Advertising is an age-old facet of the running of a business. But these days, it looks a little different than it has in the past. More people see ads on Facebook or at the top of their Google searches than they do ads in the paper or even on TV. As the digital age marches on, online advertising has rapidly become one of the easiest ways to expand your business.
But the one aspect of advertising that has never changed is that it requires a budget. Which begs the question: how much will advertising cost you?
The cost of advertising can vary depending on the format of your ad, the type of ad campaign you choose, and especially the online advertising platform you use.
Of these, there are three platforms that form the Holy Trinity of online advertising: Google AdWords, Facebook Ads, and Instagram.
Today, we’ll parse out the costs of advertising on these three digital giants, as well as each of their strengths and weaknesses.
The Cost of Advertising: Google AdWords
Google is first and foremost in any discussion of online advertising or marketing for a reason.
The vast majority of people know Google for their omniscient and ubiquitous search engine, but what some folks may not realize is that Google has seamlessly integrated a veritable advertising machine into this search engine. Online advertising brings in the greatest part of Google’s revenue every year.
Google AdWords Pricing Model
There are two types of GoogleAd campaigns you can launch: search and display network. It is important to understand this in order to understand Google’s pricing model, and what it means for your advertising costs.
Average Advertising Costs For Advertising on Google’s Search Network
With this type of campaign, ads are triggered by a proactive search query inputted by the user. What this means is that the user is actively searching out ads for specific goods and services. These are the ads you see above and below the search results in Google.
For instance, if someone puts into Google “dentist in city name” Search ads for local dental offices would be triggered.
Search ads use a pay-per-click (PPC), model. This means you pay whenever someone clicks on your ad. The amount you pay is determined by a process known as the ad auction.
The ad auction is also used to determine the position of your ad, based on the maximum amount of money you’re willing to pay per click, as well as your Quality Score. The higher your Quality Score, the lower your cost per click will be; i.e. if you have an excellent Quality Score, your ad could be placed in the top position even if your maximum bid is low, whereas someone with a lower Quality Score may have to raise their maximum bid significantly to get a decent position for their ad.
Daily Budgets for Google Search Ads
Google search ad budgets are set per day. As an example, if your daily search budget is $33.33 per day you’d spend roughly $1000 per month. Most small business owners spend anywhere on the low end of $500 per month on Google search ads, up to $20K or even more depending on how large of a geographic area the business serves.
Average Advertising Costs for Advertising on Google’s Display Network
In this case, users may not be actively searching out ads but are instead looking at content and pages that relate to their needs and interests. Ads of this kind will be triggered when they are matched to relevant page data, and will usually show up as banners on websites.
For instance, continuing with the user searching out a mechanic shop, if that user were checking out websites about car repair or car problems, Display Network ads for mechanic shops could be triggered.
While these ads are certainly prevalent, they don’t exactly have high click-through rates. In fact, we’re nearly 500 times more likely to win the lottery than we are to click on a banner ad. When advertising on Google’s display network, you’ve essentially got three pricing options:
- Cost per click (CPC) pricing. Similar to search ads, you pay only if someone clicks on your ad.
- Cost per thousand impressions (CPM) pricing. You bid for one thousand views. This could be beneficial if you want your ad to be seen by as much of your target audience as possible.
- Cost per acquisition (CPA) pricing. Set a target CPA and pay only when your ad leads to a conversion.
How do I lower the cost of advertising on Google AdWords?
There are four methods you can employ to lower your advertising costs when using Google AdWords.
- Raising your Quality Score. If you have an excellent Quality Score, it can lower your cost per click significantly, impacting your overall advertising cost. You raise your Quality Score by raising your click-through rate, which you can do by writing highly relevant ads that entice people to click.
- Ad scheduling. Costs-per-action on Google fluctuates rapidly throughout the day. If there is a time of day when your advertising costs elevate but you aren’t getting a lot of traffic or conversions, you can shut down ads for that time frame and save money.
- Geotargeting. If you are trying to drive traffic to a physical brick-and-mortar service like a doctor’s office, a law firm, or a retail store, it doesn’t do much good to advertise in cities forty-five minutes down the freeway. To combat this, you can target the locations that are likely to have the greatest impact on your business.
