How to Lower Your Facebook Ads Costs and Improve ROI

If used effectively, Facebook ads are very efficient in growing
traffic, generating leads, increasing engagement, and driving sales
to a business. The problem is that if not properly managed, the
costs of running Facebook ads can become very high.

In this article, you will learn important tips that will help
you lower your Facebook ads cost and improve ROI.

Editor’s note

How much does advertising on Facebook cost?

When starting out with Facebook ads, the first question on your
mind is – “how much does it cost?”

When calculating the cost of Facebook ads, there are several
cost structures that must be taken into consideration:
cost-per-click (CPC), cost-per-thousand-views or cost-per-miles
(CPM), cost-per-view (CPV), cost-per-action (CPA), cost-per-like
(CPL). Out of all these cost structures, the one that is most used
by advertisers is cost-per-click (CPC).

Along with these cost structures, the price of your ads may also
vary depending on the industry that you are in. Certain industries
have a higher Facebook ad cost than others. Below, you’ll see an
overview of the different cost structures and how they affect
Facebook pricing.

PS: Sources of the Facebook cost averages and
values mentioned below are from research done here and

here
.

Before we dive in, the average CPC for Facebook ads is $1.72 and
the average CPA is $18.68. Even though this is the average across
all industries, the average is subject to change. Industries that
are very competitive have a higher CPC value than others.

For example, a company that sells dog food and advertises on the
platform could have a CPC of 50 cents and a company that offers
loans or health insurance would have an average CPC of $2.77. This
huge difference in costs is because of the difference in
competition in both industries and the user intent. Users searching
for insurance are more likely to spend more.

Further in this article, you’ll see the factors that affect the
costs of your Facebook ads. For now, let’s look at the different
cost structures.

Cost-Per-Click (CPC)

For this Facebook ad model, advertisers are charged for every
click their ad sees. This type of ad is perfect for businesses that
are trying to send users to a particular landing page or website.
It’s great for generating traffic or building awareness for a
particular post.

CTAs are very important for this kind of ads. They drive the
user to take a particular action. The CTA can feature words like
“learn more”, ” sign up” or “shop here”. The average CPC across
industries is $1.72 with a difference in prices depending on your
industry.

Cost-Per-Miles (CPM)

For this model, advertisers are charged whenever an ad gets a
thousand impressions. This type of ad is significantly cheaper than
the CPC models. The number of impressions doesn’t mean that users
are interacting with the ads. This model is best if you are just
trying to build awareness for your brand.

Depending on your industry and the level of competition, it
would cost an average of $11.20. If you’re targeting an audience
where there is low competition, your CPM can be very low. The more
competition your industry has, the higher the price.

Cost-Per-View (CPV)

This ad model is video-based. Advertisers are charged for every
view their video ads receive. Something to note when doing video
ads is how Facebook counts these views.

When your video ad is viewed for up 3 seconds, it’s counted as a
view. So as to avoid wasting money, make sure you capture the
attention of the audience in the first 3 seconds. The first 3 – 6
seconds of your video ad are the most crucial.

Depending on your industry, the average CPV would range between
1 and 15 cents.

Cost-Per-Action (CPA)

For this ad model, advertisers are charged when users take a
particular action like installing an app. Unlike CPC, where you are
charged when users click the ad, you’re charged when users have
taken a specific action that you have set as your ad objective.

Facebook uses Pixel to track the ads to know when a specific
action has been taken. Out of all the models, it’s the most
expensive. The average cost across industries is $18.68 and can go
as high as $45 depending on the industry and the level of
competition.

Cost-Per-Like (CPL)

This ad model is similar to CPC, but instead of using a CTA like
“learn more”, the CTA directs the user to like your business
page. 

Sending likes to an inactive Facebook page would be a waste of
effort. To receive maximum engagement, make sure that you are
directing users to an active page. The average price of CPL is
between 12 and 16 cents.

Factors that affect the costs of your Facebook ads

There are several factors that determine when, where, and how
your ads will show up on Facebook along with how much it will cost.
These factors are what determines how the Facebook algorithm
interacts with your ads.

