How much does paid advertising cost?

How much does paid advertising cost?

This is probably the main question that you want to get an answer to and, whilst we’d love to give you a straight one, it isn’t that easy. On this page, we’ve tried our best to break down the factors to consider when using a paid marketing strategy. If you don’t think paid marketing is a great fit for your business you should consider looking at an inbound strategy instead.

When it comes to the costs of paid marketing you need to consider the following…

  1. The platform you are advertising on.
  2. Your product or service.
  3. Your target audience.
  4. The time of year.
  5. Your budget.

What is paid advertising?

Paid advertising, comes under the outbound marketing umbrella and involves paid methods of acquiring leads. The simplest example is Facebook Ads. As a marketer, you will be paying for your adverts to appear in someone’s news feed. These adverts could aim to send targeted traffic to your website or landing page. You might instead use a lead form. When someone clicks this type of ad a form pops up on their device and they enter their details. You are paying for more exposure and that is why we consider this paid marketing.

Now that we’ve briefly gone over what paid marketing is you’re ready to learn how much paid marketing costs. We’ll now look at the individual factors listed above.

Key Takeaways

  • Facebook, Instagram and Linkedin charge for appearing in social feeds – also known as cost-per-impression or cost-per-view.
  • Google Ads charge when someone clicks your ad – also known as Cost-per-click (CPC).
  • Your paid advertising spend will be affected by the platform you’re using, product or service you’re promoting, your target demographic, the time of year and your budget.
  • When starting out on Facebook Ads, try £20 to £30 per day and run your first campaign for a few days.
  • A healthy budget should be £40+ per day for lead-form ads.
  • Traffic and awareness campaigns are generally cheaper than a lead form or conversion campaign, however, they don’t necessarily result in actual leads as their objective is different.
  • Google Ads have search intent meaning someone clicking wants your product or service. Be prepared to pay more because of this.
  • Go into paid advertising with a mindset. Select an amount you’re willing to gamble if the risk doesn’t pay off.
  • Reduce the risk of paid advertising by seeking help!
  • If you can, approaching paid advertising with a £2000 budget should produce results and data to confirm whether it is a viable form of marketing for you.

1. The platform you are advertising on

There are multiple platforms you can run advertising campaigns on and there’s no doubt you’ve heard of the majority of them. The big ones are Facebook Ads, Google Ads, YouTube Ads, and Linkedin Ads. Each platform helps advertisers reach different types of audiences.

Facebook Ads

Facebook is heavily consumer based and if you’re a B2C (business to customer) business with services or products, then running ads on Facebook is something you should consider. When it comes to billing the advertiser Facebook focuses on charging you for impressions. Impressions count as appearances within someone’s news feed. Due to the cold approach of this type of advertising Facebook charges very small amounts in order for you to appear, the idea being that the more you get in front of an individual the more likely they become aware of you and eventually become a lead.

There are multiple types of adverts that you can run within Facebook Ads Manager and we’re going to give you a brief overview of a couple to give you an idea of why the cost can vary so much depending on which type you use.

The cheapest form of ad is a traffic ad. The goal of this type of advert is to send as much traffic to your website or landing page as possible. This ad is about building awareness mostly but it is possible to send traffic to a landing page in order to try and get individuals to perform a specific action on the page, such as fill in a form. When using this type of ad to a very broad audience the costs can be incredibly small.

Another type of ad, and one that we love using, is a lead form. As mentioned before, this is an ad that when clicked, a form will pop up on their device. The form can automatically populate the user’s information which makes it super easy for someone to become a lead. If you find the lead quality is low you can add some custom questions to help pre-qualify people.

Lastly, before we move onto the costs for these ad types, there’s remarketing to consider. There’s no doubt that you’ve been on a website and when you’ve opened up Facebook you immediately see an advert for the product you were looking at. This is remarketing. It’s a way of appearing in front of people that have shown some form of interest already but haven’t purchased from you.

You’ll find that the overall costs for these types of ads will vary. If getting traffic to your website is important to you, you could get away with spending no more than a fiver a day if you have a very broad audience. This is because the objective isn’t very demanding on the consumer, you aren’t asking them to do anything difficult like handing over their information, so a simple click is easy for them to perform.

