Digital Advertising Costs: How much does it cost to advertise on Facebook and Google?

September 24, 2021

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As a marketing agency, we’re a go-to source for digital advertising information for our clients. One of the most common questions we get from clients that are ready to invest in their online marketing is “how much does it cost to advertise on Facebook or Google?”. The answer, like the answer to so many digital marketing questions, is that it depends. A number of factors affect how much you’ll pay for a digital ad. However, with the right frame of reference, you can decide on an appropriate online marketing budget and know what return on investment to expect from your ad spend.

To get the best results on your digital ad campaign, you’ll need to take time to develop a strategy, plan your campaign, and then implement it accordingly. You’ll also need to monitor your ads and act on suggested changes or feedback while your campaign is running.

In this article, we’ll guide you through the most frequently asked questions about digital advertising to help you get started!

How do digital ads work?
What is the average cost of digital ads?
How much should I invest in digital ads?
What influences the quality and final cost of a digital ad?

 

How do digital ads work?

Digital ads work as auctions

Each time someone scrolls through social media, goes into a website, or searches the internet for a keyword, it creates a space that is available to display an ad. Many ads that you see across the web are from Google – including those sponsored links at the top of your web search, ads you see before a YouTube video, and even graphic display ads across the web. When it comes to social media, Facebook dominates the scene with digital advertising across their network of products – Facebook, Instagram, and WhatsApp.

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These advertising giants have millions of companies using their services to advertise. So how do they choose which ad to show you?

Both Google and Facebook use an automated, real-time bidding system to select the ads you see. This is a complex process that happens lightning fast, sifting through all the ads available and selecting the perfect fit for that viewer.

The process for choosing the right ad to display takes these factors into account:

  • Your budget: How much you’re willing to spend
  • Your competitor’s budget: Your budget will be weighed against the budgets of other businesses that are trying to reach the same audience.
  • The quality of the linked website: Your website speed, mobile-friendliness, and website design all factor into how often Google or Facebook will display your ad. Google and Facebook prefer not to serve ads that take their audience to low-quality websites.
  • The relevance of the website: Your ad needs to accurately reflect what will happen when someone clicks on it. Make sure your ads are relevant to your website or the link you’re promoting.
  • The quality of your ad: Google and Facebook will keep track of whether people are clicking or skipping your ad. When you have good graphic design and interesting content, your ad is more likely to be displayed.

Skip to the end to learn more aboutmore factors that influence your ad campaign.

 

What is the average cost of digital ads?

The price of digital ads is based on your end goals for the campaign. Because ads can be used for many different objectives, from brand awareness to specific user actions, the cost of an ad is measured by how much you have to spend for each view, click, or conversion. Some goals have a clear return on investment (ROI), like when you’re measuring sales coming from a Facebook ad. Other objectives, such as awareness, are harder to track because they don’t trigger a measurable action.

Here are the most common results used to measure the effectiveness and cost of your digital advertising:

  • Clicks: how many times someone clicked on your ads
  • Impressions: how many times your ad was shown
  • Reach: how many users saw your ads
  • Conversions: how many intended results you got from your ad. This can include sales, contact forms, phone calls, newsletter subscribers, etc.

 

Average cost per click (CPC)

One of the most common metrics used to measure a digital ad campaign is cost per click (or CPC). This takes your ad spend and divides it by the number of times your ad was clicked to determine the cost of your ad. Your cost per click is how much you spent to get one person to visit your website one time.

There’s no fixed cost per click for digital ads. You can run the same campaign with the same budget and end up with a different CPC. Factors like your target audience, competitors, the time your ad appears, and more can influence your cost per click. Because you need to set your budget at the start of the campaign and you have no way to know how many people will click your ad, you won’t know your final cost per click until your ad campaign is running.

Based on past data, we have a general idea of how much digital advertising can cost. From our experience with digital advertising for our clients and reputable online sources, here’s an idea of what you can expect when running digital campaigns:

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Digital advertising costs change

Your campaign’s CPC will vary monthly, weekly, or even daily based on a number of factors. Because the cost is based on how many clicks you get, even 1 click changes your CPC. Since users decide whether to click on your ad or not, there’s no way to guarantee your CPC. When running a digital advertising campaign, you should monitor your cost per click and make changes accordingly. It’s best practice to tweak your ad at least monthly and compare results to find the winning combination of design and copy.

 

How much should I invest in digital ads?

If you’ve already run digital ads campaigns, you should already know what CPC you can expect from your Google or Facebook ads. If you’re new to digital advertising, use the average cost per click numbers above as a reference for your first campaign.

Knowing the average CPC of digital ads allows agencies and businesses to set realistic budgets for their intended results.

Let’s look at an example. A company is looking to make sales online through its website. After some analysis of their metrics, both online and off, they determine that an average of 1 in 50 product page visits converts to a sale. That sale will then net the business $100 in profit.

So we know that 50 clicks are equal to $100 in profit from 1 sale. We can divide that $100 by 50 to determine that each click can cost $2. If the CPC rises over $2.00, the business is not making a profit off of its digital advertising. In this case, the business needs to monitor their campaign, and their cost per click, to keep that number below $2.00.

If that same business continues running ads and finds that their average CPC is $1.00, they can estimate that investing $500 will net them about 500 clicks. That should lead to about 10 sales for an expected profit of $500.

This example doesn’t take into account the many factors that can affect your digital advertising. But it does demonstrate just how important monitoring your CPC is. To keep your CPC low, you need to create quality advertising aimed at your target audience. Business owners should also evaluate their ads regularly and adapt their future strategies accordingly.

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What influences the quality and final cost of a digital ad?

