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Although this is among one of the most frequently searched questions on the web, many new business owners and marketers are interested in learning how Facebook Advertising works and how much budget they should put towards ad spend on Facebook. So, let’s dig in.

Setting a Budget

To start, your mind should not be focusing on how much money should be put towards your Facebook ad spend. Results vary and one size does not fit all. Instead, you should focus on asking yourself what it is you want to achieve. Do you want to grow your community, increase website traffic, or increase sales/leads? Determine what it is you want to go after before calculating the cost.

How Facebook Ads Work

Facebook Ads are often compared to Google AdWords in the sense that once you have created an ad it is auctioned off for ads competing within the same audience and space. This way Facebook is making sure your ads are fairly being delivered to Facebook users relevant to your ad. Facebook ads in comparison to Google AdWords cost much less making this platform good for small or new businesses to learn how to get the best bang for your buck.

How to Pay for Facebook Ads

There are multiple ways you can pay when users click or show interest in your ad. There is no right or wrong way to pay for users’ actions, remember it is all about what you value.

Cost Per Click (CPC)

 When a user clicks on your ad you pay. It is that simple. They do not have to convert or purchase anything. You are merely paying for what Facebook considers a “lead”.

Cost Per Impression (CPM)

You will be charged based on every 1,000 views on your ad. This is for people that value getting their name out there in front of people as much as possible for brand awareness.

Ad Placements

Facebooks business manager platform not only allows you to specifically target your audience based off age, gender, location, and demographics, but it also allows you to place your ad where you want it. Facebook encourages you to promote your ad across platforms to such as Instagram, and Audience Network to expand your reach and advertising dollars. These placements include:

                -Facebook Newsfeed (Web and Mobile)

                -Right Column (Facebook Web)

                -Instagram Newsfeed

                -Audience Network

                -Messenger

What Influences Facebook Advertising Costs

There are many factors Facebook analyzes when determining the cost for your ads including seasonality, placement, location, or target audience. The best way to stay on top of your advertising spend and make sure you are doing everything possible to effectively market to your target audience is to keep an eye on your ads manager and study trends. If your audience is not responding to the same ad after a while try switching it up, tweak your audience, location, or create a fresh new one with new copy and a new image. There are 3 factors to keep in mind that Facebook use to determine cost:

1. Audience
2. Relevance
3. Estimation Action Rate

Based on how specific you set your audience you will be given a relevancy score. The relevancy score tells you who how much your audience reacts to your ads and how likely they are to continue reacting.

This lowers costs and increases your ROI.

Now that you have an idea of how Facebook Advertising works, it may be helpful to work with an Inbound Marketing Specialist who has experience with the platform. They can teach you what to look for, how to avoid errors, and how to tap into your target audience and deliver results! Keep in mind that putting Facebook dollars behind your social media marketing efforts is highly encouraged as you will be able to reach a much larger audience tailored to their needs helping drive those sales much more than traditional marketing efforts will.