We find that the cost of lead ads can vary hugely, but the important thing to remember is that anyone entering the form is a lead and has shown actual interest in your product or service. This is why you should expect to spend more per day. Your ads will need to appear in news feeds more in order to find people who will complete your form. Facebook recommends around £20 per day but if you can afford it, a budget of £40 – £60 is healthy.

Here is a real result achieved by one of our lead form campaigns…

60 leads within 5 days at a cost of £5.24 per lead. That’s a total spend of £314.55.

We could stop there because this is about how much advertising costs but I want to carry on because the ROI on this campaign was out of this world.

30 of the leads converted (an exceptionally high conversion rate) and our client’s average sale is £1200. That’s £36,000 in their pocket after spending £314.55. That’s an incredible ROI of 11,445%!!!

We should point out that this is an extraordinary result and we’ve been optimising campaigns with this client for well over a year now. Facebook’s algorithm can be frustrating though and similar campaigns can sometimes go up to £25-£40 per lead. One of our clients had to spend £2000 before their first sale, this was due to the nature of the product and we’ll get to that shortly.

Continuing on, you’ll find with all the ad types that the more narrow your audience is, such as location, interests, and job titles, the more expensive it is going be. Remarketing can only start when Facebook has 1000 people to remarket to which is still considered a small audience and because of this, it can cost more to reach these people. If you’re considering remarketing your monthly ad spend should be at least £1500 but preferably more.

Lastly, when it comes to Facebook, the more you spend per day the more people you’re going to reach. So whilst your targetted audience might be 100,000 people, if you’re daily budget is only £20 per day, you may only reach 2000 of those people.

infographic telling readers that search ads increase brand awareness as much as 80 percent

Linkedin Ads

Linkedin Ads are very similar to Facebook Ads in terms of how they work. These ads are about putting your content in front of users based on the demographics you set. You would likely be using Linkedin Ads if your product or service is for a professional consumer rather than just about anyone. You’re able to narrow your audiences by business industry, job title, and so on. Again, you’ll be able to create different types of ads including our favorite, lead forms.

Although they are very similar to Facebook Ads, you’ll find the cost to be more expensive overall. Just like Facebook Ads, your costs will increase the more you narrow your audience down.

Google Ads

Google Ads cover a wide range of ad types from those first few results you see after searching, to the adverts you get between YouTube videos and ad images displayed across their Display Network. For this article, however, we’re going to refer to the ads that show when you search for something. The reason for this is that Google charges differently compared to Facebook and Linkedin for these. This type of advertising is known as cost-per-click (CPC) as opposed to cost-per-impression/view. Essentially, you’re only charged when someone clicks your advert.

Within the Google Ads platform, you will set the search terms that you want your ad to appear for, as well as a few other settings. The advantage to these types of ads is that leads have something known as search intent, meaning these are individuals searching for your product or service at that time. The leads from these types of campaigns are usually warmer but this comes at a cost. A cost that will again vary depending on a few factors like your industry, how often it is searched, how many competitors are also trying to appear for the same keywords, and your bidding strategy.

How often your search terms are entered into Google doesn’t affect your overall cost as such but a good marketer will know how to read data and look for the gaps where both CPC and competition are low. Just because something isn’t searched often doesn’t mean you should ignore it. Some of the best returns can be found when lots of low-traffic and low-competition opportunities are utilised.

Google Ads works on an auction-type bidding system and because of this when you have more competitors who want to appear for your keywords, the more it will cost for you to win. You’ll find that some industries are more competitive than others. You can set a higher maximum bid to improve your chances of appearing however Google also takes into account the quality of the page you’re sending traffic to.

There are tools available online that you can use to estimate your marketing costs with Google. These tools tell you how much a click will cost you. Some keywords or phrases will cost you under £1 per click whilst more competitive terms could see you spending £10, £20, and more. Depending on how much you’re willing to spend on a lead and how good you are at converting, will determine whether this is a scalable form of marketing for you.

