Feb / 22

7 Things To Determine Facebook Ads Cost

CEblog Content Marketing, Digital Marketing, Facebook Ad 0

So how much do we have to spend on a Facebook ad? How much is too much and how much is too little?

We might all want to know the exact costs there is for each Facebook ads, but truthfully there is no accurate way to pinpoint with the finger. However, there is an average which we can set our benchmark based on the studies done by Adespresso.

This puts Malaysia at an average CPC of USD 0.18. You can use this as a benchmark for your ads. 

Nonetheless, there are many more factors that affect your ad budgeting because of how Facebook ads work. All Facebook ads go into a bidding war among other advertisers and competitors before you are assigned a specific CPC value.

So, how does the Facebook ad bidding work?

Facebook ads are not won by the highest bidder but the overall value created for the user based on 3 different factors:

  1. Your bid.
    • There are 2 types of bidding – automatic and manual. If you are new, going for “automatic” would be a good start, if you are experienced and you know your data, going for “manual” would work best for you.
  2.  Ad relevance score.
    • How relevant is your ad to the target audience is all measured by a score. This will affect your cost and how likely Facebook will prioritise to deliver your ads. If you have a high ad relevance score, your cost will be low and Facebook will more likely prioritise your ad delivery.
  3.  Estimated action rates.
    • If Facebook’s algorithm predicts that your ad will incur more action taken, then your ad will be more likely to win the bidding war.

Here’s what is important, you do not have to have the highest bidding amount to win the bid war. A high-quality ad better than your competitors is your chance in winning. After one has won the bidding war, their ads will be charged at the minimum bidding amount required to win the auction.

What other factors that will affect your costs?

4.  Your target audience

Who you target and how big the number of your target audience is a factor because the more marketers or competitors target the same or similar target audience, your ad costs will be more expensive.

You can try experimenting with different target audiences to find one that works best for you.

5.  Time of the year

Logically if more marketers and advertisers are advertising on a platform, it will become more expensive.

Look out for festive season periods such as:

  • Thanksgiving Day
  • Black Friday
  • Cyber Monday
  • Christmas
  • Post-Holiday Sales
  • New Year’s Eve
  • New Year’s Day

If you really are planning to advertise on Facebook during these periods, be prepared for the cost hikes.

On the other hand, if your business tends to get sales during these periods, then it is wise to spend and advertise Facebook ads.

6.  Where your ads appear

Facebook ads allow you to choose where you would want your ads to be shown:

  • Facebook’s desktop News Feed
  • Facebook’s desktop right column
  • Facebook’s mobile News Feed
  • Instagram’s mobile News Feed
  • Audience Network
  • Messenger

Facebook also recommends that advertisers allow their ads to be shown on Instagram and Audience Network so that your average cost will be lower.

However, you also have to take into account if your target audience is aligned for Instagram.

7. Optimization for Ad delivery

While creating your ad, under “Budget & Schedule”, and if you click on “Show Advanced Options”, you will find an option called “Optimization for Ad Delivery”. Basically, you’re telling Facebook’s algorithms what your anticipated results are and who should see your ads.

For example, if your ad objective is Conversions, Facebook will deliver your ads to people who are most likely to convert.

There are a few types of Facebook ads delivery optimization based on the different ad’s objective you choose.

For the complete explanation, go here.

Overall, you should always optimize your Facebook ad delivery to your final goal of an ad. For example, if you would want people to install your app, choose the App Install objective, and so on.

The bottom line, you should keep trying out different ad methods and continuously improve on them to find the one that works. You can also calculate the efficiency of your ads based on ROI. Most of the time, it is not getting the lowest Facebook CPC, but getting leads that spends the most in your business.

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