Are Facebook Ads Worth It?

Facebook is no longer just a platform for staying connected with friends — it’s also become a major marketing platform. According to Hubspot research, Facebook ads account for over 9% of all digital ad spending and nearly 19% of mobile digital marketing worldwide! Why are so many businesses investing in Facebook ads, you may ask? 

Are Facebook ads worth it? The answer, summed up simply, comes down to Facebook’s targeting capabilities. Custom Audiences is a Facebook feature that allows you to target so accurately that marketers report spending 73% less on acquiring new customers using this feature. Few marketing tools other than Facebook allow you to target an audience as specific as 29-year-old males residing in Denver, Colorado who listen to Taylor Swift, for example. On this social network, you have the chance to reach your audience at every stage of their journey from their awareness of your brand all the way to their first purchase. 

So what do Facebook ads cost and are they worth the expense? Are Facebook ads right for your business? In truth, a finely tuned Facebook marketing strategy can be one of the best revenue drivers for ANY kind of business. In 2016, almost 98% of global marketers using social media reported that Facebook gave them the best ROI. In our professional opinion, Facebook ads are one of the most cost-effective ways to grow your company online. 

The Cost of Facebook Ads

Many businesses and marketers shy away from Facebook ads, thinking that they don’t have it in the budget to invest in this marketing strategy. In response to this concern, Facebook itself has said that you probably spend more on your daily coffee than you would on a Facebook ad campaign! Facebook ads are affordable for any budget, and they can be run on Instagram and Audience Network as well. 

With Facebook Ad Manager, you have full control and visibility over your campaign, and you can set as little or as much as you want for your budget and pay only for the actions you want to take. Facebook never spends more than your maximum ad budget, and the ads will only be shown to people who are most likely to be interested in your products or services via the Facebook ad auction. This ensures that you get results from your investment. Read more about how Ads Manager works here.

If you’re looking for a more granular answer about the cost of Facebook ad clicks, most people will tell you that it depends on your industry, audience, ad quality, objectives, and so on. But AdEspresso by Hootsuite was able to figure that, on average, cost per click (CPC) for Facebook ads comes out to be about $0.27. It’s nice to have this data, but knowing the CPC of the ad doesn’t tell you if your investment is leading to sales or that a Facebook ad campaign is worth the money. 

As a rule of thumb, remember that CPC is meaningless if you aren’t getting a reasonable return; profitability is more important than costs when it comes to digital marketing. In order to find out if a Facebook ad campaign is worth your money, you need to ask yourself not only what CPC is but also how much of a return on ad spend (ROAS) the Facebook ad will give you.

How to Calculate ROAS for Facebook Ads

Experts say that if you earn more than four dollars on every dollar you spent advertising, that is a profitable campaign. But how do you know if you’ll profit or merely break even on a Facebook ad campaign? You can eliminate the guesswork and figure out the return your business will get from Facebook ads by calculating ROAS using several metrics. To do this, you will need to know the following:

• Your monthly budget for Facebook ads
• How much you’re willing to pay per click
• Frequency of website visitor conversions (as a percentage)
• The value of one customer (as a dollar amount)
• The percentage of leads that become customers

For example, if you:

• Had a budget of $3,000 for monthly digital ads;
• Were willing to pay the average $0.27 per click;
• Have a 2% target conversion rate;
• Get $2,000 per customer over their lifetime; and
• Have a 5% lead to customer rate…

… you could expect a 640.7% return on ad spend, which is considered profitable and would be worth the expense of the campaign. We used the free Hubspot Advertising ROI Calculator to crunch these figures, and you can use it to customize these numbers to your business, too.

Get Started With Facebook Ads Today

As you can see, Facebook has some promising potential in terms of ROI (but remember that it’s about profitability, not costs). Most companies that utilize Facebook ads get quality leads and increase their sales at an affordable price. Check out our case studies to see how we’ve helped local businesses score big time using this marketing method. 
If you’re interested in starting a Facebook ad campaign, our expert team of social media marketers is eagerly waiting to help you. Contact us today to learn more about our social media marketing services or to speak with one of our knowledgeable professionals to find out if Facebook ads could be the right approach for your business.