Social Media

How Much Do Facebook Ads Cost?

The great thing about Facebook & Instagram advertising is the scalability of investment when it comes to creating adverts. In fact, some people spend more on coffee each day than they do on their advertising campaign. So how does it all work? Facebook uses an ad auction format which determines whether an ad is shown to someone or not. 

Similarly, to Google, you bid on whether your ad is shown to a person from your target audience. Facebook can automatically decide if this is within your budget, or alternatively, you can create a ‘cost cap’. 

So, what’s the answer to our main question; how much do Facebook Ads cost? The short answer is a pound a day. The longer answer requires us to go into a bit more detail. 

A Pound A Day

This is the absolute minimum amount Facebook will let you advertise for. It’s great to setup test, risk-free campaigns – especially if you’re still a small business. Of course the results won’t be fantastic – but it can give you an idea of how new audiences react to your brand.

By using these test campaigns you could track, for example, the average CTR (click-through-rate), reaction from certain demos (male/female or adults 25 – 44s) or how people engage with your content.

Setting up a multitude of ads aimed at different experiments is a great way to grow your business while also learning the do’s and don’ts for your brand.

Divide Up Your Advertising Budget

When starting up a social media marketing budget, a good rule of thumb is to divide up your spend as follows;

  • Engagement Budget (x3)
  • Discovery Budget (x2)
  • Remarketing Budget (x1)

What we mean here, is to start with an engagement budget at least three times the size of your re-marketing budget. Pushing revenue into building a following, raising awareness and getting more comments and likes on your posts is crucial to build a solid social media campaign.

Next you want to allow people to discover more about what you do. We suggest this to be twice the size of your re-marketing budget. This will be ads getting people to visit your site, read your articles, watch your videos and discover your products/services. Once they visit your website, a pixel will track their details and add them to a retargeting audience later.

Lastly you want to hit those who are interested but didn’t convert. Set up “lookalike” and re-targeting audiences for those who visited your site and learned about your brand but didn’t buy anything.

As your business starts to grow and you gain a good bulk of “loyal followers” start to turn this ratio on its head. You want to end up with your re-marketing budget being x3 times that of your engagement. (As most of your ROI will come from this.)

Spending £1 for Every 100 Visitors to your Site

A great place to start for any small business. Spending £1 per 100 visitors is good to know you’re heading in the right direction.

With an average healthy Facebook account, (and a good product targeted at the right demo) you want every 100th visitor to your site to spend at least thirty seconds navigating around. Out of those one hundred you might expect two of them to convert. This will lead to a cost per conversion of £0.50. So in theory, if you were to spend £456 on a Facebook campaign you’d expect 45,600 to visit your site and 912 to convert.

This is just an example as with different industries and conversion types the CPA (cost per acquisition) increases.

Going off what we know already about the 3:2:1 ratio of marketing budgets – remember that for every 100 people visiting your site you want to retarget 33 of them. Most people fail at Facebook ads because they start with arbitrary monthly budgets and just run ads to cold audiences. This often leads to low sales and useless likes on your ads.

Your Ad Revenue Will Be Better Spend If Constantly Monitor Your Ads

The biggest mistake a marketer can make is switching on their ads and just letting them run until they turn off or run out of budget. You wouldn’t start cooking a delicious meal only to stop halfway through and expect it to magically do the rest of the work. Once a campaign is set up YOU MUST monitor it constantly, making changes as things work or don’t work.

Think of it more like an experiment. You’re trying to line up the right messaging, goal, target audience and creative assets to get the correct results. Some questions to have in mind include;

  • What’s the frequency of the ads? Are they being shown too many times to the same people? Will it just annoy the viewer.
  • Relevance Score – Is the click-through rate low on your ad? Why do you think this might be? Turn off certain platforms, placements and audiences to see if this fixes the problem.
  • Are you spending more on CPC on certain audience or placements? Try channelling all your revenue into those that are working.
  • What do people do once they reach your site from an ad? Are they leaving straight away? Maybe you need to create a more clear and easy to use landing page.
  • Is your campaign too limited? Are you bidding higher for an audience because there’s too few people.

You need to fine tune your ads almost daily. However, ensure you let your ads build up on data before making changes. Don’t react to data if it’s only been running for 5 hours. Ensure you give a long enough period to know the results are an accurate reflection of what’s going on.

Avoid Overspending By Using Automated Conditions

If you have a campaign that’s working extremely well for you, you want to maximise profitability. You can do this by cloning existing campaigns and increasing budget significantly for that ad set. To be clear, it doesn’t always work, but if you want to avoid risk you can turn on Facebook automated rules for your ads.

The key rules to use are turn off an ad if the spend is greater than x3 your desired Frequency, CPA or CTR. Basically if an ad starts to show too many negative results it will automatically turn off mitigating risk.

In the above example you can see that as the ad is shown to more people if the average frequency increases from 1 to 2. The ad will turn off. Or if the click through rate falls below 5%. Finally if the lifetime impressions grows greater than 8,000 the ad will switch off.

These three rules in tandem make it so that the ad can’t go drastically wrong. It’s a good idea to still keep monitoring your ads daily but at least this gives you peace of mind when you log off for the day.

How We Might Be Able To Help

Hutch offer social media training, ad creation and digital design packages to help any SME grow their business online. We can also offer support and advice on your social media strategy. Remember, things don’t happen overnight so it’s good to get professional advice for your long-term marketing strategy in order to maximise profits.

If you’d like to see how we can help your business, head over to our marketing enquiry page and tell us a little bit about what you do. We’d love to hear you.

Thanks for reading and we hope this was useful for deciding your revenue spend with Facebook ads.