- Device targeting. You can bid higher, or lower, on keywords for mobile versus non-mobile devices if you have a particularly high performing advertisement. For instance, if you have an ad that is doing extremely well on mobile, you can choose to spend more money on that ad specifically on mobile devices.
The Cost of Advertising: Facebook Ads
The next of the three juggernauts of online advertising is the granddaddy of social media: Facebook.
It makes perfect sense that Facebook has made such a big splash in the online advertising world; many people already spend huge amounts of time browsing their Facebook news-feed, and they aren’t just looking at pictures of their third cousin twice removed’s newborn baby. People are using Facebook to search for goods and services more than ever.
Facebook offers sophisticated targeting options for businesses using Facebook Ads, making it a great online advertising platform for smaller businesses.
Facebook Ads Pricing Model
Facebook’s pricing model for their ads is very similar to Google’s PPC pricing model. Companies advertising on Facebook will create a daily or weekly budget for their ad campaign, and when this budget is reached, the ads are paused.
Within this budget, you have the ability to control how specific parts of your budget are allocated. You can set maximum bids for different campaigns, and in addition, you can set bids to control how much of your daily advertising costs go towards enticing users to take certain actions, such as downloading your app or signing up for your newsletter. Facebook costs per click are quite a bit lower across industries than Google’s search ads, so optimizing your Facebook ads can have a significant impact on your advertising costs.
However, Facebook Ads are not quite as straightforward as Google’s PPC model and can be confusing for someone looking at it for the first time. Many businesses rely on a marketing or advertising agency to handle their ads.
How do I lower my advertising costs with Facebook Ads?
Facebook makes it very easy to control and manage your advertising costs. The easiest way to do this is to simply set your daily budgets to an amount that you’re comfortable with. Once this budget is met, your ad campaigns will be paused until the next day, and no more money will be spent.
In addition to setting daily budgets, you can also set maximum bids to ensure that your ad campaigns don’t expire quickly due to high costs per click. For instance, you can set your daily budget at $40, but set your maximum bid at $4, so that if costs per click for a certain ad begin to exceed $4, your daily budget won’t get eaten. This is helpful for businesses that may be working with a lower daily budget.
You can also always take advantage of Facebook’s massive array of targeting options in order to direct your ads to the demographics most likely to be interested in them. By doing this, you can ensure that you are getting the best bang for your buck.
The Cost of Advertising: Instagram
For the same reason Facebook is an optimal advertising platform, so too is Instagram; which is why it is only fitting that Facebook acquired Instagram in 2012. This acquisition allowed Facebook to expand its online advertisement empire.
Due to the nature of Instagram, it is best for brands that are more visual, like clothing brands.
One of the greatest benefits of Instagram ads is that they aren’t disruptive; they appear in consumers’ news-feeds nearly identical to organic content.
Instagram Ads Pricing Model
Since it’s part of Facebook, Instagram’s pricing model is similar to Facebook’s. So if you’re already familiar with Facebook Ads, Instagram Ads won’t be a particularly large leap to make.
Since Instagram is a visual platform, for the most part, ads are priced using the CPM method. This means you pay a certain amount for every one thousand people that Instagram puts your ad in front of. Like with Facebook, you set daily budgets or lifetime budgets that last the entire life cycle of a campaign. You also set maximum bids that you are willing to pay for each individual ad objective. Ad quality and relevance matters when Instagram is determining which ads will get primary spots and minimum costs-per-action.
How can I lower my advertising costs on Instagram?
Managing your advertising costs for Instagram is exactly the same as managing them on Facebook: setting budgets you are comfortable with. You can even control them from the same place on the Power Editor dashboard.
The quickest way to lower your Instagram advertising costs is to make your ads highly relevant. Also, continually placing high in the ad auction, maintaining low costs for each ad. Some ways you can increase your ad efficiency, thus decreasing your advertising costs, are:
- Make your Instagram ads look as “native” and natural as possible
- Creating dedicated landing pages on your website for each Instagram ad
- Research which demographics are generating the most expensive results, then target outside these audiences
- Re-target to those who have already visited your site. This means if your ad drew them to your site once, keep hitting them with ads