Industry

The industry or niche that you’re targeting determines the cost
of your ads. Industries with less competition see a lower cost in
the prices of ads when compared with an industry that has high
competition. 

An advertiser that is targeting apparel makers will have lower
advertising costs than an advertiser in the financial and insurance
industry. 

facebook advertising benchmarks.

The report from this image shows that the finance and insurance
industry has the highest CPC at $3.77.

The more advertisers are competing for a particular kind of ad,
the more costly it becomes. 

The objective for the ad

The reason for creating the ads determines how much it costs. I
mentioned earlier the different cost structures of Facebook
ads.

creating new campaigns on facebook.

If the goal of your ad is to create brand awareness, you should
go for cost-per-miles (CPM). The cost of this kind of ad is cheaper
than if your objective was to get the user to install an app. For
app installs, you should choose the cost-per-action ad format which
is more expensive. To determine which ad objective is the best for
your brand, identify your target audience.

Editor’s note

In GetResponse, the campaign objective is currently always set
to “traffic”, which means your budget will be allocated in a
way that’ll help you maximize your landing page website
visits.

To make it easy for you, I’ll break down the different
objectives and the cost structure that suits them:

Objective 1: Awareness

This objective is to create brand awareness and increase the
reach of your product or service. The ad is usually targeted
towards new customers and is paid in CPM.

Objective 2: Consideration

This ad is targeted towards an audience that already knows about
your product or service. It is created to drive the user to take a
particular action. The objectives include generating traffic,
increasing
user engagement
, app installs, video views, lead generation,
and messages. The ad is paid using cost-per-action (CPA).

Objective 3: Conversions

The objective of this ad is to increase your conversion rates,
catalog sales, and store visits. This ad is paid using
cost-per-conversion (CPM). 

Reports from
Statista
shows that product catalog sales in the conversions
objective have the highest cost of $4.77 CPM. The lowest is the
brand awareness objective with $0.48 CPM.

Time or season

The time or season that you are displaying your ads also plays a
significant role in how much your ads cost. During the holiday
season or toward the end of the quarter, there is a lot more
competition between brands. As the competition increases, the cost
of Facebook ads also increases.

Bid

Your bid determines how interested you are in showing your ads.
It determines how much people will get to see your ads. But, there
are millions of advertisers on the platform targeting the same
audience as you.

With so many advertisers competing for the same ad space, the
higher your bid, the more people will see your ad. 

bid amount facebook ads.

If you bid too low, the number of people your ad will be exposed
to will be low, and you’ll have a low advertisement cost. Bidding
too low also means that you might not be able to meet your
advertisement goals or objectives.

Ad Placements

Where you place the ads also determine the costs. There are
several ad placements offered by Facebook and they include:

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

In a blog
report
, Facebook advises marketers this – “Allowing us to
show your ad on Instagram and the Audience Network as well as
Facebook gives you more opportunities to reach the people you care
about across devices. It can also reduce your average cost per
result”.

Pro Tip: Before rushing into displaying ads on
Instagram, ensure it aligns with your marketing goals and you have
an
Instagram marketing strategy
in place. 

6 tips to lower your Facebook ads cost

It can be very easy to blow through your advertising budget
without even meeting your objectives. If you do not optimize your
ads properly, it can cost you a lot to run them. Let’s look at tips
on lowering your Facebook ads cost. 

Optimize your relevance score

Facebook always provides a relevance score on any ad that you
run. This relevance score is directly related to the
price-per-click (PPC) of your ads. The score is a measure of how
relevant your ad is to the audience that you are targeting. 

relevance score in facebooks ads.

The higher your relevance score, the lower the cost of your
Facebook ads. Although we do not know the exact metrics that
Facebook uses in calculating your relevance score, we know that
there are certain factors that improve it.

These factors include positive feedback like the number of
clicks, engagement rates, shares, and comments.

A factor that reduces your relevance score is negative feedback
(like hiding your ads or having your ads flagged by Facebook
users.) A
high relevance score
can tremendously reduce the cost of your
ads. 

Improve your Ad CTR

Improving your Click-through-rate is directly related to
improving your relevance score. The more clicks you have, the more
your relevance score increases hence reducing the costs of your
ads.

