Chapter 3 How Much It Really Costs to Advertise on Facebook

Logan Young / 6 min read

Everyone knows Facebook is a pay-to-play game, so then the question is:

How much does it cost?

The practical answer:

Spend $1 for every 100 website visitors you get each month.

Sounds arbitrary, I know, especially since all businesses are different.

You could be selling digital products, gym memberships, or dog toys — but this will be a good starting point.

We have clients that spend $100,000 a day on Facebook ads — but they are probably not like you.

They have massive media budgets and teams of people that do things like Super Bowl ads.

They budget “top down,” meaning that their spend is based on what they spent last year and a share of this years’ projected company revenues.

They can afford million dollar mistakes. You can’t.

Whatever the case, the three parts of the funnel are audience, engagement, and conversion (we shorten it to AEC).

The goal is to generate:

  1. A first touch (which is awareness)
  2. That then leads to engagement (initial remarketing)
  3. Then to conversion (cross-channel remarketing from search, email, and social back into Facebook conversion ads).

We’ll work our way up from the bottom to the top of this funnel.

If you haven’t run Facebook ads before, or if you’ve not had success, start by boosting posts exactly in the way we’ll describe later in this post.

Conversion Remarketing Budget

Facebook is a remarketing engine.

Yes, like those product ads that follow you around, but smarter if you do it right.

You see, Facebook is an amplifier of what’s already working for your business.

That means if you’re already driving conversions via SEO, AdWords, email, or other digital channels, Facebook will increase your efficiency.

Whatever is already working, you’ll get more – more visibility, leads, phone calls, and sales.

Most people fail at Facebook ads because they started with an arbitrary monthly budget and just started boosting or running conversion ads to cold audiences.

That either gets you a bunch of useless likes (doesn’t translate to sales) or yields no conversions. The users you targeted never got a chance to learn about you, therefore are less likely to buy from you on the first impression.

You need to match your offer to where your audience is in their buyer’s journey and relationship with your business.

Your baseline for Facebook budgeting should be how big your remarketing audiences are;

meaning, for every 100 people that have come to your website you will retarget them on Facebook.

You do this by setting up custom audiences, a javascript pixel you place on your site or a one-click integration with your email provider.

facebook pixel

So if you have 5,000 clicks on your emails each month and 7,000 website visits, that’s 12,000 sessions.

And at $1 per 100 visitors, you’d start your budget at $120 per month for conversion remarketing.

Of course, if you sell many products to many segments in a more complex funnel, then you could adjust this up or down, largely by whether you have content for each of these audiences.

If you find that this initial budget is profitable for you, then you’d want to keep adding money until your marginal revenue equals your marginal cost.

Expect that in a healthy Facebook account, one-third of your budget should be conversion remarketing.

Alex Cleanhous, Co-founder & Chief Innovation Officer, Web Profits

Alex Cleanhous

Create a custom audience of your biggest spenders by uploading a list of their emails to Facebook and then target ads to them. You can also use dynamic retargeting to drive sales of products that people visited in your online store, or added to their shopping cart, to drive additional sales.

Engagement Budget.

You’ll also want to have an engagement budget.

This is part of the consideration phase, as Facebook defines it, where your goal is to increase your audience reach and educate these audiences on who you are.

Your engagement budget should be triple your remarketing budget to start because you’ll be focusing on three key touch points.

The 3 Ways to Target Your Audiencens
  • Lookalike Audiences: people who look like your current customers.
  • Interest Targeting: people whose interest relate to your product.
  • Behavioral Targeting: people whose behaviors relate to your product.

Lookalike Audiences.

One-third of your engagement budget should be for lookalike audiences.

Provided you have conversion tracking in place and have more than 30 conversions a month, Facebook will find people who look just like people who have bought from you before.

Even though these lookalikes are way bigger than your conversion sets, don’t fall into the trap of setting giant budgets here.

Increase your budgets only if the custom audiences you yield are profitable or if the lookalike audiences buy your product.

We don’t recommend running lookalikes in a conversion campaign at first until you’ve exhausted your remarketing audiences and made sure they’re profitable.

Interest and Behavioral Targeting.

One-third of your engagement budget should be for interest/behavioral targets.

This means you’re segmenting your audiences by other products they like, life stage events, competitors’ page they like, and other targeting criteria.

Your ad copy should reflect should reflect the audience’s interest and/or behavior you are targeting to make this method effective.

For example, if you are an active wear brand targeting women with an interest in Game of Thrones, then your ad could use fire and dragon imagery and copy that reads:

“Ignite Your Workouts While Staying Cool with Our Dri Fit Fitness Leggings.”

Remarketing for Further Engagement

Finally, the last one-third of your engagement budget should be remarketing to further engagement.

Earlier, we said to spend a dollar per 100 visitors to drive conversions via remarketing.

