Facebook Ad Cost Calculator｜ How to Reduce Facebook Ads Cost
Nowadays, the importance of advertising promotion in the era of new media is becoming more and more obvious. A product that stands out in a huge market is mostly the result of advertising. For advertisers, choosing the right delivery channel can maximize their advertising exposure. At present, the most mainstream advertising channels are undoubtedly Facebook and Google.
Why Advertise on Facebook?
There are many users on Facebook, and billions of users receive ad exposure every month. On average, each user spends at least one hour per day browsing on Facebook. The accumulated amount of data and customer data are also of extremely high commercial value. Its highlight is that each of its users is authenticated by real-name systems. Therefore, the user's basic information and preferences, purchase path, etc. are all included in its database. This is the most important thing for advertising, so advertising on Facebook is the most effective and accurate way.
In summary, advertising on Facebook is a wise choice.
Indicators of Facebook Advertising Cost
The birth of an advertisement involves a process of budget evaluation, content production, fixed-point delivery, and user clicks. During this period, we will undoubtedly need to pay a lot of financial support, so we must plan carefully and spend the funds in the most critical places.
So, how much does Facebook's advertising cost? My answer is that you will never exceed your budget. If you have a budget of $100 per day, Facebook Ads will never charge you more than $100 per day.
The following are two important indicators of Facebook advertising costs.
1. Cost-per-thousand impressions (CPM)
Cost per thousand impressions = advertising spend x 1000 ÷ total impressions
The number of impressions is when a user has clicked to view your ad. For every 1,000 impressions, there is a cost associated with it.
Your CPM will indicate whether your Facebook advertising campaign is cost-effective.
2. Cost-per-click (CPC)
Cost per click = advertising spend ÷ outbound link clicks
Cost-per-click refers to the cost of each ad click on your website.
When your click-through rate and cost-per-click are both high, you can tell when your website has not converted. If this happens, you need to start optimizing.
According to the above logic, it seems that an advertisement that is prone to clicks should use CPM, or when you have no idea about the click-through rate that online advertisements may achieve, CPC may be a better choice.
Facebook Ad Cost Calculator
How to Use The Facebook Ad Cost Calculator
Regarding the calculation of the above indicators, a Facebook Ad Cost Calculator can help you. First we need to know the algorithm of each indicator：
how to calculate CPC
As previously mentioned, CPC is cost per click, so the formula for it is super simple: CPC = total_cost / number_of_clicks. You may also derive it from CPM and CTR: CPC = (CPM / 1000) / (CTR / 100) = 0.1 * CPM / CTR.
Nowadays, the common model is often not as straightforward as the one you see here. Advertisers often compete over the ad placement in a real-time bidding auction. Special algorithms take multiple factors (the CPC bid of each ad, its performance so far, what they know about the user) into account and try to predict actual revenue for every impression.
How to calculate CTR
Again, this is a simple percentage formula: CTR = 0.01 * number_of_clicks / number_of_impressions. It's divided by 100 because it's expressed as a percentage.
It's always a dilemma of whether you should pick CPM or CPC. CPC is more closely tied to the value that the traffic brings. Going with CPM has its merits, too - it's more predictable for the publisher. It's possible that visits don't interest you much at all - you may treat display advertising as a way to increase brand awareness.
According to the formula, we can use a calculator to simulate and calculate the cost.
After understanding the principle of the formula, various values can be estimated in an all-round way, and the efficiency of estimating advertising costs can be improved.
The Key Points to Reduce The Cost of Facebook Ad Clicks:
Timing
When evaluating your Facebook advertising costs, please be sure to consider observing the CPC and CPM during the period you want to advertise last year to make an estimate. For example, if you want to place Facebook ads after August of this year, you can query the CPC and CPM trends of any day from August to the next six months to estimate the cost this year.
According to data from ADCostly, from August 1 last year to January 1 this year, the CPC and CPM prices were highest in mid-December. This means you'd better avoid advertising during mid-December this year.
Audience Selection
The most important thing you need to do before creating an ad is to figure out your audience. Because your product cannot be noticed and liked by everyone.
From the data displayed by ADCostly, we can see that from August 1st last year to January 1st this year, the CPC and CPM prices of audiences of different ages and genders are different.
From a gender perspective, the CPM of women is much higher than that of men, and the CPC is also higher than that of men. This may be because there are more e-commerce brands targeting women, which means that if your advertising audience is for men, the cost of CPM will be much lower.
From the perspective of age, the younger the audience, the lower the click cost; the more mature the audience, the higher the click cost. Therefore, if your product is more popular among young people, your advertising costs will be much lower.
In addition to the audience classification at the gender and age levels, there is also a big level: country.
Click costs in different countries and regions are also different. As ADcostly shows, CPM costs in the United States, Australia, and South Korea rank among the top three in the world. CPMs in the UK, Germany and Singapore are relatively low. This can show the number of advertisements in the United States, Australia and South Korea. If you are not confident enough to think that your advertisement can stand out from the mass of advertisements, then it is recommended that you do not invest a lot of energy in these three countries.
The CPC’s world ranking is different, with South Korea topping the list, followed by Japan and the United States. This means that the cost of entering the Korean market is the largest.
Not only that, but you can also see the CPC and CPM trends of each country in different periods. This helps to estimate whether the cost of clicks will increase or decrease in the country where you want to deliver.
In addition, more detail is described in this blog：Facebook Advertising Cost by Country/Area [2021 Update]
Ads Placements
Advertising placement can be described as a major link that can change the fate of advertising.
It seems that Audience Network is the most expensive advertising location, while Instagram’s Explore is the cheaper advertising area.
So, how to choose your Facebook ad placement and reduce costs?
I recommend that you use automatic placements to run Facebook ad campaigns for a period of time. After you get the results, you can exclude the most expensive placements.
However, if the cost per conversion for all placements is lower than your sales revenue, please make all placements attract more people.
