Facebook Advertising Cost CPC, CPM, CPL, CPL & Guide

How much does it cost to advertise on Facebook?

How much should I spend on Facebook Ads?

These are the two questions that I hear the most when I talk to marketers who are first thinking about how to run a Facebook Ad. And so it should be. Marketers need to be be able to estimate their ROI above anything else.

Here’s the answer: Spend less on each customer you get through Facebook Ads than they are worth to you.

But how do you know much an average customer is worth? And how do you know if you’re spending less than that on your Facebook Ads?

Let me explain.

Facebook Advertising Costs Principle #1: CPC, CPM, CPL, CPA & Cost-Per-Customer of your Target Audience

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Ok, first, let’s take a look at how Facebook charges you to advertise on their platform and the factors that affect how much it costs.

CPC, CPM, CPL & CPA Explained

When you setup your Facebook campaign budget, you need to choose between two-four pricing options. CPA is only available if you choose “Website Conversions” as your “Ad result” in the the Ad creator on Facebook.com. CPL is only available if you choose “Page Likes” as your “Ad result”.:

CPC (cost-per-click): If you use cost-per-click pricing, you only pay when someone clicks on your Facebook Ad.

CPM (cost-per-mille): With cost-per-impression you pay when Facebook shows your ad 1000 times. (Impressions are the number of times your ad is shown to a user on Facebook).

CPA (cost-per-action):  This allows you to track and optimize how much you spend to get someone to take an action (or convert) on your website after clicking your ad.

CPL (cost-per-like): This allows you to track and optimize how much you spend to get someone to “Like” your Facebook Page after clicking your ad. Learn more about how to increase Facebook Likes using Facebook Ads.

Calculating your Cost-Per-Customer (The Only Cost You Need to Care About)

Cost-Per-Customer is the one number you need to watch. It is the cost of getting one person to buy from you. All of the other cost numbers are just parts of the equation for calculating your final cost of getting one new customer.

Here’s how to calculate it:

Using Facebook’s built-in CPA tracking, where we can first get the cost of the initial action the user takes on our website. If that action is to make a purchase, then your CPA is equal to your Cost-Per-Customer. But if your action is to download an ebook, sign up for a newsletter or some other form of lead-generation, then you need to add one extra variable to the equation:

CPA x (Number of Leads that Buy / Total Number of Leads)

What is the average CPC?

A recent article from Search Engine Journal reported that the average CPC for retail advertisers in Q3 of 2013 was just $0.45 USD. Which is a 27% drop from the year before. In Q3 of 2012 the average CPC was $0.62 USD. Check out the graphs below to see how the average CPC changed from Q2 2013 - Q3 2013. The report findings are based on 200 billion Facebook Ads.

The default pricing option that Facebook sets for your ad is a “cost per click” (CPC) bid. This is a good option for when you’re first starting out, as the click through rate (CTR) for Facebook Ads is lower and paying for clicks is ultimately cheaper than if you were to pay for the same number of impressions (CPM).

Depending on your ad’s performance, you may want to switch your Facebook bid from CPC to CPM - especially if it’s doing well with a high click-through-rate. But be sure to monitor impressions and clicks. If impressions on your ad increase and clicks decrease, your cost will increase and you may need to switch back to CPC pricing.

After choosing your payment method, you can choose to set your own bid or allow Facebook to optimize your bid for you. Unless you’re an advanced user, we recommend allowing Facebook to optimize your bid.

Choosing a Target Audience for your Ads

Your Target Audience is the group of Facebook users who will potentially see your ad. Facebook has  a very deep knowledge of users’ demographic, employment and interest information to target people based on. Want to target 45-year old women in Kansas City who like cats? No problem! You can even target specific individual’s with your ads using only their email address or phone number. This is called “Custom Audience” targeting.Learn How to Target Facebook Ads Based on Email Address & Phone Number (Custom Audience).

If you’re interested in learning how to create a target audience, check out our recent article, How to Create a Targeted Facebook Ad Audience.

Why some target audiences have higher CPM and CPC

In a nutshell, the more advertisers there are for a particular target audience, the higher the cost will be to advertise to it - basic supply and demand. If you’ve ever run Google Adwords, you’ve experienced the same thing. The more people try to advertise for a particular search keyword, the more it costs to advertise for it.

Under Principle #3, Optimizing your Ad Spend (Budget), we’ll look at how to find the lowest CPC and CPM for your Target Audience.

