Are you about to start Facebook advertising and don't know how much money it will cost you per month or how much a visitor, interaction or order/lead will cost you? You've probably arrived for specific numbers, but you won't get them because they change dynamically based on many aspects. In this article, let's break down what attributes affect price and how the whole advertising system works on Facebook, or Instagram for that matter.
Budget and Learning phase
First and foremost, how much you spend on Facebook advertising is mostly influenced by the budget you set, whether it's at the level of the account, specific campaigns or ad sets. You can also choose between a daily budget and an overall campaign budget.
So if you choose a long-term total budget, you can't end up with a situation where a campaign spends more. With a daily budget, it may happen that on certain days the budget will be overspent, but over a longer period of time, the average spend should be identical to the daily budget you set.
From a budget perspective, I recommend starting with low amounts and progressively increasing as results are good. At the same time, there is an important thing to take into account and that is the learning phase. The learning phase is the period when the actions of the report (leads/orders) are collected at the ad report level. The ideal amount is 50 actions for 7 days counted from the last significant change.
So how to deal with this information? From my experience, I would recommend, especially if you are on a limited budget, to start with a low amount of sets so that the already small budget is not divided between too many ad sets. I'm not saying you necessarily need to complete 50 actions in 7 days, but if we have units of completed actions per set, Facebook will not have the optimal amount of data to optimize and the results achieved may not be in balance with your idea of results.
Auction
Facebook auctions basically decide what ads a user will see. But it's not just about using the bidding action to outbid your competitors to see who can bid higher. The auction is influenced by a number of other attributes. We'll cover the most important ones below.
Competitors
You need to understand that when you want to run a promotion on a local fitness center, competition in the concept of Facebook advertising does not take a competing gym from the same city. A competitor is any other advertiser that targets the same user in that location based on their behavior or interests. So, the higher this general competition is, the higher the price per action in Facebook advertising will be.
Location
A significant difference in advertising prices will also be at the locality level, especially at the country level. Advertising in a small country in Europe is guaranteed to be significantly cheaper than advertising ads in the wealthiest states in the US.
There will also be another noticeable difference if you advertise on Facebook your café that you run in Paris than if you run it in a small village in the middle of France. Again, this is based on the logic that the number of local businesses in Paris that will fight with each other to get into a relevant user's feed will be significantly higher than in locations with lower saturation of businesses advertisers.
Ads quality
For me, a very important point, in fact one of the most important ones, which you can do something about, unlike other criteria like location, competition or industry. In my experience, the difference between good and bad ads, can be as much as 150% increase in cost per click, consequently CPM or cost per action.
Advertising must be interesting to the audience you are targeting. But what do you mean by all this? The product, the price offer, the design and the wording of the ad must be interesting to the target audience.
A general guide doesn't work very well. On some accounts amateur videos work better for me, on others classic static image ads work better. It's all about testing different types of creatives after that, and that testing really pays off. If you are going to spend say $1000 on FB to start with, invest at least 30% on quality and variety of creatives. Of course, only if you can't produce a quality video/banner by yourself.
Bid
By the default you do not set the bid. Setting the bidding strategy leaves the bid setting up to the algorithm. However, if you want to control the bid manually, Facebook advertising provides this option.
However, I don't recommend it for myself, I fail to improve campaign results using this option. However, there are definitely case studies for some specific case where testing manual bidding came out more effective than bidding via auto bidding.
Industries
Even across industries, click-through rates vary, so it depends on what your business is all about. But there's no table that tells you approximately how much advertising will cost if you run a restaurant.
The logic is again based on the auction model, so it makes perfect sense that if you advertise to mothers on maternity leave a visually beautiful and functional toy for their babies in a compelling and emotional video, the response with that ad will be more frequent than if you advertise refinancing your mortgage.
Campaign type
You may have come to this article wondering about the amount of a particular metric. Is it CPM, cost per lead, or perhaps cost per interaction (likes, comments, shares)? The cost per action also greatly influences what type of campaign you choose.
Facebook Ads behaves quite logically in this regard. When you set your campaign type to reach, the cost per reach result will be great. Other metrics like CPC or cost per order won't be as good. On the other hand, if your goal is to get an order in your e-commerce store, you will choose the "Sales" campaign type and even though the cost per reach will be higher, the cost per order will be multiples greater compared to a reach campaign.
So think carefully about what is the purpose of the campaign you are running. Your results will look accordingly. I can say for myself that more than 80% of my campaigns are optimized for sales and the rest are only used for very specific examples.
Target group
The price of the action is also influenced by the target group. To a large part, this is influenced by only two factors. The response rate to the ads of a given audience and the size of the target audience. In fact, a high frequency of ad impressions almost always increases the cost of getting the action.
This is most evident in remarketing campaigns. If an identical ad is shown to a user 10 times a day (and I have seen such cases), it can be assumed that the user does not click on it many times out of those 10 impressions or otherwise does not interact, which decreases the quality of the ad, which is precisely dependent on user interactions, and increases your CPM, CPC and other metrics in which the cost of advertising is reflected.
Placement
In basic placement targeting, the automatically set to all so that the ads are automatically spread across all available platforms and the placements they offer, so you only see the total price for the entire ad. However, if you were to break down the performance of each placement by using segments, you would see that there are drastic differences in the price per ad or getting an action between placements.
The most expensive placement in the case of my campaigns is definitely Facebook Feed, specially on desktop. The cost compared to e.g. right column ads is 3x higher in terms of CPM. The difference between FB and IG in CPM for 2023 for a client who spent approx. $600,000 is, 23% in favor of IG. For example, between Facebook and Messenger, the difference is 87% in favor of Messenger. But even that difference doesn't mean Messenger is a better performer in terms of ROAS or CPA.
Post click experience
Another important attribute is the so-called post click experience, which evaluates how the visitor interacts with the landing page.
Are visitors finding what they were interested in on the page in the ad?
A bad landing page can be a mistake. You advertise a product that catches the visitor's eye in the ad, but then send them to the main page of the site. This will give the visitor a higher bounce rate and Facebook Ads system knows this and works with this information.
Is the site fast enough?
A slow loading site is both bad for your SEO and basically all advertising systems will make your advertising more expensive because of this. Their goal is to drive visitors to advertisers where they have a good user experience. You probably know for sure yourself that waiting a few seconds for a site to load doesn't have much to do with a good user experience.
Is the site mobile friendly?
Does your website display properly on mobile devices? If you don't get it, both Facebook and Instagram is primarily a platform used on mobile devices, so if you bring a visitor to your site that doesn't display properly on all devices, in most cases, the ad will just be money wasted.
For the same client with an annual spend of over $600k, the percentage of visitors from mobile devices was 88%!
Website conversion rate
We brought users to the site from a sales campaign. We got the site fast enough, we sent the visitor to the right landing page on a responsive mobile-friendly site. Still, the post-click experience of the ad may be bad because it didn't meet the goal we brought the visitor to the site for. He didn't order your product or send a lead.
This again can have a number of reasons, which we won't discuss today. In general, I would generalize this aspect to mean that the conversion rate of a site/shop affects the value of the quality of the advertising.
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