Facebook Ad Costs

Facebook Ad Costs Reverse Engineered – Part 1

I’m on a mission to help entrepreneurs, coaches and business owners grow their business by taking Facebook ad costs and reverse engineering them so they actually profit from running Facebook ad campaigns.

I see people posting their wins with Facebook ads but very rarely does anyone post bombed campaigns or campaigns in progress to show what’s really going on or how to fix campaigns when they go south (and they all eventually go south kids, don’t be fooled!).

So I decided to do a little exercise. I’m going to run some campaigns and share the real life, honest stats and show you the real deal.

To start the test campaign, I targeted folks in the USA aged 25 to 65, male and female interested in Digital marketing. Pretty broad but still related to my business. I set the budget at $20/day.

(Note: That’s $20 Canadian so it’s like $2.69 USD plus a Band-Aid, a paper clip and two pieces of popcorn off the floor; exchange rates could be better I admit!)

Here’s what I saw:

Potential Reach: 3,200,000
this number is based on the size of the interest you’re targeting

Estimated Daily Reach: 610-1600
this number is based on your budget and the average performance of your ads.


Facebook ad campaign estimated Daily Reach
Some performance markers include: Relevance score, click-through rate and budget

Budget testing:

As an example, if I target those 3,200,000 people and I play with the bid amount, the estimated daily reach looks like this…

2 - Budget Testing

 

 

 

 

 

Out of curiosity, I played with the numbers to try to find a max. The question that popped into my head was “what would it cost reach all 3,200,000 of these people?”

I entered ever increasing numbers and when I got to about $80,000 per day, the numbers maxed out at 320,000-860,000.
I have no plans of spending $80,000 testing one interest on Facebook today but it’s interesting to note that the system isn’t set up to let us reach all of the audience.

It makes sense too as there are TONS of advertisers using the Facebook ads platform all with different offers. Facebook wants those folks to see and click on only that which they’re interested in so that’s not likely to happen if all ads were from one advertiser.

Actual test results:

To test some of these numbers, I ran a $20 test.

I ran 1 campaign, with 1 ad set, with 5 ads in it.

The ads all had the same copy and their only different was the image in the ad. The overall results are shown below (click image to enlarge)

Facebook Campaign Results

Reach: 557
Impressions: 581
Link clicks: 2
Clicks (All): 5
CPC: $4.12
CTR: 0.86%
Results: 0
Frequency: 1.04
Amount Spent: $20.60

So while this is an extremely small test, I wanted to use it to see if we can reverse engineer the numbers. Not every advertiser is in a place to spend $60,000 per month on Facebook ads so I’m on a mission to help business owners got to a place where spending more on Facebook ads DOES makes sense.

Making Sense of the front end numbers:

We were told at the start that we could potentially reach 610-1,600 people for our $20 per day.
We spent $20.60 and the campaign reach turned out to be 557, close to the minimum.

Please keep in mind that all Facebook numbers are ESTIMATES. Reach is based on average performance across many advertisers trying to reach the same audience and your budget.

How do you reach more of them?

You create better ads.

Reach vs. Impressions:

I get asked this one a lot. “How come my reach doesn’t match my impressions?”

Impression is the number of times your ad or post has been displayed. If one person sees your ad and shares it, the number will be higher than 1.

Clicks (ALL) vs. Link Clicks

I started monitoring both link clicks and clicks (all) because Facebook has some clunky definitions around some of their terms. To me, if I run a conversion ad (and ad where I want people to click on it and then go see my offer), that’s a good old fashioned click.

Facebook doesn’t see it that way. They figure if someone has any interaction with your ad at all; like, share, comment etc, then that’s a click. It’s their playground, let’s just keep moving.

They call a LINK Click a click that takes the visitor off to another site. It doesn’t require you to have a link in your ad though many of mine do such as a clickable URL’s because people still see URL’s and recognize them as something that they can usually click on to go see something else.

So what did we get?

We got 5 total clicks

Click through Rate (CTR)

This is a number that measures the number of clicks we got as compared to the number of impressions we received.

In our example, we received 5 clicks out of 581 impressions, so 5/581 = 0.86%. That sucks.
That’s a poor click thru rate so we’ve got one of our performance markers clearly identified.

How we doing?

So far, the report is that we’re not reaching enough people. Of the people that we ARE reaching, not enough are clicking our ad.

So now what do we do?

This is the part where many say Facebook ads stink and they run away never to return.

We’re better than that so let’s solve the problem.

Look at the opportunities and challenges and bridge the gap.

So early lessons I’d flag include:

  • Test was too short, needs to run longer
  • Only tested one interest

Opportunities include:

– I created more than one ad image
– Some people are clicking, we can look closer at who they are

Here are the images I ran:
Facebook Ad Images

…and here’s how they performed
Facebook Ad Image Performance

So the first two ads got all the action and of those, the first image performed WAY better than the others. See why we split test images?

Who are they?

This test is way too small to start narrowing down the target focus but I want to share the whole plan with you. If we dig into the breakdown inside ads manager to see who the main clickers are, we find the following:

Now we can see some useful data!

Females, 45-54 had a CTR of 2.86% and a CPC of $1.71
Females, 55-64 had a CTR of 6.90% and a CPC of $0.79
Males , 55-54 had a CTR of 8.33% and a CPC of $0.38

This may be a small test but this my friends, shows the amazing power of Facebook ads.

Let’s pretend for a moment…
Knowing what we know now and keeping with the same numbers, let’s pretend I ran this ad ONLY to the men aged 55-64.
581 impression with a CTR of 8.33% would yield 48 clicks (581 *.0833).
In this case, for our $20.60 we would have received 48 clicks instead of 5 and our cost per click would have been $0.38 instead of $4.12. Advertising costs SLASHED.

…what does it mean?

None of these numbers mean much unless we get conversions, opt-ins or sales.

Next steps for me would be to test the same images and copy on other interests and see how they perform. I can also keep running tests on this audience to get more significant data and optimize as I’ve just shown.

We need more numbers captain!

We need more volume and higher numbers so we can look at the numbers of the whole funnel.
Does the landing page convert when people do get there?

We’ve got to keep pushing and let the numbers tell us the whole story of what’s going on from the moment people see our ad until they get right down into our funnel and closer to the solution we
can provide them.

Questions? Thoughts? Concerns? Share them below and I’ll do my best to answer them for you

The exercise we just went through is a tiny fraction of what my ad agency Brave Influence Media will do for you on your ad campaigns. To find out if we can help you, book a time for a quick chat with Mike by clicking the button below.
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I'll never give away, trade or sell your email address 'cause that's SUPER lame. Unsubscribe at any time.