Facebook Advertising Costs Principle #2: Your Average Value Per Customer

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Now that you understand how Facebook Ads are priced, you need to look at the other side of the equation, which is how to calculate how much value (revenue) your ads generate for you. The best way to do this is to calculate your average value per customer, so you can easily match up against the Cost-Per-Customer that we calculated above.

Calculating your Average Value Per Customer (AVC)

AVC is the average order amount of each customer.

If you have a one-time payment business model, meaning someone pays you a one time fee for each product or service, this is the equation you use to calculate the average order amount:

Total Sales Revenue / Number of Customers

Now, if you’re a larger business and have multiple product categories, you may need to create segments based on those categories. For example, the average order amount of electronics will be much higher than that of cleaning supplies.

Calculating AVC for Reccurting Revenue Models

If you have a recurring revenue model, meaning people pay you on a weekly/monthly basis for a product or service, this is the equation you use to calculate the average order amount:

(Total number of recurring payments/number of customers) x ((Recurring Payment Price #1 x Number of Customers Paying this Price) + (Recurring Payment Price #2 x Number of Customers Paying this Price) + … / Total Number of Customers)

In the next section I’ll show you the one number you need to watch to know if your Facebook Ads are successful or not.

Pro Tip: An easy way to track your Cost-Per-Lead without having to deal with messy tracking codes between your Facebook Ad and your website is to use Wishpond’sFacebook Ad Manager with Wishpond’s Landing Page Builder. These are both integrated within your Wishpond account to allow you to track your Cost-Per-Lead (as well as every other metric) without having to set up your own tracking codes.

Facebook Advertising Costs Principle #3: Optimizing your Ad Spend (Budget)

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So, now that you know how to analyze your Facebook Ads to make sure they are making you more money than you are spending on them (a.k.a. profitable), how much do you spend each week/month? And how do you optimize your ads to make them as profitable as possible?

The one number you NEED to watch

The one number that you need to be focused on at all times is your average-value-per-customer minus Cost-Per-Customer. This is, how much money your average customer brings you minus the amount you need to spend on ads to get one customer. If this number is above zero then your ads are profitable. And the higher the number, the more profitable they are.

At the end of the day, every other number is just a vanity or incomplete metric. This is the only one that truly affects the bottom line of your business.

Optimize your Facebook Ads Using A/B Split Testing

While there are a number of best practices on how to advertise on Facebook, the only way to optimize your Facebook Ads to maximize their ROI is to test, test, test. Specifically, A/B split test.

A/B testing is a strategy in marketing in which two versions, A and B, (the Control and the Treatment) are tested against each other. The goal is to identify changes that increase the chance of the what you want to occur, occurring.

It’s used commonly for webpages, landing pages, marketing emails, and advertising. The best practices remain essentially the same across the board though:

• Change the placement and formatting of objects on a page to get a user’s eye to where you want it
• Change colors to ensure primary objects stand out
• Change images to be eye-catching or elicit emotion: encourage engagement
• Change text to be appealing to the reader, and encourage a desired outcome

Want to know more? Click to learn How to A/B Split Test your Facebook Ads to Maximize ROI.

Don’t fall victim to Facebook Ad Fatigue

Facebook Ad Fatigue occurs when your ad’s target audience is shown your ad too many times and your Click-Through-Rate drops as your Frequency rate (how many times it’s seen) increases.

Why this happens: Users are shown your advertisement frequently (every time they sign into Facebook - on average 13.8 times/day according to recent data) Your ad is competing against photos and statuses on Facebook user’s News Feeds. People become inured to your advertisement and your Click-Through-Rate (CTR) drops.

Rotating the variables within your ads (Ad Rotation) stops Facebook users from becoming Ad Fatigued. Ideally, as soon as your ad starts losing efficacy it gets rotated out and replaced with a different version.

Learn more about Facebook Ad Fatigues and how to combat it.

Does Facebook Optimize my Ad Spending for me?

Yes - Facebook does optimize your target audience for you, based on who is clicking or converting on your ad. But, to be honest, the optimization they do is fairly minimal.  Using the above techniques optimize your ads far better than Facebook will.

Bonus: What is CTR and How Does it Affect Facebook Advertising Costs?

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CTR (Click-through Rate): This is the percentage of people who click on your ad divided by the total number of people who saw your ad. For example, if 100 people see your ad and only 1 of them clicks on it, your CTR is 1%.

