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The Cost of Advertising with Meta and Google Ads

Olaf-Sebastian Krysik
Olaf-Sebastian Krysik
HK Digital Co-Founder
19th October 2022

If you are looking to boost your business with some paid advertisements, there's no doubt that both Meta and Google have crossed your mind: they are by far the most popular places to reach audiences of all kinds. Facebook alone can tout the fact that it is the only social network to reach 2.93 million monthly active users (MAUs), and accounting for 29% of all digital ad spend in 2021, Google has already become a verb.

If you want to know what the cost of advertising online is going to be for your business, the best thing that you can do is get familiar with the cost structures of these platforms: they are going to be major components of your paid advertising budget, and their cost structures can be found throughout the world of online advertising, ensuring that you will be able to effectively budget across channels and keep your ad spend in check.

The Quick and Dirty Data on the Cost of Advertising Online

If you were planning on coming here to get a quick number and be on your way, then I only have to assume that you aren't quite familiar with the bidding structures that Meta and Google offer. When it comes to estimating the cost of advertising online, it is really going to come down to your business's goals.

The reason being that the price you pay depends on your bidding strategy, so the cost of advertising on either of these platforms is going to be up to your budget in the end. However, it is pretty important to get an idea of what you should be paying so you have a benchmark to help estimate your budget.

But before I give you some general stats on the costs of advertising on these platforms, let's define the different ways you can look at the cost of advertising.

3 Cost Metrics you Should Know

In order to understand the cost of advertising online, you will need to be able to track the following metrics:

  • Cost per Click (CPC): This is how you will primarily view all of your online advertising costs. Most platforms use this as the primary cost metric because the user's click is what you are bidding on.
  • Cost per Mille (CPM): Your CPM is a metric that you can calculate by dividing the total number of impressions by 1000, and then dividing the total cost of the campaign by that figure. What this tells you is how much it costs you to reach people within your audience, and can be very important when working on top of the funnel (TOFU) campaigns.
  • Cost per Acquisition (CPA): Your cost per acquisition is calculated by dividing the cost of the campaign by the number of actions that were taken after a click. This could be a sale or a signup, or anything goal that you had in mind for your advertisement.

Let's look at some of the global averages that I could find for Meta and Google advertisements.

Facebook

  • Average CPC: $0.97 (expect $0.80 - $1.10)
  • Average CPM: $12 (expect $10 - $15)
  • Average CPA: $18.68 (range $8 - $55)

Instagram

  • Average CPC: $1.47 (expect $1.10 - $1.50)
  • Average CPM: $10.93 (expect $9 - $12)

Google

  • Average CPC: $2.69 (search) - $0.63 (display)
  • Average CPA: $45.27 (search) - $65.80 (display) (range $19 - $135)

A Deep Dive Into the Cost of Advertising on Meta and Google

Just to reiterate, we are diving into the cost of advertising on Meta and Google because they are currently the largest online advertising platforms in the world, and they are accessible to pretty much any business. Be sure to read Google's and Meta's advertising policies prior to launching any campaigns to ensure that you don't get your account blocked.

In the following sections we will look into the cost of advertising per industry, for each platform, how to use the bidding system to set your budgets, and discuss how valuable the platform can be overall. Let's dive right into it.

The Cost of Advertising on Facebook

The best way to estimate the cost of advertising on Facebook is by managing your CPC and CPA rates. We will go over how to manage these costs from the platform's interface, but first it is important that you get an idea of how effective Facebook Ads can be for your business by looking at some of the industry benchmarks.

Facebook CPC and CPA by Industry

Here you can see some stats on Facebook Ads for the retail sector:

If you consider the average order value (AOV) for each of these markets and the CPA that Facebook Ads averages, you can see that your margins aren't really at stake here.

In fact, you will find that these metrics are often quite a bit more favorable than Google's at first glance, however, we will touch on why Google simply can't be overlooked in the paid ads space in a bit.

Managing Your Facebook Budget

In order to manage your Facebook budget properly and keep control over the cost of advertising on their platform, you will need to know how Facebook's pricing model works.

Long story short: you can simply set the daily spend that you are willing to put forward and Facebook will place your ads based on a CPC bid that you indicate.

Once you have racked up enough clicks to hit your daily maximum, Facebook will stop your ads til the next day. There is also the option to run ad spend limits based on different time periods (e.g. week, month), but that is up to you and your testing strategy. 

It is important to note that this is a bidding strategy, and that means that competition is going to have a major effect on how much you are going to pay per click and, therefore, how much you are going to have to spend on your sales at certain points, and this price keeps increasing as marketers double down on the platform's benefits. 

When it comes to competition, it depends on the size of the audience that you are targeting and the number of competitors trying to bid on their impressions.

Facebook ROI

While the cost of advertising on Facebook is rising, and you will see a ton of articles with clickbait titles implying that the platform has reached its limit, you can't deny the stark contrast between AOV and CPA: this platform can still return outstanding ROI, and with the number of MAUs, it is definitely going to be attributed to a fair amount of your traffic and revenue.

