Did you know that Facebook's annual ad revenue topped over $25 billion in 2020? And if you're considering utilizing this amazing platform to better reach your audience, then you might be wondering if it's too late to get your piece of the pie.
Don't worry if Facebook ad costs make you nervous. There is still plenty of room at the table, and you're just in time. So, keep reading to learn everything you need to know about how Facebook ads can take your business to the next level today.
Basics of Facebook Ads
Before we jump into the details of planning and budgeting for your Facebook ads, let's cover some basics just to ensure we're all on the same page.
First, when you consider the umbrella of your Facebook marketing strategy, your ad sets are only a small piece of a larger puzzle. Facebook offers you the amazing ability to interact with and engage your target audience. Never before have businesses been able to be so intimate with their audience on such a large scale.
Second, understand that there are a variety of ways to spend advertising dollars on Facebook. You can boost posts for more engagement. You can create video ads to build your brand and awareness for your business.
And, of course, you can sell your products or services. Many marketers jump to these ads without also considering the value of the other types of ad campaigns. As we dive deeper into your budget, we'll show you how you can calculate your overall costs so you can stay within your budget.
Are Facebook Ads Still Worthwhile?
Many businesses wonder if Facebook ads are still worth the investment. With changes coming to Apple iOS, many marketers fear the days of easy ads are behind them. And to an extent, yes, the low-hanging fruit and days of spending pennies on the dollar may be behind us.
However, Facebook ads are still just as relevant as long as you realize that the easy days are behind you. But in the long run, that's not a bad thing all around. As a silver lining, many businesses did bail, which leaves less competition for you.
Additionally, many amateurs marketers were running successful ads simply because it was so easy. Now that things are getting harder, you will quickly see who the experts in paid advertising are.
At the end of the day, 7 out of 10 American adults are on Facebook. Chances are, your target audience is on this far-reaching platform. So, if you want to reach your audience, you should be on Facebook.
How Much Are Facebook Ad Costs?
When it comes to calculating your budget, there are several factors you need to consider. And unfortunately, there isn't one singular answer to determining how much ads cost on Facebook. In general, the range of your cost per click will likely be between $0.50 to $2.00 per click.
And, depending on your industry, your cost per click might be much higher than a business in a different industry. For example, the finance and insurance industry will require a much larger ad spend budget than retail or apparel.
And, as we saw, factors out of your control will also determine your ad spend. The hospitality industry saw a plummet in ad spend in 2020 due to the pandemic and lack of traveling.
When it comes to social media marketing, you need to consider all these variables to determine the best cost for you and your business. Let's dive into the specific variables you should consider.
How to Set Your Campaign Budget
When it comes to setting your campaign budget, there are a few different budgets you'll need to determine. First, you'll need to set a daily budget. Second, you'll also need to set a lifetime budget for each campaign.
Facebook will never spend more than your daily budget, but it could be less. This is why it's also important to set a lifetime budget, or Facebook will continue to run your ads for as long as you fund it.
The four main factors you must consider as you set your campaign budget include:
The number one factor you need to consider when determining your budget is what your business can afford. After all, you have a business to run. And your marketing budget is only a small part of your overall expenses.
You can't let your Facebook ads take too much of their allotted percent of your big-picture budget. So, keep this in mind as you set your ad campaign goals and create your budget. Remember, Facebook will never spend more than you allot each day.
So, know what your cap is and stay within your budget. This will help you keep your business solvent and in business.
Second, consider your goals. What do you want to attain during this marketing campaign? Are you simply building brand awareness, or are you selling a high-priced item? These two goals will determine very different budgets.
There are three types of goals you can set within Facebook ads. These include:
- Awareness: promoting your brand
- Consideration: promotes user engagement
- Conversion: encourages a viewer to sign up for a free offer or purchase a product
As a general rule of thumb, the conversion rates will have a higher cost per click than the other two campaign types. Consider this as you set your budget for your Facebook ads.
If you're used to running Google ads based on certain keywords, then you might not give much attention to your target audience. However, this is key when creating your Facebook ads campaign.
You must know your audience intimately, including socioeconomic factors, demographics, and psychographics. If you already have a customer list, email list, or following on Facebook, then you have a head-start when creating your ideal audience.
Facebook can use this information to target your ads to other people with similar interests, lifestyles, friends, and everything in between. As you create your ad campaign and budget, you must consider your audience carefully, so you get the best return on your ad spend.
Lastly, you have to remember that you're not creating your ad campaign in a bubble. As you're setting your budget, you must know what and who your competition is. Some questions to consider include:
- What are they spending?
- Who are they targeting?
- What are their campaign goals?
The answers to these questions will determine your ultimate ad spend. Facebook will take your competition into account as they determine how much they'll charge you per click, engagement, or conversion.
Mistakes to Avoid When Setting Your Budget
It's very important that you take the time to create the best budget for your business needs and goals. However, you also want to get the best bang for your marketing dollars. And to do that, you need to make sure you're not spending more money than you need to.
As you create your campaigns, don't lose money by making these top three mistakes we've seen too many other businesses make.
Jumping Out Too Early
Just as in the stock market, you don't want to risk jumping out of the market at the wrong time. If your conversions go down, that doesn't mean you need to stop spending. It means you need to assess each ad set and make small tweaks to improve your conversions.
It is crucial that you give your ad campaigns the time they need. Facebook ads use sophisticated AI that can analyze your audience and how they interact with your ads. As you give the algorithm more time to study your audience, you will see better ROI on your ad spend.
So, don't jump out too early. Instead, take the time to analyze and improve your conversions of the ads themselves. This will give you better returns on your ad spend overall.
Choosing the Wrong Campaign Type
As we mentioned earlier, knowing your goals is imperative to a successful ad campaign. You don't want to set impression ad spend for a conversion campaign. These two campaigns have different cost strategies, and choosing the wrong one can have lasting impacts on your campaign.
At the end of the day, while the Facebook computers might be very smart, they can only do what you tell them to do. So if you set your campaign for consideration, it won't know that you actually want to grow your lead generation. Be sure that you choose the right campaign so that the algorithm can give you the best results.
Not Analyzing Enough Data
You need to have a reasonable sample size to analyze your data correctly. And to get your sample size big enough, you need to consider two important factors—the amount of your budget and the time span of your campaign. If you go too small on either of these, you won't get enough information to make educated decisions based on solid data.
Instead, you'll make gut decisions based on incorrect information, and you'll see your budget spend increase and your ROI decrease.
Scale Your Business With a Winning Facebook Ads Strategy
As you grow your business, leveraging the reach of social media can help you scale like never before. But you don't have to let your Facebook ad costs skyrocket out of control. Use the information in this article to create ad campaigns that reach your target audience while staying within your target budget.
And if you've already reached the level where you want to spend less time staring at Facebook and more time running your business, then it's time to turn to an expert. We help business owners just like you to create inspiring and engaging strategies that can turn your digital marketing into a lead generating and sales converting machine.
So, if you're ready to get started, we can't wait to help you reach your goals while staying within your budget.