Unlike Google Adwords, Facebook does not have any documented Quality Score. For Google Adwords, your Ad’s Quality Score is affected by how high your click-through-rate and long-click-rate (number of people who stay on a website after clicking on an ad for it). Unfortunately, this is not the case yet for Facebook Ads

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7 Big Mistakes New Affiliate Marketers Make

When I first started in affiliate marketing, all I wanted was to just make money. Off I ran in every direction, trying everything, with no real idea of the mistakes I was making that could very well affect my chances at long term success.

Through my years of experience with both affiliate marketing and teaching other affiliate marketers, I have come to the conclusion that there are 7 big mistakes new affiliate marketers make.

Let’s talk about these mistakes in more detail.

1) Selling Rather Than Helping

Yes, the word “marketing” is part of the phrase affiliate marketing, but for the most part, our job as an affiliate is not to sell — that is the job of the sales page our affiliate links lead the reader to.

When I first started, my overwhelming (and totally naive) impulse was to fill my pages with words and links that screamed “BUY THIS NOW!”. I didn’t help the reader learnwhy they should have this product. I only wanted them to click a link which would hopefully lead to a commission for me.

People want to hear from other people when making a decision to buy a product or not — that’s why the reviews on Amazon products are so powerful. Those reviews are genuine feedback from people who (usually) have absolutely nothing to gain if someone buys that product or not.

When we talk more like an unbiased reviewer rather than a high-pressure salesperson, we will find we make more sales and people will come back for advice on other products in the future.

2) Too Many!

This is another big mistake I made when starting out — joining any and every affiliate program I came across. While I absolutely do believe in cultivating multiple streams of income when working online, there is a point where you have too much to deal with and it becomes unmanageable.

Choose your affiliate programs wisely and don’t overload yourself.

3) Not Testing

Whenever I choose to promote a Clickbank offer (for example), I put myself in the shoes of a potential customer and opt in to test the vendors’ follow up sequence.

I learned this the hard way.

Nothing breaks a reader’s trust more than being led to a promotion that will blow up their inbox. Put yourself in the shoes of a potential customer and see what will happen if they follow your advice.

4) Not Tracking

This was a BIG mistake I made when I first started out. I began my affiliate marketing career using free-to-make web pages on a site called Squidoo (and I still do this to this day).

I am fond of promoting Amazon products on these pages, but would forget to use unique tracking affiliate links on each page.

Why is this a mistake? Very simple — when you make a sale, you want to know WHERE the sale came from. This enables you to know which pages are converting well so you can grow and scale that campaign.

Creating a unique tracking ID for an Amazon link is easy. Simply log in to your Amazon affiliate dashboard, click “Account Settings” at the very top on the right, then click “Manage Tracking IDs”. From there you can make a new tracking ID so you can track which web page/campaign sold what.  You can learn more about using Amazon’s Tracking IDs here.

Yes, making any commission is cool, but knowing where and how you made that commission is what makes you a better marketer. It lets you grow and scale your campaigns — as opposed to working blindly.

5) Not Comparing

One of the best converting tactics I use to sell affiliate products online (especially physical products from Amazon) is to compare the “main” product with two other similar products.

When people are in buying mode for a physical product, they tend to have their options narrowed down to 2 or 3 and need help making the choice that is best for them.

By comparing the “3 Best Widgets For _______”, I not only help my readers make a choice, but I also have my affiliate links there for THREE products instead on only one.

Over time, when I track that web page, I will be able to see which product is most interesting to readers and move the best converting product to the top of the page for better CTR.

Comparison web pages are not only very popular and helpful for readers, they are also very profitable for you.

6) Make Money Online Products

Perhaps you’ve seen this before. You’re in a “learn online marketing” type forum. A person publishes a post complaining that they can’t make a dime online. But in their signature line they have something along the lines of “I Made 50 Million Dollars with This” followed by their affiliate link.

It happens all the time. Please, don’t be that person.

If you’re new and you want to promote products in the Make Money Online arena, don’t make false claims that it made you money. In fact, don’t make false claims at all!

Sure, talk about the benefits of the product/training — maybe even why it sounds awesome to you — but don’t try to trick people. You will ruin your credibility.

7) “Oh Look! A Butterfly!”

This is the biggest downfall for any new affiliate marketer. In fact, it can cause really big issues for seasoned affiliate marketers as well.

It is all too common to be working on one thing when all of a sudden, something “shiny” comes through your inbox or is mentioned in a forum you frequent. Then off you go chasing some new idea to make money online.