Not all ads are created equal. Digital advertising platforms like Facebook and Google evaluate the quality of your ads by considering different factors of your campaign. In turn, this can influence how often your ads are shown to viewers online. If your ad is deemed to be high quality, it’ll show more often with the same advertising budget, decreasing your cost per click.

So what makes an ad high quality? Here are some of the factors that come into play:

  • Quality of landing page: Most ads are only as good as the landing page they lead to. Facebook and Google rank landing page quality as one of the biggest factors in determining your ad’s quality score. To be considered high quality, your landing page needs to load quickly, be closely related to the content of your ad, and encourage users to take actions or browse your website.
  • Relevance and ad design: An ad should be both attractive and relevant. Both of these qualities will make it more likely for a user to be interested in, and therefore click, your ad. Communicate your message in an interesting, concise, and well-designed way. This will earn you clicks and let your ad show up more often for users.
  • The right target audience: Online audiences can be targeted using location, sex, age, interests, keywords, search intent, and more. Creating the correct target audience for your ad is key. Finding the right audience means your ad will be more relevant to them and get more clicks.
  • Size of target audience: If your target audience is too big, your ad spend could easily be diluted among too many individuals that aren’t as interested in your business. If your target audience is too small, you risk not reaching enough users and oversaturating the users you do reach. No one wants to see an ad that doesn’t apply to them or see the same ad over and over again.
  • Campaign objectives: Campaigns can have very different objectives: awareness, website traffic, leads, video views, and more. You can tell Facebook or Google what your objective is to have it correctly calculate your cost per intended action. The closer you get to making a profit, the higher your price per objective. In our previous example, the cost per click could go up to $2 while the cost per conversion (in this case, a sale) could be as high as $100.
  • The right keywords: Google ads rely heavily on keywords that users search for. Doing keyword research and evaluating your keyword performance during your campaign is very important. Some keywords are too expensive or too common to create cost-effective advertising. Adding specific keywords or long tail keywords (3 to 5 words together) can improve the effectiveness of your campaign.
  • Direct competitors: You’ll be competing with similar businesses for the same target audience or keywords. Finding out about their ad campaigns and understanding their strategy can help you understand how to stand out.
  • Indirect competitors: Your competitors aren’t the only ones trying to reach the same target audience. You also compete with different companies that don’t offer the same product or service as you, but that target the same target audience.
  • Seasonality: Many businesses have more popularity during a particular season. External seasonal factors have a direct impact on your campaign success as well. For example, November and December are more competitive (and expensive) because of Black Friday and Christmas. Industries like landscaping are more popular during warmer months when homeowners have to spend more time on their lawn. You’ll see keyword usage, and therefore how much you need to bid, change seasonally. Other issues – national news, global events, or even local trends – can affect keyword popularity and cost.
  • Not enough ad spend: Ads should generate enough results for Facebook and Google to intelligently understand your audience. As with a scientific study, you need a certain sample size to have accurate results. With too small of an ad spend and audience, these platforms can’t get a good read on what works or who they should be showing your ad to.
  • Too much ad spend: On the other hand, there is such a thing as too much ad spend. Especially if your target audience is smaller or very specific. If you have a large advertising budget, you should diversify by launching campaigns on different platforms and using different messaging to see what’s most effective. This way, you can spend your budget and know that your audience will see a few different ads for your business in a few different places, instead of uninterested viewers having you pop up on Google for keywords that are barely related.
  • Restricted categories: Most ad platforms have prohibited or restricted content. You have to be pretty careful when making ads related to categories like healthcare, political advertising, sexual content, alcohol, and gambling. Some categories, like housing, credit, and employment opportunities, are restricted to promote equal opportunity and avoid discrimination. For restricted categories, you can’t narrow your target audience based on age, sex, interests, or specific locations.
  • Expense of industry: Some business services are more expensive than others, which means most viewers will have to consider their purchase longer. Finances and insurance tend to have the highest CPC, while apparel and retail have the lowest. You can expect a lower cost per click if your industry doesn’t require a high level of trust, sells physical products, and has an affordable price per item. Meanwhile, keywords related to insurance (such as “auto insurance price quotes”) averaged a CPC of $54.91 CPC, and keywords related to loans (such as “consolidate graduate student loans”) averaged a CPC of $44.28 in 2020. These ads have to do a lot more work to get users to click – establishing their experience and trustworthiness while selling a specific service.
  • Type of industry: Some industries are just more interesting to consumers, giving them an advantage when it comes to getting engagement and clicks. Fashion and clothing ads are very likely to get more engagement than an industrial service.

 

Ready to jump into the world of digital advertising?

There is no simple answer when it comes to the cost of Google and Facebook ads. In fact, your cost per click is likely to change every day that your ad is running. As we’ve seen, getting the most profit from your digital ad campaign is determined by your cost per click, conversion, view, etc. To keep that cost down, ad quality and strategy can’t be beat.

That’s where we come into play. Liquid Creative is a full-service marketing agency experienced in launching digital advertising campaigns for businesses. Our team can create a digital campaign for your business based on our existing knowledge of what works. As your campaign runs, we’ll continue optimizing it for the best results and the most profit.

Contact us today to start your strategy-driven digital ad campaign on Facebook, Google, or anywhere else you’d like to be heard online!

Sources
https://www.wordstream.com/articles/most-expensive-keywords
https://www.webfx.com/social-media/how-much-does-it-cost-to-advertise-on-instagram.html
https://www.wordstream.com/blog/ws/2015/05/21/how-much-does-adwords-cost
https://www.oberlo.com/blog/facebook-advertising-cost
https://www.wordstream.com/blog/ws/2016/02/29/google-adwords-industry-benchmarks
https://revealbot.com/facebook-advertising-costs/cpc-cost-per-click

Results from Liquid’s clients ads