You’ve hatched the idea behind your new campaign and determined your ads will be placed on Facebook. All that’s left is calculating your budget and how much you’ll be spending.
Unfortunately, Facebook doesn’t come with a menu of options and corresponding price tags, which makes it challenging to answer the question: How much does it cost to advertise on Facebook?
The short answer is that it will cost you as much as you have to spend. However, there are multiple factors that influence the price of Facebook ads and how far you can get with your budget. Knowing what influences the costs of an ad on Facebook will help you prepare the right budget to get the results you want.
Below, we will guide you through each step needed to figure out the budget you will need for a Facebook advertising campaign.
Choosing a bidding option
Facebook has four different bidding options available — cost per click (CPC), cost per thousand impressions (CPM), cost per action/conversion (CPA) and cost per like. The different bidding options have an effect on cost — sometimes minimal and other times not.
The first step to set your goals is to know your industry’s benchmarks to have some context on how your ads might perform and how much each click might cost you. An experienced social media ad agency can provide insights from past campaigns and help you identify where your industry stands according to different metrics.
CPC will give you a higher click-through rate (CTR), while CPM will generate fewer, but cheaper, clicks. An advantage to CPC is that you can set it to match your average CTR once the campaign has been running, which will lower your costs for the same amount of clicks.
Your costs will also depend on if you choose to use manual or automatic bidding and whether you opt for a daily or lifetime budget. But we’ll get more into your budget in a little bit.
The factors that influence the cost of advertising on Facebook
There are a few different factors that go into determining how much you pay for advertising on Facebook.
- Your bid. The higher your bid, the more likely it is your ad will be shown. You can set up manual or automatic bidding. Automatic bidding allows Facebook to choose your bid to get the most engagements at the best price, while manual bidding has you choose the price that works for you.
- Ad quality and relevance. Facebook gives your ads a relevance score to show how relevant they are to the audience you’re targeting. Your score is based on how people respond to your ad. If they react positively your score goes up, but if they react negatively, such as “disliking” the ad, your score goes down. An ad with a higher relevance score is shown more frequently than one with a low score.
- Estimated action rates. Much like the way Google determines your quality score by your estimated click-through rate, Facebook estimates how people will react to your ad and uses that to determine where your ad will be placed. Facebook recommends setting your budget and bid high enough to get at least a few of the results you want per day.
- Your audience targeting and competition. Whom and how many people you target plays a large role in the cost of advertising on Facebook. This has to do mostly with competition and who else could be targeting the same audience. Fewer people fighting for the same spot will reduce costs.
- Time of year. There are times during the year when advertising is in higher volume, such as during holidays. When there are a lot of advertisers flocking to the same space to place ads, your prices will increase.
- Placement. Facebook recommends allowing them to place your ads on Instagram and its Audience Network in addition to Facebook, because it allows you to expand your reach. This can reduce the average cost of your ad as a result.
- Optimization of ad delivery. Be sure to optimize your ads for the results you want. This allows Facebook to place your ads in front of people that will respond to it.
How to set up a budget and scheduling when advertising on Facebook
Facebook gives you the option to set up a daily or lifetime budget. A daily budget sets the average amount you’ll spend every day. Once you’ve reached your limit, Facebook will stop running your ads until the next day. Your budget is reset at midnight, specified by the time zone you choose, every day.
For a lifetime budget, you determine the amount you want to spend over the lifetime of your campaign. Facebook averages the amount you spend daily over the course of your campaign based on the amount you’ve indicated.
The choice of automatic or manual bidding also affects how far your budget stretches. Manual bidding allows you to choose the highest you’re willing to pay for an ad placement. While you might not be paying your max amount every time your ad is placed, the frequency at which your ads are placed could potentially drain your budget faster than you’d like.
Now that you know all the factors that influence the cost of advertising on Facebook, it’s time to know the minimum you will have to pay to run an ad on the platform.
How to calculate the cost of advertising on Facebook
Using USD, AUD, CAD, SGD, JPY, NZD, TWD, EUR, CHF, SEK, HKD, GBP, ILS, NOK, KRW, DKK will require your minimums to be as follows:
- At least $1 a day for ad sets charged for impressions.
- Ads charged for clicks, likes, video views or post-engagement need a daily minimum budget of at least $5 a day.
- Daily minimum budget for low-frequency events such as offer claims or app installs need to be at least $40 a day.
Using any other currency besides the ones listed above will lower the cost slightly.
- At least 50 cents a day for impressions.
- If you’re being charged for clicks, likes, video views or post-engagement your daily minimum needs to be at least $2.50 a day.
- Low-frequency events such as offer claims or app installs need to be charged at a daily minimum of $20 a day.
Time to spend money to make money
Now that you’ve gained some knowledge behind how to estimate the cost of advertising on Facebook, it’s time to spend those ad dollars. Think of how long you want your campaign to last and how much you’re willing to spend to beat out a competitor for a good placement.
Keep in mind whether you’re focusing on financial or social ROI and the bidding options you’ve chosen to boost them.