Ignore the “butterflies” that are sure to fly by on a constant basis. They will just distract you from your project/campaign at hand. One completed and profitable campaign is worth so much more than 50 almost half-finished campaigns or projects.

Affiliate marketing is a business that requires self-motivation and focus. For many of us, these are learned skills. Once you are aware of the the mistakes that can cause a lack of profits and productivity, you will be better able to grow your business and be profitable long-term.

Best of luck!!

How to Become an Internet Affiliate

Affiliate marketing has become a popular method to monetize a website or to be the gateway to starting a business online. Its popularity is due, in part, to the fact that it is easy to become an Internet affiliate. Here is a quick guide on how to become an Internet affiliate marketer and increase your affiliate marketing traffic.

1

Identify your niche. The Internet is a big place and being an affiliate for something that doesn't ring true for you can be a big mistake.

• Do you have an existing blog dealing with specific subject matter? Are you a member of local clubs or organizations dedicated to one thing? Make sure the topic you choose to market is one that you are passionate about.

2

Purchase a dedicated web domain name. Make sure that it features words that are important to your subject matter.

• If your subject matter is dog training, try to have the words "dog" or "training" in your web domain--both words if possible. Try to avoid misspelled words or unrelated slang. Topic-specific jargon is actually good in this case ,as it will help people who understand the topic know that you are intimate with it.

3

Put a website on your domain. If you have an existing blog hosted elsewhere, try to move it to your web domain or at least link to it with a menu link. Most major blogging sites have a way for you to move all of your content along with the blogging tools to a separate web domain.

• You're going to have to design a site and create some content if you don't have a blog. There are plenty of resources out there for premade site templates that are easy to use and look professional. There are also many content management systems that are easy to learn

4

Choose your affiliate marketing program. There are many reputable sites that are nothing but repositories of digital and physical products for affiliate marketing. Sign up for one and find the products that best match your site.

5

Create content for your site. If you have a blog, focus on more blogging. If you don't have a blog, figure out how you want to lay out your site and make sure that it lets visitors know you're an expert in the field.

6

Place affiliate links in appropriate places. If you've selected more than one product, make sure that each link is related to the content of the website or Web page.

• You may consider creating a whole page of suggested products with your affiliate links. Some affiliate programs may provide you with banner and leaderboard advertisements. Graphical ads can be very useful, but don't let them crowd your page.

7

Promote your site to your specified niche. Some great ways to promote your site are to guest write for other prominent blogs or have their authors write for you. Also consider distributing video and pay-per-click advertising.

You can read CPA Marketing   for more

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Social Media Optimization

Social media marketing and the businesses that utilize it have become more sophisticated. More small businesses are beginning to understand how to best leverage online tools to build a community and recognize that engagement and interaction are the foundations of social marketing, but most don't know what's next.

What follows are five advanced strategies for small businesses that may already have small online communities and understand how to create an online presence, but don't know what to do next.

What Is An Advanced Strategy?

The definition of an advanced social strategy is a technique that goes beyond the normal social media presence. It introduces or reinforces a marketing message while pushing a user to another profile or business site. Before moving forward with an advanced strategy, it's important that your business understands social marketing, has experience engaging consumers, and that you possess a basic understanding of online marketing.

Strategy 1: Multimedia Usage

The term "A picture is worth a thousand words" has never been truer. Consumers are now using the web to look for product pictures and videos; they want more information and want to see what they're considering buying. The good news is that it's easy for a company to create and publish videos and pictures.

In addition to taking photos of products, you can also take pictures at office events as a way to highlight company culture. This not only helps convince others to work with you or to buy from you (consumers see that you are down to earth and one of them, instead of a stuffy company), it also helps your HR department recruit new employees. Who doesn't want to work for a company that celebrates birthdays and has a good time?

Videos are useful for explaining complex how-tos or concepts. Showing step by step directions can have a greater impact than even the most well written article. Businesses don't have to invest huge sums of money to create good videos, either. I highly recommend the relatively cheap Flip camcorder, which takes great videos and is easy for even a non-technical marketer to use.

Multimedia can break down the faceless business-to-consumer sales flow and make your company appear friendlier. Use videos and images to show that your business is fun, you care about your employees, and most importantly, that you care about your customers.

Strategy 2: Integrate Offline and Online Advertising

Many small businesses do some sort of offline advertising, whether it be radio, print, or cable. Social marketing allows a business to extend their offline sales pitch.

