How Much Does Facebook Advertising Cost?

3 min read

In a pay-to-play social media market, it is quite daunting to join a competitive advertising environment like Facebook. While connecting with the social media advertising world, you have control over your budget for ad campaigns.  In the first quarter of 2016, 1.65 billion Facebook users were active on a monthly basis. Rest assured, your prospective customer is among them.

How Much Does Facebook Advertising Cost

Facebook advertising has a potential to produce good returns on investment (ROI), but in order to achieve that, there are certain things that you should think about prior to setting up your advertising budget and going live with your campaign.

The cost of Facebook Ads is very dynamic and it varies based on your ad’s performances and your targeting options. For example, if your ad is very specific and has small target audience, then it will be expensive, whereas if your ad is performing very well, then the price might go down with time. This is the reason why it is so essential to do a lot of testing to find a good, creative and a performing target. By setting up a small campaign and observing what numbers you can get after 2-3 days, you can get a fair idea of how much you are going to pay. Once you have a fair idea and the numbers make sense, you can raise your budget and start testing, to make your performances better.

You can choose between two cost models:

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

CPM refers to the cost that you pay for every thousand people who have seen your ad, whereas CPC means the cost that you pay when someone clicks on the ad. Both cost models employ a bidding system and the cost is based on what other advertisers are ready to pay for impressions or clicks from the same demographic.

You can choose among the two options explained above, while setting up your ad campaign. Once you understand the working of Facebook advertising, it can be exigent to comprehend how much you should be paying. The minimum CPC bid is $0.01, while the minimum daily budget for an ad set is $1.00. The advertising costs totally depend on an individual, and these costs can be managed from Ads Manager page.

A social media marketing company can choose from the following two types of budgets:
Lifetime budget – As the name suggests, this is the amount of money that a social media marketing agency sets as the budget that is to be used throughout the lifetime of the campaign. These costs are then distributed equally during the period that the agency has selected for the campaign to be active.

Daily budget – Daily budget is the amount of money an agency is willing to spend on its campaign per day. As a social marketing company will never be charged more than what it is set in the daily budget, this option can be used to control costs at any moment.

Often, people get confused between bid and budget. Facebook differentiates these two as follows:
“Your budget is the maximum amount you’re willing to spend on each campaign you run. A bid allows you to choose how much you’re willing to pay per click (CPC) or per 1,000 impressions (CPM) [or per action (CPA)].”

In short, budget helps to control your spending for each of your advertising campaigns, whereas bid allows you to control spending with each ad.
Let us have a look at average costs from 2015:
Average cost per click: $0.27
Average click-through rate (CTR): 1.5%

Generally CPC gives a higher CTR compared to CPM. When it comes to advertising on Facebook, one can see excellent results by testing both models and choosing the one that meets his/her business needs and objectives.