Facebook advertising costs a fortune!
That’s the common refrain. They say the same about Google Adwords and other Pay Per Click services, too.
But there are several things wrong with this view:
- It’s an incomplete picture. It’s not just about the cost per click.
- It implies a “fire and forget” strategy. The success of any advertising comes from relentless testing and measuring. With vanishingly rare exception, your first cut doesn’t bring home too much bacon.
- It demonstrates lack of understanding. Without appearing to be too rude, if you think Facebook advertising costs too much, then you really don’t understand advertising and marketing and it’s probably best you stop doing it.
Let’s look at these in a bit more detail.
Facebook Advertising Costs - Why Cost Per Click Is Less Important Than You Think
Facebook advertising costs are meaningless unless you consider them in the context of the Return On Investment (ROI).
In other words, the cost per click doesn’t matter if each click on average brings you more in revenue than it cost.
Fig 1 below shows a screenshot from one of my ads, and the results over the span of a few days:
Fig 1: Facebook advertising costs over time (CTR increases by 238%, CPC decreases by 14.1%)
What it’s telling us is my Facebook advertising costs have fallen dramatically over a few days simply because I was testing and measuring the responses I was getting.
I began with two ads which were more or less arbitrary.
Arbitrary?
Yes, because I know whatever I do I can improve on, so rather than waste time and energy worrying about whether my ad is going to “work” or not, I just took a guess and put it up there.
And then I watched to see what happened.
When it was fairly obvious one of them was doing better than the other, I stopped the worst-performing one and created another to test alongside the winner from the previous round.
And then I did it all over again, testing the winner against a fourth ad, which you can see at the bottom of the image.
All told, my Click Through Rate increased by 238%, and my Cost Per Click decreased by 14.1%, meaning I was getting more clicks and paying less per click for them. My Facebook advertising costs were falling because I was testing and measuring. I wasn’t just putting an ad up there and hoping for the best.
Seems like a good deal to me.
But…
Facebook Advertising Costs Are Only Half of the Story
Because what I’ve done is spent €236.48 to get 336 clicks. That’s an average of 70.38¢ per click.
Is that good or is that bad?
Well, it depends. For me it’s good; for you, it might not be.
Here’s why: these 336 clicks represent 39 new people added to my list from the landing page they go to once they click on the ad — you can see it yourself, here — and that represents a conversion rate of 11.6%. That’s pretty low, actually, and that’s the next thing for me to work on.
But the point is, it’s still good in the sense I know from experience the average value of a new subscriber to me is around €28.
And doing the maths with these clicks tells me it’s “costing” me €6.06 per subscriber — meaning, on average, I’m in profit by €21.94 every time I get one.
That’s the whole crux of any kind of advertising — not how much you pay for the ad, but how much you make once the dust has settled.
Trouble is, most business owners don’t understand this point; and even if they do, even fewer of them will take the time and trouble to go out there and do it. Which is all the more reason YOU should.
Obviously, if I can drop my cost per subscriber I will do, because it means I increase my profits. And your numbers will likely be different from mine anyway — they may be lower, but they may well be higher, too.
But the point is, by and large… Facebook advertising costs are irrelevant, and now you can see why I say that.
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{ 6 comments… read them below or add one }
Thinking about trying facebook to advertise my scottish dance band ,instead of google. All advice is welcome. Cheers
The first thing to do is just TEST something — almost anything. The reason I say this is you can’t know what’s going to work and what isn’t.
hi Jon,
I’ve heard that if you direct your ad traffic to your facebook Page instead of an outside site, this can significantly reduce your costs. Do you have any experience of this and if so, what would be your reasons for recommending it (or not)?
Thanks in advance,
Mandy
Of course, the best place to ask this is in the Inner Circle you just joined
But since we’re here…
I can’t say categorically this is the case, because I haven’t done a proper analysis with enough data, but that’s certainly the impression I got when I tested the same ads sending traffic to on- and off-FB destinations.
The problem is, though, no one makes money ON FB. To do that you’ve got to get them off FB and onto your own site. So while you might save on the upfront cost of a click, you can then lose that saving because of the additional time, effort and attrition you’ll get when you try to send them to your own page.
All that said, you CAN set up a squeeze page within your FB welcome page now, so you perhaps get the best of both worlds. It’s something you’d just need to test.
Remember: it’s all about ROI, not the cost of the ad.
Whats in it for you? Why are you giving free advise?
Good question Anthony.
It’s simple: if people like my free advice enough, they are more likely to become paying customers and clients further down the road.
I can sit here and just tell you how good I am at marketing, or I can prove it and let you decide for yourself.
Jon