Facebook ads. Campaign objectives and bidding. Obviously bidding is the key factor in the cost of your Facebook paid promotion. Your bids are factored into 3 main strategies:

Spend Based- this will mean your entire budget allotted will be spent as an objective to get the best result for your campaign. 

Goal Based- You can set a metric or objective for the campaign or a value to the campaign to reach. This objective can be set to get maximum ROI or capped at a certain amount for bids.

Manual- You are in the driver's seat when it comes to how much you bid. Also a bit better for pages that are raising awareness rather than sales. 

Tip: when entering the amount to spend on your advertising make sure you tick the daily amount OR monthly amount. Make sure you are aware which one you have selected. Be careful here, as you can accidently put the budget for the month as the daily amount! (Yes, I did this. I wasn’t popular that day). Triple check if you have to!

Facebook has a handy document here if you want to read further about bid strategies. 

How much does it cost to advertise on Facebook?

Ah… the most frequently asked question. Well, there is no hard and fast amount. It differs depending on your country, industry, time that you run your ads. However, the average cost in Australia for 2020 was $0.50 according to ADCostly. 

Different industries have different costs. These handy graphs by Wordstream highlight the difference. In 2019 the average CPC was: 

Source: Wordstream 

The average across the board was $1.68

In 2020 the CPC across industries was:

Source: Wordstream

And the average across the board was $1.72

The reason for the comparison is 2020 was an unusual year globally and ad spend did drop slightly in the first quarter, but picked up in the second quarter. Many companies have turned to digital marketing as a result of COVID-19. It also shows that despite a worldwide pandemic the fluctuations are usually minimal. Also keep in mind that is an average spend and not meant to reflect exactly how much you will spend. 

There are also many other factors other than industry that will affect your ad spend. Let's look further. 

What factors influence my Facebook Ad Spend?

While there are many factors at play, not all are beyond your control. We will also give you some tips on how to manage these factors as well. 

Bidding strategy

This is probably one of the most contributing factors to cost. As mentioned previously you can set your bidding strategy to maximum to make sure you out compete another rival company for the ad spot. But only if your budget allows. You can set this option to maximum spend or minimum spend. 

Tip: if your budget is small or you are running an awareness campaign have your bidding selection set to manual. That way you will only spend the amount you have allocated. You will still get great results but on your budget. 

Timing

Everything in this world is down to timing and your Facebook ads are no exception. There are more popular times to advertise and this can raise the price of your Cost per Click. 

Tip: If your ad is running during major retail events ie.Black Friday they are going to be more expensive and frankly not perform well. Many industries reported in 2019 and 2020 that their campaigns had major dips in impressions and clicks during this time. If you are not a retailer or have a Black Friday deal it may be worth switching them off or setting them to minimum spend. And don’t get worried if your results are lower than usual!

Audience

Unfortunately if you are targeting a popular demographic ie. fitness or beauty there is a lot of competition out there. This doesn’t mean it’s not effective, but you may want to also look at other types of demographics such as geolocation as another way to target potential customers. 

Tip: If you are just starting out make sure your ads contain videos. They are much more successful than static images alone. And you will get more impressions to retarget!

Ad placement

Some ad spaces on Facebook are highly desirable. This may mean you have to do some investigating into what placements will save you money. There are many options for you to choose from when running the ad itself. 

Source:Facebook

These are just some of the examples shown. 

 Facebook Messenger ads aren't terribly effective. In Feeds, Facebook Search Results and the Right Column are the most effective placements. However you may pay more for these spots. 

Tip: if you don't have an Instagram page, you can decide not to choose Instagram ads as it may not be your target market. More placements = more money spent!

5. Ad objective

It can be expensive when you choose the wrong objective. When you are just starting out, goals such as awareness are a good place to start. Focus on your impressions metric. The basic rule of thumb is the more actions you want your audience to do the higher the cost. So if you decide you want a customer to install your app that's going to be far more costly than choosing video views, engagement or simply reach. That's not to say it's not effective, it just will require a bigger budget. 

Tip: Save App installs and Conversions until you are more established and even then only run them for a short period of time. This will save you money on your advertising budget and increase sales short term!

 6. Relevance score

You need to make sure that your ads are to a relevant audience. Like Google, Facebook will punish you financially  if you try to advertise to audiences that aren’t likely to respond or enjoy the ad. The reason for this is simple. Facebook likes to make sure your experience is an enjoyable one and that won’t happen with random ads popping up.

Tip: your organic audience can give you a great idea of your demographics if you are unsure. You can also create what is called a Lookalike Audience of people who have recently bought or enquired about products similar to yours. 

7. Industry

As we've previously mentioned, a popular industry on Facebook Ads will require a larger budget allocated. It is still a worthwhile experience for these industries but be aware that you will need to grow your organic audience as well in highly competitive industries. 

Tip: If your industry is highly competitive on Facebook limit the more expensive ad objectives to 3 to 4 times a year to limit over spending. 

Should I allocate some of my ad spend to retargeting? 

In short, yes. It is incredibly effective and a great way to remind your customers that you are still around. About 10-20% of your budget should be allocated on this strategy. The amount should increase as your customer base grows. Try to think of Facebook Ad campaigns in stages. Discovery, Sales and Conversions and Retargeting. This will give you a great framework to develop your budget for your ad spend. 

If you are ready to dive into the world of Facebook advertising you need to keep in mind your industry, objectives, bidding type and times that you target your customer. It's a great idea to start with a minimal budget (10 dollars a week) with an awareness campaign and build your confidence from there. 

SavvySME has many different service providers that can help you build your customer base from Facebook marketing if you prefer a more hands off approach. Start your Facebook advertising journey today!