2. Your product or service

We touched on this earlier and as an expert in your industry, you’ll already know that the more expensive/high-end your product or service is the harder it is to find your target audience. The incredible example we gave earlier was for a newborn and baby photographer. Due to the nature of the business not many people go looking for the service so a cold outreach with paid advertising tends to bring in the best results.

As a general rule, we take on products or services that cost the consumer more than £500 because our particular model of advertising can scale with this. Our clients who have average sales between £800 to £1800 will spend around £50 to £150 per day. If you have a UK-wide or even worldwide product/service then you could probably spend less, these numbers are for very localised businesses.

Going back to our other client who had to spend £2000 before their first sale came in, they were okay with this. Their average customer spend for this range of products is in the tens of thousands and this particular sale was their largest to date which came in at £30,000. So, despite the big spend, the returns were great. Our client had a very good email nurturing campaign setup so that when a lead was captured within Facebook, they were then fed through an automated sales funnel.

3. Your target audience

As we mentioned earlier, the more narrow your audience the more you’ll need to spend per lead. Facebook is more demographically-driven so this mostly applies to their ads. Google relies on search intent, if nobody is searching for your keywords or phrases then you simply won’t get charged.

What does narrowing an audience mean though? If you put an advert out to the whole of the United Kingdom, Facebook will have no problem showing your ads to anyone. That’s why it’s cheap to go broad. Let’s say your service only covers 25 miles around your base and it’s for newly engaged couples. Your reach has suddenly dropped from millions to just a few thousand. If you’re running a lead form ad, this is going to be harder for Facebook to push your advert in front of someone who the algorithm believes is more likely to fill in your form. You’ll need more impressions for a form to be filled in and therefore your costs will increase.

4. The time of year

Believe it or not, the time of year can also impact the cost. Again, this may apply more to Facebook but not necessarily. Early in the year, between January and March, some of our clients will achieve their lowest cost per lead. This is likely because Christmas is over and consumers are looking for something to look forward to during a long January.

From an advertiser’s point of view, it is a completely different picture when we look at the months before Christmas. During the run-up, there are more businesses trying to compete for advertising space which drives the cost up to appear within news feeds. To quote a Facebook Expert we once spoke to, “it is chaos.” We actually advised some of our clients to hold off advertising until it was all over because the increased cost per lead made it much tougher to produce a scalable return on investment.

If you have the budgets to keep going through tougher times then you should push through but if your budget is tight be vigilant at competitive times of the year.

5. Your budget

Ultimately the cost of paid marketing is down to your budget. Don’t forget to take into account your marketing provider’s management fee, ours is £799 per month and we recommend clients have an average customer spend above £500. We work with our clients to find scalable returns to ensure that paid marketing is a viable option for them. If we don’t think we can help you then we’ll tell you. Even if you can afford more, consider a smaller advertising budget to start with to reduce risk and when the data starts to show compelling results, you can start to increase your budget. We recommend testing your first Facebook and Linkedin campaigns for around £30 per day.

So how much is paid marketing going to cost you?

Whilst narrowing your audience down means your adverts are being shown to the right people, it can cost you a lot more. Sometimes it’s best to keep your target audiences as broad as you possibly can, setting location, age, and gender, and allowing the algorithms to figure out the ideal person for you.

All forms of advertising achieve better returns with effective remarketing and nurturing campaigns. You might find it more effective to use your budget in order to get simple information from leads rather than throw products straight at them. Once you have their information you can nurture them with a strong email campaign. You should also make sure you’re contacting leads as soon as possible to reduce wasted spend.

If you’re going into paid marketing for the first time you should approach it with a certain mindset. Be ready to spend a set amount of money that you’re happy to sacrifice if it doesn’t work out. To reduce the risk you can always speak to an expert marketer….if only you knew who to ask 😉

Finally, if you’re serious about trying paid marketing we’d recommend a monthly advertising spend of around £2000. This should allow you to collect enough data to understand whether paid marketing is a viable option for you. It is possible to advertise for less but this is a healthy amount that will hopefully bring you a return.

Reach out to us