When you go to the mall to purchase a new winter coat, you most likely know what you’re paying for. So why should your Facebook ads be any different?

Facebook advertising is highly effective, and in my opinion, the smartest social media investment you can make. The platform has a knack for getting through to the right consumers and providing impressive conversion rates. If your business hasn’t yet invested, here are four reasons your business needs Facebook advertising.

If you’re already utilizing Facebook ads, then you might understand what all the fuss is about. But what if your Facebook strategy isn’t living up to its reputation? Check out which factors affect the cost of your Facebook ads and begin implementing better strategies today!

Your Audience

Selecting your audience is one of the first steps in creating a Facebook ad. Your cost will be dependent on who else is targeting the same audience.

This pricing process can be confusing. Let’s say you are an automotive dealership advertising a special deal on a new sports car. You are not simply competing against other automotive dealers, but instead, anyone who is targeting the same audience as you.

You are competing for a spot on your selected audience’s news feeds based on the criteria you provide. Therefore, the more ads that are competing for the same audience, the higher the cost will be.

As shown above, you can select your audience based on location, age, gender, language, interests, behaviors, friends of people who like your page, people who are connected to an app, and much more! On the right-hand side of your screen, Facebook will rate your audience definition to indicate if it is too broad, too specific, or just right.

Quality

Your ad will receive a score between 1 and 10 based on its relevance to your audience. The more relevant your ad is, the lower the cost will be. A higher click-through rate indicates to Facebook that your ad is relevant to your audience, so as your click-through rate goes up, your cost will decrease.

Frequency

The frequency determines how often your Facebook ad will be shown. A lower frequency is generally better to avoid overwhelming your audience. If a consumer has seen an ad 11 times and still hasn’t converted, they most likely do not plan to the 12^th time they see your ad either.

Bidding Strategy

Facebook allows you to place a bid on your ads, and the bidding options allow you to choose how you want to pay for that ad. You can manually adjust the price you want to pay or stick with the automatic pricing option, which is designed to give you the greatest results for the best price.

Keep in mind that your budget is different from your bids. Budget represents how many conversions you can afford at that price, whereas the bid is the price per conversion. You can set an average or maximum bid price.

You can bid based on the following:

• Cost per conversion: This strategy typically provides the greatest ROI. Here, you are paying for the completion of a specific action.
• Cost per click: With this option, you will pay for each user that clicks on your ad, regardless of whether or not they complete the conversion.
• Cost per like: You can pay for each like you get on your page from your ad.
• Impressions: This could be a good strategy to get a lot of views on your ad. You will pay per 1,000 impressions, and the cost is typically lower than the cost per click option.

Once you choose the criteria you want to bid with, you can then optimize the way in which the ad will be delivered as shown below.

Your optimization choices are dependent upon the objective you choose when you first begin creating your ad. Optimization is very important as it tells Facebook what you want to value in your ad. Facebook will automatically choose a bidding option based on your objective, or you can manually choose your own. Some of the optimization choices include conversions, impressions, clicks to your website, and daily unique reach.

Your optimization choice directly affects the cost of your Facebook ad. While most find the cost per conversion option to be the most beneficial, you should consider split testing your ads to see which works best for your business.

Now that you know what affects the cost of your Facebook ads, you can work towards creating the best strategy for your business. If you are new to Facebook advertising, try it out and let us know what you think!