With so many tools and platforms available at your disposal, it’s never been easier to grow your small business through online advertising. That being said, there are still some important things that you’ll need to consider when developing your online advertising strategy. One of the most important factors is budget.
Whether you are working on a bootstrap budget or have a little money to spare, it’s good to know the average advertising costs before you start marketing your business online. Below, we’ve put together a quick guide to all the costs that you’ll need to consider when developing your online ad strategy.
Average Advertising Costs: Advertising with Google Ads
Given Google’s status as the most popular search engine, it probably comes as no surprise that Google Ads is the world’s largest online ad platform.
When you run online advertising campaigns with Google, you get the chance to put your brand message in front of customers who are searching for businesses like yours on both the search engine and Google maps.
These are examples of what Google Ads look like on the search engine results page (SERP).
Small businesses use Google Ads to drive more website visits, get more phone calls, and increase foot traffic to physical store locations.
Given the fact that you can develop effective Google Ads campaigns on any budget, many small businesses will add Google Ads to their advertising strategy to maximize their online advertising budget.
Google Ads Pricing Model
Before we get into the average advertising costs of Google Ads, let’s first take a look at how the pricing model works. There are two different types of Google Ad campaigns you can launch – search and display network:
Here’s a quick breakdown of the differences between search vs. display network ads.
When you launch advertising campaigns on the search network, these ads use a pay-per-click (PPC) model. That means that you pay each time a user clicks on your ad and visits the corresponding landing page.
With search ads, Google serves ad content that is relevant to users’ search queries, helping drive more qualified traffic to the advertiser’s site. These ads appear directly on the search engine results page just above the results.
Display ads appear on Google’s display network on sites across the Internet. Most of these ads appear as banners. These ads are ideal if you want to advertise on a site that has an audience that might be a good fit for your brand.Here’s an example of where display ads might appear on a local website.
With ads on the Google Display Network, you have three main options for pricing:
- CPC Pricing – If you choose this option, you will only pay when a user clicks on your ad. This pricing option is ideal for ad campaigns that aim to drive website traffic.
- CPM Pricing – CPM, or cost-per-thousand impressions, is a pricing option that requires you to pay for ad views based on one thousand views. This can be ideal for brand awareness ad campaigns.
- CPA Pricing – Cost-per-acquisition pricing requires you to pay when your ad leads to a conversion. If your ultimate goal is to drive sales, then this may be the best option for you.
Average Advertising Costs for Google PPC Ads
Google PPC ads, which are displayed on the search engine, are charged on a cost-per-click basis. That means that every time a search engine user clicks on your ad, you are charged a small fee.
The cost-per-click is calculated according to Google’s ad auction process. This process is how Google determines which ads to display when a user performs a relevant keyword search. The auction also determines which order the ads are shown in as well as the CPC rate.
Both your ad position and your cost per click are determined by both the maximum bid you have set (the most you’re willing to pay for each click) and your quality score.
A quality score is a measure of how good your ads are on a scale of 1 to 10. The higher your quality score, the higher your ad rank will be on the SERP and the lower your cost per click will be.
There are a number of different factors that will impact your average advertising costs for Google search ads. CPCs vary from one geographic location to the next. They also vary between industries.
If you are working in a more competitive industry or there is more competition in your current location, then you may experience a higher than average cost per click.
That being said, the average cost of an ad on the Google Ads platform is between $1.00 and $2.00 per click. On average, small businesses that use Google Ads as part of their online advertising strategy end up spending between $9,000 and $10,000 per month (or $100,000 to $120,000 per year).
As we said before, you don’t have to start with that kind of budget. You can create successful Google Ads campaigns on nearly any budget. But only if you are experienced with the platform and know how to get the best results.
Average Advertising Costs for Google Display Network (GDN)
Ads on the Google Display Network tend to have lower click-through rates than ads that appear on the Google search engine. However, there are appealing targeting options and remarketing opportunities that allow you to take advantage of this ad network to grow your business. The higher the click through rates you can achieve, the higher the return on investment on your ad spend.
