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Determine Cost Of Facebook Ads For Businesses

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Importance of Facebook Ads

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Before the Internet, it was unlikely that the average person would advertise. Many businesses used the Yellow Pages or radio, but not all. Even in the first decade of the 21st century, only a percentage of companies used search advertising. Many found that pay-per-click was too expensive or too complicated for them. With approximately 1.28 billion monthly active users, Facebook is the 2nd-most visited website on the Internet (behind Google). All those eyeballs mean plenty of exposure for your ads. However, it is not only the big brands that make the full use of Facebook’s social media power. Even small businesses can benefit greatly if they make optimal use of the various features that Facebook has to offer.

Every time a prospect customer or client goes to Facebook, he or she will see your ad but it’s not just shares or leads that you are targeting here, brand recognition is also targeted. With so many companies now advertising products and services, people rely on brands that they trust. Basically, visibility on Facebook will help promote your brand. Facebook ads target custom audiences. Recently liked posts, and internet searches determine what advertisements show up on users’ pages. In other words, ads are placed on users’ pages that have already expressed interest in. The average desktop computer user spends 6.35 hours a month on Facebook, which is significantly higher than any other site, with Google coming in second at 3.2 hours a month. That means that advertisements on Facebook are the most-seen advertisements on the web.

Facebook Ads Cost Models

When advertising on Facebook you can choose between four cost models:

1) CPC : Cost per Click – You only pay when someone clicks on your Facebook Ad.

2) CPM: Cost per thousand impressions – With cost-per-impression you pay when Facebook shows your ad 1000 times.

3) CPL : Cost per Like – This allows you to track and optimize how much you spend to get someone to “Like” your Facebook Page after clicking your ad.

4) CPA : Cost per Action –  This allows you to track and optimize how much you spend to get someone to take an action (or convert) on your website after clicking your ad.

Cost and Convenience of Facebook Ads

When you start advertising, you’ll have the option to choose either a daily or a lifetime budget, along with the total amount you want to spend. Currently, the minimum amount you can spend per day is $1. The minimum cost per click is 1 cent, however, you are unlikely to see any clicks if you bid that low. Your budget, the  type of bidding you choose (Cost Per Click or Cost Per Impression), the audiences you target (a broad audience vs. an audience with very specific interests, behaviors and demographics) and many other factors will determine how many people see or click on your ad within your budget.

One very important factor which determines cost of business is the Type of Business. Retail stores (like Target) typically have to pay a very high CPM or CPC compared to the average food and beverage company . The average CPC cost was $0.31 cents and the CPM was $1.39 for retail stores.  On the other, Food & Beverage companies (like Coca-Cola) paid an average CPC of $0.21 and CPM of $0.65. Cost for Local Businesses to advertise via Facebook might cost them in the range of $2.00 CPM. This is because of the high amount of bidding which might have taken place in the same geographical region.

 ‘US advertisers on average will have to pay $24.00 to get 100 people to click on their advertisement or will have to pay $24.00 to get their ad shown 36,364 times.’

–  Data From Facebook Ads Benchmark Report From Salesforce Marketing Cloud

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Opportunity Cost of Facebook Ads

If you just spend $1 per day on Facebook ads, you will get in front of 4,000 people that wouldn’t have seen you otherwise. They are the lowest cost per 1,000 impressions ad in history. They average around $0.25 per 1,000, which is only 1% of the cost of TV. And with the minimum spend of just $1 per day , the Return on Investment (ROI) via Facebook Ads can be unprecedented if it is utilized to its full extent. Pages with millions of fans find themselves only reaching 10s of thousands with their posts. Adding advertising to promote your posts ensures you get 10-100x the exposure of page posting alone.

Success Stories:

What makes a social media campaign successful in 2015? It’s often about seizing the moment on Facebook. There are plenty of success stories out there which can be models for strategic development for Small , Large Businesses  and Corporate Houses.

1) Air China used Facebook’s Custom Audiences targeting tool to attract overseas customers to fly to China with the airline, resulting in a 109X return on its ad investment.

2) Nike.com Sales : The sports brand achieved an 8.6X return on ad spend using Facebook’s remarketing solution.

3) Coca Cola India : Coca-Cola India reached the right audience and drove consumption in key tier 2 and 3 markets during the summer months by targeting feature phone users on Facebook.

4) Smirnoff : Smirnoff focused on Facebook to launch Smirnoff Double Black in Australia. In just 4 weeks, it reached over one million 18–24 year olds and was 7X more cost-efficient at driving trial intent than any other online channel. Focussing on Facebook to launch Smirnoff Double Black in Australia. In just 4 weeks, it reached over one million 18–24 year olds and was 7X more cost-efficient at driving trial intent than any other online channel.

5) Pigtails & Ponies : The Indian hair accessories start-up used Facebook Ads to grow what was once just a flea market booth into a thriving business, with 70% of its customer base acquired on the platform.

Image Credits: Google Images , Moz Images

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