Advertising on facebook has become one of the most trusted strategies for businesses all around the globe. In the 3rd quarter of 2019, Facebook announced that there are more than 7 million active advertisers on Facebook (source: Facebook data – www.facebook.com/insights-to-go
So how much does Facebook advertising cost in 2020?
If you’re considering promoting your business, product or service on this platform, here are some handy insights on how to calculate a spending budget to advertise on Facebook.
Firstly, you can run a facebook ad on any budget, but these knowing how a few variables work, help to maximize your campaign’s ROI.
For a facebook ad, there are two bidding models that you could choose from to run your advertising campaign. The cost-per-click (CPC) and the cost-per-1000-impressions (CPM). The CPC is basically the cost of one user clicking on your facebook advertisement while CPM is the cost that facebook will charge you for 1000 eyeballs to view your advertisement on it’s platform.
Now the ROI varies off course, depending on your spend and at the actual bidding auction , but knowing this data as a point of reference helps to construct your budget.
So let’s get to the numbers.
CPC or Cost Per linkClick.
This is a metric used in the online industry to indicate your ad efficiency and performance. Facebook calculates with this metric as the total amount spent divided by link clicks.
| TOTAL AMOUNT SPENT ON AD divided by LINK CLICK |
The average CPC on Facebook is US$0.73, that means it will cost you US$0.73 for one user to click on your ad on Facebook.
So that means if you want 5 users to click on your facebook ad, you will on average have to spend US$3.65
Take note, that this is the average and so should not be used as a given for your advertising budget campaigns but as a point of reference for cost estimates.
The metric counts link clicks on any area of the ad that link to destinations or experiences for the ad. For example a link click would be counted if someone clicked on an ad’s image or if they clicked the call-to-action button on the same ad. (source: Facebook for Business – www.facebook.com/business)
CPM (Cost Per 1000-Impressions)
So what is CPM and how is it calculated? As mentioned earlier, the CPM is a model in advertising known as the COST-PER-1000- IMPRESSIONS. That is; how much it will cost you for 1000 eyes to view your ad.
Example: If an ad is on screen and someone scrolls down, and then scrolls back up to the same ad, that counts as 1 impression. If an ad is on screen for someone 2 different times in a day, that counts as two impressions.
How a single CPM is calculated for your ad?
CPM measures the total amount spent on an ad campaign, divided by impressions, multiplied by 1,000. (Example: If you spent $50 and got 10,000 impressions, your CPM was $5.) (Source- www.facebook.com/business )
AdEspresso analyzed over US$600 million of real ad spend gathering data from advertisers worldwide that use facebook for ads, estimating the average amount for CPM on Facebook to be US$7.19 (Source – www.AdEspresso.com )
Taking these two accounts in to consideration, we can say that the first tells us how to calculate CPM on Facebook whilst the latter tells us on average how much to expect to spend using the CPM model on a Facebook ad.
So therefore, using the latter, if we wanted 5000 views on our Facebook ad, we would on average calculate our spending to be
TV divided by GV Multiplied by Av. CPM
TV being “how many views we would like on our ad”
GV being “the given number of views for CPM” = 1000 impressions
Av. CPM being “the average CPM” (in this case – US$7.19
Example calculation:
5000
1000 X US$7.19 = US$35.95
What if we wanted 5000 views on our ad daily for a week, using the given, it would be
(5000/1000) X US$7.19 X 7 Days = US$251.65
Now, be sure to take note that these are average benchmarkers used for CPM to give you a point of reference and that these figures vary depending on the industry, target audience and other factors that Facebook integrates.
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