Including your Facebook Page or blog URL in offline ads act as social proof, inviting potential consumers to see your community and increase trust in your business. Not only can integrating online and offline advertising help the conversion process, but it can also help build your community. Introducing potential consumers to your social profiles means they may join your community now and buy later.

Strategy 3: Message Adaptation

As businesses start to become more sophisticated with social media they are starting to leverage more online platforms. However, most deliver the same message over multiple platforms instead of tailoring communications for each individual site.

Social platforms each have an ecosystem of their own. What might be acceptable on Tumblr might be considered spam on Facebook. A specific style of writing might spread on Twitter but fail on FriendFeed. Understanding that each site is different and then customizing your message ensures they do well on each respective site.

Not only does customizing messages across sites help the message spread but it keeps users from receiving multiple identical communications. Be sure to maximize your potential by sending a user that follows the business on Twitter and Facebook two different messages, instead of the same thing.

Strategy 4: Local Social Networks, Beyond Yelp

For a small business, local search can be a big win. Being visible to consumers looking for a business in their area is extremely important. Make sure your site is included in local business directories in order to help ensure that consumers find you when they need you. Sometimes finding that many sites can be difficult, however.

First, make sure you check your competitors. Where are they listed? Check their inbound links to check for business directories you can add yourself to. Also, make sure your business has been added to Google Maps, using the Local Business Center.

Take the time to include all the information you can and update any old news. For many consumers, this will be their first interaction with the business.

Strategy 5: Contests and Discounts

Building a community is only the first part of social marketing. Using that community to drive sales, propagate marketing, or crowdsource operations is the true power of social media. One way to excite the community is to collectively do something to create a contest or offer an exclusive discount (i.e., the contest can create competition between users). Not only does a contest build buzz organically but if contestants need to, for example, publish an article that gets the most comments in order to win, the contest itself becomes viral.

A good social media contest should include some sort of sharing or virality as a requirement for winning.

Discounts are also a great way to connect with your community. By giving exclusive coupons to your social community, you're rewarding and reminding them that you are not only a brand to engage with, but also to buy from.

Conclusion

Creating a basic social media presence is easy enough, getting your community to actually dosomething is more difficult. Taking advantage of these strategies can help you build your community, make your marketing more effective, and incentivize buying.

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Joining Affiliates Forums

In life, information is key and power, getting the right information and putting them to work is the best way to stay ahead in this world, In affiliate marketing, countless numbers of forums exist where you can learn and unlearn (for free). In the course of my experience in affiliate business, forum has really helped me. Discussions go on daily with new threads being created. Most of these forums are free to join and you can start asking question bothering you, and trust me, affiliates, affiliates manager and even advertisers are always available to do justice to you question for free.

Below are some of the recommended forums

WarriorForum

Affilorama

Stackthatmoney

Abestweb

wickedfire

Affiliatefix

Goodluck

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Mobile and Desktop Traffic

Mobile traffic is growing so fast globally that in some places it has already surpassed desktop traffic.

That was one of the key conclusions of a year-end Internet trends report delivered this evening at Stanford University by Kleiner Perkins venture capitalist Mary Meeker.

Once known as "Queen of the Net," Meeker reported that 13 percent of all Internet traffic is now executed from a mobile device, up from 4 percent just two years ago. In tech-savvy India, mobile Internet traffic has reached 60 percent, surpassing desktop Internet traffic, which has declined to 40 percent.

Other key tidbits in the report:Monetization of the mobile sector is also growing rapidly, turning in a compounded annual growth rate of 129 percent in the past four years. Mobile apps will take home the lion's share of the $19 billion the sector is expected to generate this year, 67 percent compared with the 33 percent generated by ads.

• Sales of mobile devices such as smartphones and tablets are expected to gradually increase over the next three years, moving more than 1.7 billion units in 2015. Meanwhile, sales of PC and laptops are expected to remain relatively anemic with less than 400 million units sold.

• The adoption rate of Android phones in the first 16 quarters after their launch has well eclipsed the rate at which people bought iPhones in their first 16 quarters on the market, with more than 600 million Android handsets sold compared with Apple's 100 million, she found.

The report also touched on the ways technology has dramatically changed our lives in the past few years, from smartphones vs. sole-purpose cameras to social media vs. newspapers and even file storage, mobile payments, and education.• Nearly 30 percent of adults in the U.S. own a tablet or e-reader, an impressive adoption rate considering that less than three years ago only 2 percent owned one of the gadgets.


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