Here we’re saying that you spend a dollar per hundred visitors to further educate them, not to sell them.

Share customer stories, educate users on issues they care about, show how active you are in the community, and so forth.

In our example, we’re spending $120/month on conversion remarketing and $360/month on engagement. For a total budget of $480/month.

Remember, this is a starting point. You’d adjust budget up or down based on what’s profitable, your Relevance Scores, and whether you have content.

Peter Attia, Sr. Product Marketing Manager, Netsparker

peter attia

Put up an ad that generates a lot of comments or questions. We’ve noticed this to increase our “Ad Relevance” score, which in turn makes the ads display a higher number of impressions for a longer time period.

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Boosted Posts Budget

The last phase of the funnel, as we work our way up from the bottom is audience. Some people call it “awareness.”

The goal here is to literally make people aware that you exist.

We’d expect your boosted posts budget to be the final third of your total budget.

However, 80%of your effort will be focused here because there is a lot more maintenance and testing done in this phase than the others.

Richard Lazazzera, Founder, A Better Lemonade Stand

Richard Lazazzera

Change your copy and images frequently to avoid banner blindness as well as avoid making your ad look like a traditional ad. Most people aren’t on Facebook to shop, so to get them and get them to discover and engage with your brand, you must do more than just interrupt their news feed with a product placement.

You might start out by boosting five to six posts and finding that perhaps one of them is doing well, based on cost-per-engagement or even cost-per-lead (if you are boosting a post with a call-to-action button).

We typically find one in five boosts tend to have decent performance, but if your content is lousy, maybe you’re one in 20.

Over time, you might boost dozens of posts, but keep boosting only a handful.

This handful of posts continues to spend a dollar a day (or more, if the audience is big enough), so your total spend on boosting could be $10, $50, or even $200 per day.

If you’ve set up your funnel properly, then you have set engagement remarketing audiences to pick up from there, which then go to your conversion campaigns.

Thus, you can link all stages of your campaign to assess profitability and adjust budgets accordingly.

The amount you spend on boosting is based on how many posts you have to boost, how well those posts perform, and how long you’ve been boosting (to create more and more stacked layers of boosted posts that are running concurrently).

26 Facebook Advertising Examples

Facebook stalking your competition to preview their ad examples is time consuming. That’s why we did it for you. In this guide, you’ll get access to 26 different ecommerce Facebook Advertising examples across verticals. 

We’ve also included:

  • Facebook Advertising type
  • Why the ad works
  • How to set up your own

Get the examples.

How much does it cost to advertise on Facebook?

Expert answer: Manage against Revenue and ROAS counterbalanced metrics.

That means you are calculating marginal profitability for every conversion ad.

We know that cost-per-click (CPC) divided by conversion rate equals cost-per-acquisition (CPA).

So sorting each ad by these two primary factors will quickly tell us which ads to cut, which ads to tune, and which ads to add more money.

These two factors can each be broken down into a further set of diagnostic metrics such as:

  • Relevance Score (almost identical to Google’s Quality Score, based on click-thru rate [CTR] and negative feedback)
  • Frequency (over three per week in the newsfeed will typically lead to burnout)
  • CTR: We know that a higher CTR usually means a lower CPC, but factors such as placement, audience size, and Relevance Score come into play

Troubleshoot knowing that all campaigns are limited by either audience or budget.

If you’ve gotten this far, congratulations! That means you already know that what matters is not budget, but profits.

Thus, we do lots of optimizations at each of the three stages in the funnel, like we discussed above.

And the sum of these changes happens to be your budget.

When your goal is to spend a certain budget, then profit becomes a random output.

But if your goal is maximizing profit, then you’ll spend whatever budget happens to maximize that business outcome.

If You’re Still Not Satisfied

Some people just don’t accept “it depends” type of answers to their questions.

So we’ve also compiled some basic Facebook benchmarks based off the trillions of impressions and billions of ad spend we’ve managed over the past 10 years.

Facebook Advertising Basic Costs*
  • Cost of Impressions: $8.00-10.00 CPM
  • Cost per Video View: $0.03-0.05 CPV
  • Cost of Driving Traffic: $0.75 CPC
  • Cost per Lead: $5.00 CPL

*These numbers vary by vertical.

So, ready to get this “pay-to-play” game started?

Want more insights like this?

We’re on a mission to provide businesses like yours marketing and sales tips, tricks and industry leading knowledge to build the next house-hold name brand. Don’t miss a post. Sign up for our weekly newsletter.

Table of Contents

IntroThe Complete Guide to Advertising on Facebook: Strategies That Convert [in 2018]
Chapter 1 The Basics of Facebook Ad Campaigns
Chapter 2 How to Master Your Facebook Ad Targeting Strategy
Chapter 3 How Much It Really Costs to Advertise on Facebook
Chapter 4 The 8 Best Facebook Advertising Tools and Services for Ecommerce Brands

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