Whatsup business owners, brand
owners et all,
Hope you are getting value from all
the content on my blog and you are applying what you are learning to your Facebook
and Instagram ads to help your business grow immensely.
Today's post is a very important one
and I get a lot of questions from businesses and individuals on how much money
they are to spend on their ads to maximize huge results.
THE
BASIC THING YOU NEED TO KNOW ABOUT PRICING YOUR ADS.
The reach potential on Facebook and
Instagram is endless, it all depends on what you want at the end of the day and
the marketing objective for your business. If you want to reach 1,000,000
people and you are willing to spend $1000 per month, Facebook will help you do
that.
If you want to reach 1,000
people and you are willing to spend $100 for that number of people over a
period of time, Facebook will help you do that. With Facebook and Instagram,
how much you spend on your ads is in your control as a business owner. What you
need to understand is to spend wisely to get value, and to remain profitable as
a business.
"The mistake a lot
of businesses make is that they forget to take into account the expenses on
their Facebook and Instagram ads, so they feel they are making so much sales
from their ads; but when they sit down to calculate their profit at the
end of the day, they find out that they are running at a loss though
their ads seem to be converting real good".
THE BIG QUESTION: HOW
MUCH DO I NEED TO INVEST INTO MY ADS TO GET MAXIMUM RESULTS FOR MY AD GOAL AT
THE END OF MY CAMPAIGN?
Let me explain this to
you by first talking about the bidding techniques that Facebook use to display
your ads and how to control costs using the bid strategies you select.
Every campaign has an
objective, and Facebook has these objectives grouped for you as Awareness,
Consideration and Conversion. Now, depending on the end goal you want, you
select one of these objectives that best suits what you want.
Facebook provides a
space for you to enter your budget for every campaign after you've selected
your objective. 'Budget is the amount of money you want to pay for the actions
that help you achieve your ad campaigns goals at the end of the selected
period.
There are 2 types of
Budgets for every Facebook objective you select, there is the Daily Budget
(where you tell Facebook how much you want to spend for a click , for an
engagement or for an action on your ad) and there is the Life Time Budget
(say you want to run your ad for a month and your budget is $200, this is your
life time budget, it is how much you will spend over the period selected).
After you select your
budget the next thing is to look at the campaign Bid strategy. The campaign bid
strategy is what controls the total amount you want to spend on your ads. If
you choose to spend
$2000 as your overall
budget, there are bid strategies that will make you spend more or less than you
budget while fully achieving maximum results.
THE VARIOUS TYPES OF BID STRATEGIES AVAILABLE FOR FACEBOOK AND
INSTAGRAM ADS.
1. LOWEST COST STRATEGY
2. COST CAP STRATEGY
3. BID CAP STRATEGY
4. TARGET COST STRATEGY
NB: Every objective you
select has its own bid strategy that you can implement to control cost of your
ad campaigns.
Take a look at the
tables below
| AWARENESS OBJECTIVE | BID STRATEGY |
| Brand Awareness | LOWEST COST |
| Reach | LOWEST COST AND BID CAP |
| CONSIDERATION OBJECTIVE | BID STRATEGY |
| Traffic | LOWEST COST , COST CAP , BID CAP |
| Engagement | LOWEST COST, COST CAP , BID CAP |
| Video views | LOWEST COST , COST CAP , BID CAP |
| App Installs | LOWEST COST , COST CAP , BID CAP, TARGET COST |
| Lead generation | LOWEST COST , COST CAP , BID CAP , TARGET COST |
| Messages | LOWEST COST , BID CAP |
| CONVERSION OBJECTIVE | BID STRATEGY |
| CONVERSIONS | LOWEST COST , COST CAP , BID CAP , TARGET COST |
| CATALOG SALES | LOWEST COST , COST CAP, BID CAP, TARGET COST |
| STORE TRAFFIC | LOWEST COST , BID CAP |
UNDERSTANDING EACH BID STRATEGY AND HOW IT AFFECTS YOUR AD COST.
Not
to confuse you with any technical things, I will break everything down
into its simplest terms for you.
"LOWEST COST STRATEGY"
The lowest cost bid
strategy simply means that you don’t have control over the amount Facebook
charges you for an action. Basically, you give the ad algorithm the opportunity
to fully utilize your ad budget to bring you the results you want.
So you can spend more or
you can spend less than your budget with this strategy. For instance, you
decide to spend $20 for one email subscriber,
Facebook will get you
results either by charging you more than $20 or charging you below $20. You can’t
control the cost per event on your ad. Facebook can charge you more or less
depending on the value Facebook attributes to the action.
If you are a business
looking for huge reach and huge results and you know spending that much won’t
affect the profitability of your business, you can go with the lowest cost bid
strategy to test which cost or budget will bring you the results you want in
the beginning whiles you remain profitable.
"COST CAP STRATEGY"
The cost cap bid
strategy tells Facebook you want to spend an exact amount of money per event on
your ad and they stick to that. This strategy controls your ad cost in a very
good way compared to the lowest cost strategy where you have no control over
cost.
There are little
fluctuations at times, where Facebook spends just a little above your set
budget to get you maximum results but it’s not always the case. Most of the
time, Facebook gets you results using the set amount you decide to
spend.
Facebook starts charging
you from the lowest cost per action, when this is exhausted then the cost
increases to get you more results.
I call this the "I
am on a serious budget but Facebook help me please". So with this
particular bid strategy, you put a stop point on your budget. If you tell
Facebook to spend $50; that is the exact amount they will spend at the end of
your campaign to get you the maximum results you want.
Facebook won’t spend
more than your budget, it’s either below or just at your budget and this
helps business owners maintain a profitable business whiles getting value for
ads.
Facebook starts charging
you from the lowest cost per action, when this is exhausted then, the cost
increases to get you more results but it will never spend more than your set
budget with this Bid cap strategy.
"TARGET COST STRATEGY"
With this bid strategy,
Facebook spends exactly what you set as your budget. If you want to spend
$20 for a click, Facebook spends exactly that right from the beginning of
your ad to get you results.
The cost per event on
your ad won’t start from the lowest to the average; right from the start
Facebook spends $20 for an action or even more.
THE BALL IS IN YOUR COURT NOW
Now that you understand
the bidding strategies and budgeting, the ball is in your court as a business.
Find the value of how much an action is worth to your business and set your ad
with a budget of that amount.
If you've never run
an ad for your business before, you might not know how much it will cost your
business per event and the value of an action.
"When your ads go
live, be tracking your ad to see how the ad is performing. If you want to
increase your ad budget to get more results do so and keep tracking to see a
cost per action amount that gives you maximum results and stick with it.
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