Facebook advertising costs

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Advertising costs

How much do I have to pay to advertise on Facebook?

This question is somewhat hard to answer since the cost depends on the competition. If there are many advertisers aiming towards the same demographics as you, the prices go up and if you’re alone, advertising becomes a lot cheaper.

This, however, doesn’t mean there’s no way to eliminate high advertising costs – on the contrary. If you understand how Facebook works, you’ll be able to lower your Facebook ad spending considerably.

But then again, your goal shouldn’t be to see this as a cost at all.

Facebook advertising can yield good return on investment, but to reach there, these are the things you should consider before setting your Facebook advertising budget and going live with your campaign.

Facebook Ads Cost Models

When advertising on Facebook you can choose between two cost models:

  • CPC: Cost per click
  • CPM: Cost per thousand impressions (M = thousand in Latin)

CPC simply means that you pay when someone clicks on the ad while CPM means that you pay for each 1,000 people who have seen it. Both cost models use a bidding system – an auction – and the cost depends on what other advertisers are willing to pay for clicks or impressions from the same demographic.

Again, in areas where there are a lot of advertisers competing for the same demographic, which is defined by your targeting preferences such as country, gender, age, interests etc., the costs are higher and vice versa.

As always when it comes to Facebook advertising, you’ll see best results by testing both models and choose the one that meet your business objectives. But generally CPC gives a higher click through rate (CTR) whereas CPM generates fewer but cheaper clicks.

Facebook Ad Quality Score

The click-through rate in itself is another factor that has impact on the Facebook ad prices. The higher CTR you can achieve, the greater chance you have of winning auctions.

In an auction, Facebook’s algorithm give a quality score to each ad taking part in the bidding and many argue the CTR is the most important factor to determine the score.

The advertiser with the highest quality has an advantage.

If you are bidding for clicks against someone with a historically higher quality score, chances increase that you’ll lose the auction. With high quality score, on the other hand, you can win an auction even though your bid wasn’t the highest. This means you’ll pay less for clicks in the end.

Consequently, the performance of your ads and how Facebook visitors respond to your creative work has an impact on the actual costs. If you test and tweak your ads so that they perform well, you’ll have an advantage in future auctions.

Facebook Optimizes Your Campaigns

Facebook runs a similar algorithm to decide the quality score between your own ads. You could say that Facebook runs an optimization process for you.

When you launch a campaign with many ads, Facebook give all of them the same exposure in order to identify the CTR of every individual ad.

Once Facebook realizes which adds generate a higher CTR – or have a higher quality score – these get more impressions compared to the less converting ones. Over time Facebook will stop showing ads with a lower CTR completely.

Cut Your Facebook Advertising Cost

Facebook does this quick optimization work for you automatically, which can be great for conversion rates and something you can leverage a lot, especially if you have many versions of your ads targeting different demographics inside one campaign.

However, in some cases it might work against your optimization work. Facebook tend to make their decisions very quickly and sometimes you might want to give your ads more time before they’re shut down by the algorithm.

In that case, create more campaigns with fewer ads inside each campaign. This will essentially force Facebook to show all the ads during a longer period before giving them a quality score and lower/increase the exposure of the ads.

Qwaya provides all the tools you need to quickly and easily create multiple ads with different content and targeting. This will help you reach your conversion goals and lower your Facebook advertising rates.

Click here to see our pricing plans.

Control the Max Bid

A key factor in successful Facebook advertising is deciding how much you are willing to pay for clicks on your ads. Once you’ve created an ad you automatically receive an estimated max bid generated by Facebook.

This max bid amount is based on what target groups you have chosen and what other advertisers are willing to pay for having their ads shown to the same demographics.

We suggest you work hard on finding the correct max bid for your ads. In doing so, you’ll get a high amount of clicks for a reasonable price. Controlling the max bid and finding the right level gives the clicks a higher value for you as an advertiser.

One way to optimize your Facebook advertising costs is to set the max bid manually at close intervals aiming to maintain a high CTR at a low cost.

Max Bid vs. Cost per Click

A smart way to do this is to work against your average cost per click (CPC,) which you can monitor easily at Qwaya. Once your ads begin to receive clicks, you’ll instantly see what your average CPC is.

If the average CPC differs a lot from the max bid, you might have to consider lowering the max bid closer to the average CPC.

This doesn’t necessarily mean that the results for your advertising on Facebook will be better – only that the advertising costs will be lower for the same amount of clicks.

To find out the end result, you need to monitor if these “cheaper” clicks also generate sales. If they do, the lowered max bid is provides better results for your Facebook advertising.

But remember, when you lower the max bid too much you might end up losing all the biddings and your ads won’t get any impressions at all. Once you lowered the max bid, we recommend that you monitor the campaigns closely to make sure you don’t end up without any clicks.

Cost Cutting through Qwaya

With Qwaya you’ll be able to create ads targeting the right demographics, and when the campaign is up and running, we provide you with essential statistics that show how to tweak the campaigns for even better results.

Try to put some effort into analyzing the statistics – that’s where you find the solutions for lowering Facebook advertising costs.

We’ll provide all the stats you need, from click-through rates to actual conversion.

Take advantage of this information. It’ll do wonders to your advertising results and will cut unnecessary high advertising costs.

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