The average cost per click for an ad on the Display Network is $0.58. Again, the average cost may be more or less depending on the industry your business is in.
Though most industries tend to have an inexpensive cost per click on the display network, businesses in the employment services industry experience a higher CPC of $1.66 per click. This is followed by the real estate industry with $0.88 CPC rate.
Average Advertising Costs: How Much Do Facebook Ads Cost?
Facebook is the world’s most popular and widely used social network. So it should come as no surprise that Facebook is also a popular online advertising platform.
Facebook ads have proven to be both affordable and effective at helping brands reach their ad goals. Many small businesses rely on Facebook ads to reach new audiences, drive website traffic, and improve conversions year-round.
Facebook offers a variety of different ad types based on your online advertising goals.
Facebook is a great online advertising platform for small business as it allows these brands to reach consumers who are most likely to be interested in their products or services. Facebook offers sophisticated targeting options that allow brands to reach relevant audiences based on their demographic information, interests, and behaviors.
The more relevant traffic you drive back to your site, the more opportunities you have to engage qualified buyers.
Facebook Ad Pricing Model
Before we dive into average advertising costs for Facebook ads, let’s talk a little bit about the pricing structure for this ad platform.
Facebook Ads’ pricing model is very similar to Google’s search pricing model. Brands that are advertising on Facebook will set a daily or weekly budget for their ad campaign. And when this budget has been reached, the ads are paused.
When you use Facebook ads, you have control over how your budget is allocated. You can set maximum bids for different campaigns. In addition to your daily budget, you can also set bids to control how much you spend on getting users to take certain actions, such as download your app or sign up for your email marketing list.
One of the greatest benefits of Facebook’s pricing model is that it allows you more control over how your ad budget is spent, which helps you get more out of your ad spend.
However, the pricing model can also be a bit confusing for those who are new to the ad platform. It is not as straightforward as the PPC model for Google search ads. That’s why many small businesses rely on a Facebook advertising agency to help with getting their ad campaigns started.
The Facebook Ads Manager dashboard tells you the cost for each ad campaign.
Average Advertising Costs for Facebook Ads
Most recently, the average cost per click for a Facebook ad is $1.72. The average CPM, or cost per 1,000 impressions, is $7.19.
Though the average suggested budget will depend on a variety of factors including your industry, niche, and location. Many small businesses plan to spend $0.50 to $1.00 per fan. This will need to be adjusted depending on your goals (brand recognition, app downloads, website visits, etc.).
For the most part, Facebook CPCs are rather low across industries. Even the most expensive industries like finance and insurance, customer services, and home improvement still have relatively low average advertising costs. (CPCs are $3.77, $3.08, and $2.93, respectively.) This is great news for small businesses that want to reach their audience while still generating an attractive return on investment.
Even with a limited budget, you are able to launch effective Facebook ad campaigns given the generally low cost of launching these campaigns.
As we mentioned before, the Facebook ad platform makes it very easy for advertisers to control their costs across the board, which is ideal for small businesses that are starting with lower ad budgets.
Average Advertising Costs: How Much Do Instagram Ads Cost?
Facebook acquired Instagram in 2012 as part of a strategic plan to dominate the world of social media. This strategic acquisition also allowed Facebook to expand its advertising platform and generate even more online advertising revenue through Instagram ads.
This ad platform has become an excellent outlet for visual brands to reach and engage their target audiences through compelling image and video ad content.
Much like Facebook ads, Instagram ads provide you with different formats based on your ad goals.
The best part about Instagram ads is that they aren’t as disruptive as other types of online ads. Instagram creates a seamless ad experience by placing the ad content right in the Instagram user’s feed.
That means that your ad content can look just like organic content with the same engaging visuals and video that users have come to expect from their favorite Instagram accounts. This makes Instagram ads a great addition to your overall Instagram marketing strategy.
