This is one of the questions that first comes to mind if you are thinking of investing in advertising. The quickest answer would be that investing by advertising on Facebook is like investing in the stock market, but in reality there are several factors that you have to keep in check. It should be borne in mind that it is not the same that campaigns are carried out by a person with basic knowledge as they are carried out by a person or company that is professionally dedicated to it. But the important thing is that you understand that you will always have control of defining your budget and how much you want to spend. And you will be able to measure the income obtained through your advertising campaigns on Facebook, a fundamental factor for business today.
Factors that influence the cost of advertising on Facebook Budget.
Amount that we want to invest in our Facebook Ads campaigns. This is where we tell Facebook how much money we are willing to spend so that our ads reach the right people. This budget can be defined daily or establish a total that we want to spend, during the duration of the campaign. It is not the same to invest $10/day than $100/day. But beware! Because if we do not have a large enough audience and we sharply increase our investment, our frequency will also increase and we may end up impacting the same users over and over again with the same ad.
Target audience or audience we want to reach
(We want to have local, regional, national coverage, etc). It is important to know who our ideal client is. If you already know, now you can know by gender and age what type of user is most interested in your products and services. If we go to the Facebook Business Manager, we can see by breakdown, which age range and gender are most interested in our ads. So we can focus all our advertising investment on those users who we know respond best.
Quality of our ads
Here we must pay special attention to the image, the title of the ad, the call to action that we use, the text or the headline that we add.
Of all these factors, both the image and the text are the main factors that make an ad eye-catching or not. For an ad to show more than your competition, it must have a good relevance score.
The more competition a certain location has, the higher its cost. In the Business Manager locations, we can choose between 5 large sections:
To find out what we are paying for each of the locations in which my ad is shown, we must go to the Facebook ad manager. Once there, we can see in the breakdown report by location, how much we are spending on each of them.
The bid strategy we choose will tell us how much we are spending for each result achieved. If we don't set an (automatic) bid limit, Facebook will try to optimize our budget to get the best results. Automatic bidding is the best option, if you don't have very advanced knowledge of Facebook.
Ad campaign goal type
As we will see later, the campaign objective can determine the cost of the campaign. Facebook gives us 11 goals for advertising campaigns.
Facebook offers us several types of costs:
CPC: Cost per click. → We are charged when a user clicks on our ad.
CPM: Cost per 1,000 impressions. → We are charged for every 1000 impressions our ad has.
CPV: Cost for viewing a video. → We are charged when a user sees the ad we are promoting.
CPA: Cost per action. → We are charged when a user performs an action that we had stipulated as a result. Either download our application, make a purchase, etc.
Depending on the country in which we want to advertise and its competition, prices can vary significantly, let's see the following image:
The sector is another fundamental aspect to take into account when we advertise on Facebook. Advertising shoes is not the same as market research.
Source: WordStream. Facebook Ads CTR performance by sectors.
The 3 most important factors that affect the cost of advertising on Facebook
Campaign objective type and how they affect cost
Within the Facebook Ads Manager or Business Manager, we can choose different objectives for our advertising campaign. Each objective has different metrics and shows a different scope, depending on the investment we make. Note: The campaign objective we choose determines to whom Facebook shows the ad. This can affect the cost of advertising. Example: Let's imagine that we have a home service business and we want to reach a group of people of both genders in Spain, in a population that is between 30-60 years of age, who own or own a house and with an interest in "home improvement." Now imagine that Facebook has to choose between two types of people who meet the aforementioned characteristics. We have a first person who tends to interact a lot with all kinds of Facebook posts and ads, but never completes a lead acquisition form on the social network. We also have a second type of person, who, although he does not interact much with the ads he sees, has previously left his data through a contact form, when he has been interested in the promoted product or service. traffic to our website, then Facebook will decide to show the ad to the first person. On the other hand, if our objective is to get potential clients, it will show it to the second. Most likely, there is less percentage of people willing to make a conversion in our ads, than to interact with them.
In it, we can see that the reach of people we can reach on a daily basis is different depending on the campaign objective we choose, although the budget to be invested is the same. So the smaller the potential reach we have with our ads, the higher the cost / result we get. Choosing the correct advertising objective is the first step in ensuring that the cost of our advertisements is kept low. Remember that on Facebook, we can choose all these advertising objectives:
The Facebook ad auction: how it works and how it affects the cost
Another factor that influences the cost of our advertising is the auction that Facebook ads works with and the bid we choose. We have to bear in mind that our Facebook ads will not be displayed depending on our bid, but on the value they have for our target audience. According to Facebook, the two fundamental factors on which it relies to more or less impress the ads are:
This is represented in 3 values:
During the ad auction, our ad faces other similar ads. The advertiser with the highest combination is the one who impresses your ad.
How can the bid affect the cost of our advertising on Facebook?
There are 2 ways to bid on Facebook. An automatic bid and a manual bid. With automatic bidding, Facebook sets our bid so that we get the most conversions at the lowest price. With manual bidding, we will decide how much value we want to give to our conversions. When choosing this type of bid we must focus on our ROI, or Return on Investment, that we can achieve instead of focusing on a bid at a lower cost. Since the higher our bid or bid, the more access we will have to the people we have targeted and the greater chance of impressing our ads we will have.
Segmentation and how it affects cost
The more relevant the audience and targeting chosen for our ads, the lower the cost. Continuing with the previous example in which we had a home service business, if we choose for our segmentation an interest in “home improvement”, our ads will be shown to EVERYONE who has indicated at some point that they like this type of content or pages. This type of targeting includes people who are not homeowners or people who like home improvement programs. Without necessity, they are looking for this type of service for their homes. Choosing an appropriate audience / targeting is the trickiest part of Facebook. Choosing the right audience takes years of practice. But with platforms like Adtuo this evil is less. Since it works with Artificial Intelligence, the chances of success that are achieved are very high.
If we were to say the two main factors that affect the cost of advertising on Facebook, it would be the quality of the ads and the targeting. Our ads must be interesting, visually appealing and must meet the following criteria:
And also as we said before, the higher the relevance score of our ad, the lower its cost. If you want more information, do not miss our Guide on how to advertise on Facebook Ads for SMEs and freelancers, in which you will learn the keys to having successful advertising campaigns, getting more customers for your business and selling more.
Would you like to make the most of your budget and optimize your ads? In Adtuo, thanks to the integration of Artificial Intelligence, you’ll be able to receive instant recommendations and insights to boost your Facebook Ads and succeed! Don’t miss out! Try Adtuo now for free!