The Cost of Advertising on Instagram

Just as we did with Facebook, we are going to dive into the cost of advertising on Instagram by looking at the CPC and CPA rates that you could expect to encounter as an ecommerce company, by looking at a list of market averages. 

If you haven't already set your targets for your Instagram Ads, these benchmarks will help you understand what those targets should be, and if the ones that you may have set need to be adjusted for higher optimism.

The Average Instagram CPC

As you can see here, the averages across the retail markets are quite a bit lower than the global average for all markets. This is because the retail markets aren't as specific with their audience targeting and therefore aren't competing on a smaller pool of users. You will find that this relationship holds true across all platforms: your audiences will have their own competition factor.

The Instagram Ads Cost Structure

Luckily for you, Meta has integrated their advertising platforms and that means that Instagram's pricing structure is the same as Facebook's. 

You will want to keep an eye on the prices you expect to pay per click, across your audience, set your daily budget and max CPC bid, and ensure that your visual creative is top-notch.

No joke, with Instagram being as visual a platform as it is, I have to mention the quality of your creative in the structure of your costs!

The Cost of Advertising on Google

The cost of advertising on Google comes down to the same parameters that you set your costs on Meta with: you are competing in a bidding war on an audience of your choice. However, in this case you are bidding on search queries or placements on relevant websites.

Let's dive into what I am talking about with these key differences.

Google Search Ads vs Display Ads

Google Search Ads are the ads that appear at the top of the search results page when you search for something on Google. Display Ads are the ads that appear on websites and apps that are part of the Google Display Network.

Both types of ads can be effective in reaching your target audience. However, they have different cost structures. Google Search Ads are charged on a pay-per-click (PPC) basis, meaning you only pay when someone clicks on your ad.

The same approach is generally used for Display Ads as well. While Google does offer the option to optimize for CPM or CPA, the CPC model always prevails.

The cost of Google Search Ads varies depending on a number of factors, including the competitiveness of the keyword you're bidding on and your Quality Score. See how to calculate your CPC based on the quality score, below.

The cost of Display Ads also varies depending on factors such as the placement of the ad and the targeting options you select. However, in general, Display Ads tend to be less expensive than Search Ads.

Let's look at an industry breakdown of the Google Ads CPC averages.

Google Ads CPC by Industry

Here you can see the CPC for both the Search and Display Network Ads:

While we don't have the AOV to compare directly, you can assume by the industry how the AOV should increase or decrease, respectively. Quite reasonable for even small companies, however, it can be seen where certain industries, such as finance and law, are subject to targeting very specific search terms, and therefore are competing on a 'small market.'

Utilizing the Google Bidding Structure

The best way to utilize the Google bidding structure in order to manage the cost of advertising online is to set your daily budget and max bid on a keyword.

Be sure to stick to optimizing for CPC as this is the goal of any of your campaigns when it comes to the use of the channel, and it happens to also be the metric that Google is best at estimating. 

Also be sure to set geotargeting and ad timing parameters so that you are only getting clicks from markets that are likely to take action on your site, at times where clicks are most likely to convert: while Google can optimize for CPA (poorly), sticking to CPC and selecting parameters that are likely to lead to conversion are your best bet to getting the most out of the Google Ads bidding structure.

The Google Ads ROI - What to Expect in Terms of Performance

As you can see, the CPC on Google Ads is significantly higher than those on Meta. However, it is important to understand that the power of Google's ads lies in the fact that users are using a specific search term, which communicates intent.

By selecting the search terms that show intent to purchase, you are not simply catching people while they are browsing through their social media profiles, as in the case with Meta: you are placing your ads in front of people who are looking for exactly what you are offering, if you have set up your campaign correctly, that is.

Therefore, this platform is absolutely essential to any brand that wants to start sending high-converting traffic to their sites.

Google Ads' Effect on Other Channels

Google Ads can have a significant effect on other advertising channels. This lies in the power of the intent behind the search term that you target, which we glossed over in the previous section. 

The main thing here is that you should consider Google Ads as your method of building a database of quality leads that you can then retarget on both Search and social media, with the materials for the next stage of your funnel. 

The intent is what makes the user data that you gain from Google Ads so powerful, and this can be powerful when designing your audiences in the social advertising platforms.

The Cost of Advertising Online is Really up to you

The cost of advertising online is really up to your budgetary requirements, however, there is sort of a minimal buy in.

The reality is that you can get away with spending a couple hundred dollars per week on Meta and drive some conversions, but you will definitely have to pair this with the intent-power of Google Ads in order to ensure your targeting is on-point.

If you want to see some usable results from Google Ads, expect to spend around $1000 per month.

That being said, it's all scalable from zero: you set your own budgets and strategize between channels as you need to in order to succeed. Now that you know how these platforms work, you are prepared to tackle any of the online advertising platforms with a solid understanding of how to make the most out of their cost structure.

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