Targeted Facebook ads can be an effective way for your business to gain exposure and increase sales, but it can be difficult to determine a Facebook advertising budget. The cost of targeted ads can vary based on a number of factors. Cost per click for Facebook ads can range between $.05 and $5.00. The more targeted an advertisement is, the more expensive it will be. If you were to create a hypothetical Facebook ad that was meant to reach Facebook’s entire user base, that ad would cost mere pennies. As you add in your targeting preferences, like gender, location and age, the cost gradually increases.
The cost per click is also determined by the advertisers themselves; with Facebook advertising, a bidding system is used to determine placement of ads. If there are many advertisers competing for the same demographic as your company, costs will naturally go up. Advertisers willing to pay more will win more bids, and will get more clicks as a result.
Engagement is another factor that affects the price of targeted Facebook ads. An eye-catching and relevant ad with a high click-through rate will get shown by Facebook more often than competing ads with lower click-through rates. Let’s take a look at the three most common types of targeted Facebook ads, and see how costs can fluctuate for each one.
Sidebar ads are probably the most common type of targeted Facebook ad. These are, as the name implies, the ads you see on the side of your Facebook page. They include a headline, image and body copy. Clicking on these can lead users to a Facebook page or app, or they can lead to third-party websites. Some critics disparage the effectiveness of sidebar ads, but a well-targeted sidebar placement can be a valuable part of your Facebook ad strategy. The cost for these can vary greatly, but $1 to $5 is a typical price range depending on the level of targeting.
Sponsored stories revolve around user activity. With this technique, advertisers showcase an action that a user has already taken on Facebook. That action is then displayed to all of the user’s friends, either in their News Feed or in the sidebar. Advertisers can sponsors stories such as page likes, claimed offers, check-ins and votes. These ads typically cost somewhere around $.50 per click, but offer a relatively high level of engagement.
If your company has a Facebook fan page, you probably realize that it’s hard to get your posts to reach your fans. Promoted posts offer businesses the opportunity to pay to get their posts to show up in their fans’ News Feeds. The pricing structure for these ads is a bit different than the usual pay-per-click or pay-per-impression model: Page owners pay a flat rate to have their post reach a certain number of users. Costs can vary based on a number of factors, but a typical price would be about $5 to reach an audience of 1,000 users.
Controlling Your Costs
When you develop your Facebook advertising strategy, it’s critical to determine how much you’re willing to pay for each click on your ads. After you create an ad, you’ll receive an automatically generated “max bid” from Facebook. Facebook arrives at this estimated max bid by considering the target demographics you have chosen and what competing advertisers are willing to pay to have their ads served to that same demographic. One way to get your advertising costs under control is to manually set your own max bid. You should set this max bid at close intervals, with the goal being to preserve a high click-through rate at the lowest possible cost.
In order to figure out what that max bid should be, you might want to work against your typical cost-per-click. If your cost-per-click is quite different from your max bid, it might be wise to lower your max bid closer to the cost-per-click level. Now, this doesn’t guarantee that your Facebook ad campaign will still be successful; it only ensures that you’ll be paying less for the same amount of clicks. To judge the effectiveness of the campaign, you’ll have to determine whether these less-costly clicks are still generating sales. If so, you’ve effectively lowered your advertising costs for the same results.
A Sample Strategy
Most companies will want to use a combination of the three major advertising techniques in their Facebook strategy. This technique gives your company the broadest exposure for your money. Let’s say a company has $1000 to spend on a mix of sidebar ads, sponsored stories and promoted posts. They could do the following with this budget:
- Sidebar Ads: 600 clicks to their site, at $1 per click = $600
- Sponsored Stories: 600 clicks to Facebook page, at $0.50 per click = $300
- Promoted Posts: 20,000 views, at $5 per 1,000 views = $100
As you can see, it requires quite a bit of effort to maintain effective targeted Facebook ads.Running the same ads for too long can cause them to become a bit stale, and their click-through rate will suffer. A lower click-through rate means that your cost-per-click will go up, since Facebook will have to serve more impressions in order to get the same amount of clicks. Sales often lag as a consequence, as well. Therefore, advertisers need to constantly change their ads to keep them fresh and maintain a healthy click-through rate. However, the increase in sales from a well-executed advertising campaign can make the effort more than worthwhile.
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