Instagram Ads Pricing Model
Instagram advertising is part of the Facebook advertising platform. As such, the Instagram pricing model is very similar to that of Facebook ads. This is very convenient for brands that plan to launch campaigns on both Facebook and Instagram. You only need to familiarize yourself with one ad platform and access one dashboard for managing both types of social media ad campaigns!
As part of the Facebook advertising network, Instagram ads are bought through the same type of auction system as Facebook ads. As an advertiser, you would set your ad campaign budget per day or over the lifetime of the campaign. You would also set a bid, which is the maximum amount you’re willing to spend on the ad objective.
Your CPC is then set based on who wins the auction. The ad that creates the most value for users wins the auction, getting the minimum CPC. Value is measured based on:
- The advertiser’s bid
- How likely users are to take the action the ad is optimized for
- The ad quality and relevance of the ad content
Once you know how to create Facebook ads on the platform, developing Instagram ads is a breeze.
Average Advertising Costs for Instagram
Just a little while ago, the average advertising costs for Instagram were well below those of Facebook ads. In fact, CPM for Instagram ads used to be about half the price of CPM for Facebook ads. When Instagram first allowed advertisers to launch ad campaigns on the social media platform, the average CPM was between $5 and $6.50.
However, recently, the gap between advertising costs on Facebook and Instagram has now become much narrower – making the average cost to advertise on Instagram very similar to the average cost to advertise on Facebook. The average CPM for Instagram is now around $10, which is very close to the same price as the average Facebook CPM.
The rise in Instagram ad costs is most likely due to the rise in popularity of this visual social media platform.
But it’s important to look at Instagram advertising costs in light of the powerful, granular targeting options that Facebook offers for Instagram ads. Being able to capture attention from the right audience with your Instagram ads means that your brand is able to get a better return on investment on your ad spend.
Another important thing to consider when looking at Instagram ad costs is the fact that user engagement is significant on Instagram.
With high engagement rates, Instagram offers the ideal platform for brands that not only want to capture the attention of their audience but get them to engage in meaningful ways.
Look at how Instagram engagement rates compare to other social media platforms:A higher percentage of brands’ Instagram followers interact with their content than any other social media channel.
The engagement rates on Instagram show that advertising on this social media platform has the potential to change the way that you look at follower engagement.
That is exciting news for small businesses that want to improve engagement rates even with a limited online ad budget!
If your campaign objective is dependent upon engagement, then Instagram may be the perfect place to launch your campaign.
In addition, controlling your spending on Instagram ads is easy to do. Since you are using the Facebook ad platform to launch campaigns, you can manage your campaigns in the same way you would Facebook campaigns – through the Facebook Ads Manager.
You can also test different strategies to see which provides the best ROI. From native ad content to different targeting techniques to leveraging retargeting to reach back out to previous site visitors – there are many different options for helping you get the most out of your Instagram ad spend.
Get Expert Help with Online Advertising
Now that you know the average advertising costs for three of the biggest ad platforms used by small businesses today, you can start planning your own ad strategy.
Remember, the numbers above are only an estimate.
The actual ad spend will depend on your industry, location, ad objectives, and other factors that all affect pricing on these online advertising platforms.
Another thing to keep in mind is that you can test different options and adjust your strategy to lower your CPC and reduce costs over time.
Though testing is a vital part of online ad campaign optimize, it can also be difficult for those that don’t have experience with developing and implementing these types of online ads. If you don’t have in-house expertise on Google Ads, Facebook, or Instagram advertising platforms, then it may be time to call in the experts.
Since every user click costs your business money, you want to make sure that you’re attracting the right kind of traffic. Hiring a digital marketing agency that specializes in online advertising can help ensure that you are getting the most out of your ad budget.
Contact us today to learn more about how we can help you improve your reach online and drive more qualified traffic back to your site through online advertising.