Wondering how you can increase your ad CTR? Use some of these
tips:

Choice of ad placement: Always use desktop ad
placements. They have a higher CTR than other placement types.

Make use of CTA buttons: Attract the attention
of users and get them to take a specific action by making use of
CTA buttons. Learn to
optimize your CTA
depending on the audience you are targeting.
It’s better to use a “Learn More” CTA button for a new audience
that is just learning about your product or service instead of a
“Shop Now” CTA.

Get it right with your copy: Your copy should
have a clear value proposition. It should state clearly what the
user can gain from interacting with your ad. 

Frequency: Ensure that you regulate the amount
of times a user sees a particular ad. If one user sees a single ad
multiple times, your CTR can reduce.

Target the right audience

Defining your target audience will help you create ads that you
know the user will interact with. You’d be able to create offers
that meet the pain point of the users.

creating new audience on facebook.

Another advantage of
understanding your target audience
is that you reduce the
amount of competition you have for an ad space. Instead of
competing with several brands in targeting a broad category of
people, you will only target an audience you absolutely want to
reach.

detailing targeting on facebook.

There are several targeting options you can use in narrowing
your audience demographic. They include things like gender,
occupation, age, lifestyle, marital status, education, location,
interests, etc.

When you have a good understanding of the people you are
targeting, creating ads that get clicks and interaction gets
easier. The more clicks and positive interactions you get, the
higher your relevance score. As your relevance score increases, the
cost of your Facebook ads lowers.

Use retargeting

Facebook ad retargeting is similar to email marketing, where you
use warm emails to increase your chances of converting a lead. In
this practice, you show your ads to a “warm audience” – a group
of people that are already familiar with your product or
service.

Serving ads to a warm audience increases the interaction it
receives, reducing the costs of your Facebook ads and increasing
CTR.

Performing retargeting on Facebook is very easy. All you need to
do is create a custom audience of people that have interacted with
your product, apps, business page, or site.

creating a custom audience for retargeting.

Schedule when you upload your ads

To reduce the cost of your ads and increase your ROI it is
advisable that you post your ads during times when you receive the
highest number of engagement. Posting your ads at your highest
performing times ensures that you receive the maximum number of
interactions.

To begin, go to your
page insights
and determine the time when your audience is most
active. You can then schedule your ads in the Ads Manager to
determine what time your ads go live.

You have to change your daily budget to lifetime budget in the
schedule section of your ad set before you can use this
feature.

budget & schedule for ads

Use Facebook Pixel for conversion tracking

Accurately setting Facebook conversion tracking can help reduce
the costs of your Facebook ads. Tracking helps you analyze your
return on investment, because you have access to data that helps
you increase the clicks and engagement that your ads receive.

Another advantage of conversion tracking is that you can see
which of your ads are generating the most leads and sales. Having
this data will help you optimize these specific ads even better to
increase your ROI.

Fortunately, Facebook has a handy tool you can use in conversion
tracking. With Facebook
Pixel
, you’re able to track all the data from your ads. All you
need to do is install the pixel into your website and you would be
able to track all the data related to your site. 

Facebook ad policies to note

To ensure that your ads are allowed on the platform, there are
certain advertising policies you need to note. When you place an ad
order, your Facebook ad is received against these policies. If your
ad does not meet these policies or guidelines, it will be
disapproved.

The Ad review process

Before your ad can go live on Facebook, it will first be
reviewed to see if it meets their advertising policies. This
usually takes up to 24 hours before you receive a response.
Sometimes, this can take longer.

These are some of the things that Facebook considers while
reviewing your ad:

  • Images you used in the ad
  • The text used
  • The audience you are targeting
  • Positioning and placement of your ad
  • The content of the landing page you are directing users
    towards. If the landing page does not match the product or service
    that you are advertising your ad will be rejected. 

After your ads have been reviewed and approved, you will receive
a notification and then your ads will go live. You’ll be able to
see the progress of your ads in the Ads Manager.

This is an example of the image you would receive if your ads
get rejected

Common reasons why your ads can be rejected

There are several reasons why your ads can..

Source: Marketing Blogs
How to Lower Your Facebook Ads Costs and Improve ROI