The world of advertising is highly competitive. Knowing how to bring advertising costs down and increase profitability is the key to success. Several important factors influence the cost and increase profitability in Facebook and Google advertising.
A Facebook ad costs anywhere from a few cents to hundreds of dollars. Reach and impressions are the least expensive campaign objectives, whereas targeting purchases are higher. Google is significantly more expensive than Facebook, thanks to more specific targeting.
Understanding what can influence ad cost, which campaign objectives are more profitable, and when to advertise on Facebook versus Google can increase your profitability. Read on to learn more about ad costs in 2021 and get some profitability tips.
What Influences Ad Cost?
Timing, industry, location, and campaign objectives will influence ad costs. In this section, I’ll break down the specific influences, how they work, and how you can maximize your potential.
When You’re Advertising
The timing of your advertising directly influences the cost. During “Quarter Four” (October, November, and December), especially around Black Friday, advertising costs are significantly higher. Prices can go up to 300% higher than other quarters because more people purchase around this time, naturally making advertisers want to get in front of people more. When more people are competing and willing to pay more to reach potential customers, prices rise.
To reduce your advertising costs, think about supply and demand. Competitiveness doesn’t necessarily mean that you should stop running ads during these periods, but it’s not a good time to target new customers. It could, however, be beneficial to target those who already have heard of your brand.
The Industry You’re Advertising In
Specific industries are more expensive than others when it comes to advertising.
Software companies are a prime example. These companies often have a lot of money to spend on advertising. If you’re a startup software company, you’re competing against thousands of other well-established companies that have money to throw around.
Beauty and health services are other examples of a costly industry. This industry is trendy right now, so hundreds of thousands of highly competitive companies are fighting to get in front of people.
Know who you’re competing against and how much they’re comfortable spending.
Targeting a broad audience is less costly than targeting a precise location. For example, the United States as a whole is cheaper to target than just California. Targeting individual cities, like Los Angeles, for example, will drive costs up even higher.
The country that you’re targeting will also impact costs. Targeting the United States is more expensive than Canada, and India and Brazil are less costly than Canada.
The campaign objective that you choose will also impact your cost. Setting up ads on Facebook to reach as many people as possible at the lowest price will not necessarily benefit you if you’re looking for purchases. Reach is great for things like views but not purchases.
Facebook knows the behavior of its users. They know who tends to click on ads, make regular purchases, and make big purchases. Companies will pay more to get in front of the users that are more likely to purchase, and this drives up costs.
Let’s take a look at a few of the objectives:
- Reach/Impressions – This is how many times you get in front of people. If someone sees your ad five times, that’s five impressions. Choosing “Reach” as your campaign objective will put you in front of people, but these people are unlikely to be users that click or buy. It’s less expensive to get in front of these users.
- Link Clicks – If you choose “Traffic” instead of “Reach,” it will target people who click. Clicks are effective in getting people to your website, but they may not make a purchase.
- Purchases/Leads/Conversions – Companies looking for purchases will use this campaign objective. This campaign objective puts their ad in front of people that are most likely to buy. Companies don’t care how much they have to pay to get in front of the people who buy because it makes them profitable.
After running Facebook ads for years, I’ve found the best results for choosing the campaign objective that I want. If I want purchases, I prefer the “Conversions” campaign objective. If I want views on an article, I choose “Traffic.” If I want people to see a video, I’ll select “Reach,” and so on.
Facebook Campaign Objective Costs
Let’s take a look at Facebook Campaign Objective Costs:
In my experience, the lowest that I’ve seen for Reach is $6 for 1,000 impressions. I’ve seen the range go up to $20, depending on the factors mentioned earlier (timing, industry, and location). However, as mentioned earlier, these only show people your ad and don’t necessarily target those who click links or make purchases.
In the United States, I’ve seen Link Clicks cost anywhere from twenty cents to two dollars. The cost to drive link clicks is influenced by how good you are at getting people to click on your ads, copywriting, and ad creation.
I’ve seen the cost for purchases as high as $100 to reach 1,000 people. The plus-side to this is that those people are more likely to buy, making targeting conversions very profitable, especially when compared to Reach and Link Clicks.
The cost depends on the price of your product as well. It’s going to cost more to drive a $300 purchase compared to a $20 purchase. Generally, I recommend being willing to spend at least half of what the customer pays. So, if I’m selling a $60 product, I am comfortable spending $30 to drive that purchase. I have found, however, that it’s challenging to get purchases for less than $20, so I recommend selling products over $20 to remain competitive.
While I do not participate in app-install campaigns, I know many people that do. Generally, they’re seeing prices range from one dollar up to ten dollars to get someone to install an app.
Tips for Increasing Click-Through Rates
Let’s take a look at some tips for increasing click-through rates to make ad costs go down:
- Ask an enticing question. Use a query to convince people to click on your link. Examples include, “What’s your oral hygiene score?” or “How much money could you save on your heating bill?”
- Use a presale article. Presale articles have high click-through rates. Let’s say that you sell an acne treatment. You might have an article titled “5 Strategies to Help With Acne.” People will click the article because of the helpful information, but you’ll benefit because your product is mentioned in the post. This strategy also adds people to retargeting.
- Have a solid call to action. If the ad itself has a lot of information or testimonials, you’ll want the call to action to be enticing. It could be something like “Get this discount for 48 hours only,” or “Learn why this teeth whitening system is ten times more effective.”
Increasing Profitability on Purchases/Leads
It’s important to track leads to make sure they’re following the steps you want them to take, or else you’re essentially throwing money away.
- Offer bundles or other offers. Providing bundles, offers, and other deals during the checkout process or via your follow-up process (such as email) can increase profitability. You have to have a solid follow-up process to increase profits with that customer.
- Optimize your page. Your shopping and checkout pages should be intuitive. Use tools to track consumer behavior on your website. For example, see how far people scroll and what they click on. Use this information to rearrange your website and make adjustments. If your page is long, have the “Add To Cart” button in different places. Make everything easy to see and easy to access.
How Does FB Advertising Compare to Google Ads?
Google Ads Pros and Cons
Google ads are significantly more expensive than Facebook ads, but they’re also more targeted. People on Google are more likely to buy than someone scrolling through Facebook. Google is the better option for urgent advertising or for reaching a specific target audience.
Facebook Ads Pros and Cons
Facebook ads are better for reaching more people with less money. It’s not uncommon to get impressions on Facebook for as little as one cent. Facebook is also better for advertising a product that appeals to a broad range of people.
Many different factors influence Facebook ad costs. Knowing when to advertise, who to advertise to, and which campaign objective to choose is beneficial for maximizing profitability.
Want to learn more about how to bring Facebook advertising costs down? Check out this video discussing eight key factors that strongly influence your profitability.
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