Step #4: Budget and Pricing
Before you start spending money on Facebook, it’s important to know how much you’re willing to spend and how much your advertising/marketing budget will allow. When in doubt, start small! Create a highly targeted ad and monitor it for results. When you’ve fine-tuned it for maximum results, then you can add another advertisement to your campaign or increase your budget.
Once you’ve created your advertisement and chosen your target audience demographics you’ll be asked to set your budget and pricing. Here are the decisions you’ll be asked to make:
There are two different pricing types on Facebook. They include:
Cost Per Click (CPC) - A type of campaign pricing where you pay each time someone clicks on your ad. This is the best type of campaign to use when you want to drive specific action on your website or Facebook Page.
Cost Per Thousand Impressions (CPM) - A type of campaign pricing where you pay based on the number of people who view your ad. This is the best type of campaign pricing to use if you want to raise general awareness within a targeted audience.
Facebook advertisements work on an auction based system. This means that the market sets the price for a click depending on how many people are going after your target audience. You’re going to be asked to set a maximum bid. This is the amount of money you're willing to pay per click on your ad or per thousand views of your ad, depending on whether you have a CPC or CPM campaign.
Your maximum bid competes against other advertisers' bids to determine which ad gets displayed to the target audience and how much you ultimately pay for a click. This becomes important if you are in a highly competitive industry where you’ll be competing for ad space with a number of other businesses. Remember you can adjust your budget at any time. It’s important to monitor your campaign for the first few days to analyze results and modify your campaign to fit your goals and budget.
Your daily budget is the maximum amount of money you're willing to spend on an individual campaign each day. If this is your first advertisement you may want to set a low daily budget so you can monitor results. Once you know your ad is optimized you can increase your daily budget.
Above all else, make sure you’re comfortable with your budget. If you only have $50 a week to spend, then your daily budget will be $50/7 days or $7.14 per day. Facebook promises you'll never pay more than your daily budget and they stop showing your ad once you’ve reached your budget limit.