You’ve put aside a chunk of your profits to reinvest in your business’ marketing strategy. Everyone knows, it takes money to make money and digital marketing has one of the highest ROI in the advertising industry, but how much does advertising on Facebook actually cost? 🤔
Marketing in traditional space is pretty cut and dry, you pay one-time for one specific placement, easy. Digital marketing with its multiple placements can seem confusing at first, so let’s break it down.
What are you paying for?
When you choose to pay Facebook to advertise your business on Facebook, Instagram and it’s third-party networks, Facebook uses those funds to match your ad to your chosen target audience within your budget. Kind of like if Facebook was a dating app and you and your target audience both swiped right. 😘 They call this feature an Ad Auction. This is different than say traditional media like paying for a billboard because your funds do not directly determine who sees your ad or the quality of your artwork. YOU decide specifically who you are targeting and what artwork will be used.
Meeting Your Match
So at this point, you may be wondering just how you win a bid during an ad auction. 🏆
Facebook’s algorithm keeps 3 things in mind when it comes to this match system.
Bid Strategy–What you choose Facebook to focus on during bidding (We will get into bids in a second, hold tight!)
Estimated Action Rate– How likely it is a person will perform your desired objection. This is found by reviewing the past actions of your target demographic and your ad’s past performance.
Ad Quality– How interested and relevant Facebook thinks your ad is to your target demographic.
The ads total value will determine who wins the action and the ad auction will decide how much you will spend per impression or conversion.
The Bid Strategy tells Facebook how you would like them to bid during auction based on whether you would like to focus on budget efficiency or stability.
A Low-Cost Bid Strategy tells Facebook to bid at the lowest price per event while spending your entire budget in the given timeline. This will make your bids fluctuate more. You can off-set this by placing a bid cap.
A Target Cost strategy is only available for ads optimized for conversions, app installs or catalog sales. A Target Cost bid strategy means Facebook will focus on getting as close to your target cost per action as possible. This strategy is more stable because it is focused on the long-term budget. Keep in mind a Target Cost bid strategy will not guarantee you the lowest price bid and is not influenced by an increased budget.
Tightening the Purse Strings
Yes, Facebook is a great tool to promote your business but how do you not blow your entire budget on one ad? 💸 This question might be running through your head once you realized your business card has been directly linked to Facebook. Don’t worry–Facebook has already thought of this and no Mark Zuckerberg is not going to run wild with your credit card.
There are two types of bid budgets you can select when advertising on Facebook; Daily and Lifetime. It is important to get this right because you can not switch the type of budget once the ad is running.
If you want to control the cost per impressions (clicks, views, comments, shares, likes, or downloads) or conversions choose Daily to control the average amount you would like to spend every day. This is good for if your ad is time sensitive because Daily bid caps allow you to accelerate delivery to spend your total budget faster. Daily budgets also give you the option to be paced meaning that most days Facebook will be conservative with your budget, making it last for your entire time campaign length.
If you more concerned about the total budget that you will be spending regardless of how much will be spent daily (cost fluctuates every day) choose Lifetime. Facebook recommends choosing a Lifetime budget because it allows for more flexibility during ad auctions. Lifetime budgets must be paced.
How low can you go?
Unfortunately, no matter which budget you choose Facebook has a minimum budget you must spend. The minimums are per day, so if you have a Lifetime budget you must multiply the number of days your campaign is running by the daily minimum ad spend or your ad may stop running because it reaches the minimum prematurely.
Impressions (static image views), clicks, likes, video views, post engagement - $1/day
Offer claims, app installations - $40/day
When do I get charged?
You will only be charged when your selected objective occurs. This is why selecting the right campaign objective is vital to the ads performance.
Improving your bid
Facebook has control of your final bid in the Ad Auction. This is good to create a more fair market and keep viewers happy with relevant content, but is there any way to influence your bid? This is where traditional tactics fail. Surprisingly, increasing your budget does not necessarily mean better performance and lowering your lifetime budget will just make you use your Facebook ad campaign budget faster. Below are a few ways to actually improve your bid.