How Much Does it Cost to Advertise on Facebook?

by Jen Sheahan
FBadsLab

This is a common question I get asked and unfortunately it’s difficult to give a one-size-fits-all answer.

I guess the best answer I can give is ‘Whatever you want it to cost‘.

With Facebook advertising, you are completely in control of how much you want to spend, from the beginning to the end of a campaign.

That said, there are many factors that go into determining how much you want to spend, and in how much bang you’re going to get for your buck.

CPC vs CPM

One of the decisions you’re going to need to make when building your campaign is whether to pay based on the CPC (Cost per click) or the CPM (Cost per 1000 impressions).

If what you’re after is mainly spreading awareness of your brand, CPM will definitely help you accomplish this. Because Facebook knows they get paid regardless of whether people click on your ad, you will get a ton of impressions right away.

But if you ultimately want sales, leads or conversions, CPC may be a better choice for you. This way you’re only paying based on actual clicks to your Facebook page or website.

This subject is covered in much greater detail in our Facebook ads PPC training.

Daily Budget

Facebook lets (actually requires) you to choose the maximum amount you want to spend per day. The minimum daily budget allowed is $1 US.

You can of course decide this before you even create an ad, however it helps to know how much each click (if you’re doing CPC) is going to cost you before you decide.

To figure out the approximate cost you’ll pay per click, simply target="_blank">create an ad, enter all your targeting preferences, and right near the bottom you’ll see the estimated CPC.

Keep in mind this is the max you’ll pay…you may in fact end up paying much less.

How Facebook determines the Cost of Your Ad

Each time a Facebook user views a page that displays ads or sponsored stores, an auction takes place. The advertiser who wins that auction has their ad or story displayed on that page.

The reason I’m mentioning this here is that part of how Facebook determines when your ad is displayed is based on your bid (the maximum CPC or CPM you have selected).

The advertiser with the highest bid, all other things being equal, will ‘win’ that spot.

Remember that the bid amount you have selected is your maximum bid. If you can win an auction with a lower bid, you will only be charged for the lower amount.

Another important factor in how much you will end up paying is the CTR (click through rate) of your ad. It is commonly known that the higher your ad’s CTR, the lower your CPC.

[There is a third factor which comes into play in determining who wins an auction – the quality of your ad. More on this in another post].

Your Facebook Ad Should End Up Costing You Nothing!

The ultimate goal is to make sure your ROI (return on investment) is higher than your cost to advertise.

The sales, leads, and conversions you achieve through your Facebook advertising should be more than making up for the cost of advertising.

If you’re paying MORE for your ads than you’re bringing in THROUGH the ads, there is something wrong and you need to seriously reevaluate your campaign!

So, as you can see, it’s hard to give a straight forward answer to the question, how much does it cost to advertise on Facebook.

But I hope this has given you a bit of an idea of how to determine how much you want to spend to achieve the results you want.

Article submitted Tuesday, January 24, 2012 & read 11 times.

Founder of FB Ads Lab, Jennifer has for many years helped entrepreneurs and business owners to acquire the skills and knowledge they need to market their products, services and business in this dynamic environment. She is the innovator of a unique and successful system that is applicable to all kinds of businesses – online and offline, big and small.

Both online and offline businesses that recognize the role that social media plays in today’s society engage Jennifer to design and monitor their Facebook advertising campaigns. She has worked closely with well known and successful marketers including Anthony Robbins, Eben Pagan, Frank Kern, Trey Smith and James Schramko on their Facebook marketing plans.

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