I have many clients who reap the benefits of Facebook Ads, but I still consistently get comments from business owners that prove there are still many misconceptions about their value. I’m sure that is par for the course, since many owners still doubt the power of Social Media as a marketing tool. I can tell you for sure that if you are in the camp of the latter group, you are definitely operating behind the 8 ball and doing a disservice to your business.
After reading countless reports and seeing results first hand, I am confident in telling you that Facebook Ads DO work for business owners. It is critical to understand of how Facebook Ads can help you and to develop a strategy.
One of the easiest examples I use to compare the cost of running an opt-in commercial email campaign vs. Facebook Ads. It came from an article published by LoudDoor founder Jeff French. Let’s take a look.
Acquisition Costs
The going rate for most brands to acquire an email subscriber at scale is $4-$5. Therefore, acquiring 100,000 email subscribers would cost $450,000 at the mid-point.
Mailing Expense
A mail provider with good delivery rates such as ExactTarget would charge between $6-$8 per thousand to deliver email to this list when you consider all data management and mailing fees. This is assuming a mid-point of $7 would peg us at $700 per mailing. To mail to the list 3 times per week would total $109,200 per year.
Reach
According to the widely referenced SilverPop Email Marketing Metrics Benchmarking Study, the average email open rate in the United States is just under 20%. This means that 20,000 of the subscribers in our example would open each message accounting for 3,120,000 unique user impressions in a year (assuming 3 emails sent per week as previously mentioned).
Total cost per unique user impression:
Take a look at the totals for our hypothetical email example:
$450,000 acquisition costs plus $109,200 mailing cost equals $559,200 to deliver 3,120,000 unique user impressions. This is an all-in cost of $.18 per impression delivered via email.
Now that we have email covered, we’ll take a look at Facebook and apply the same math, starting with user acquisition.
FACEBOOK LIKES
Acquisition Cost
Facebook created a low friction experience for a consumer to “Like” brands and while the cost to acquire fans will vary we consistently deliver “Likes” to our clients at $1.50 or less depending on the targeting criteria. This means $150,000 to acquire 100,000 users.
Promoted Posts Expense
Cuban referenced the suggested “Promoted Post” pricing using the standard in-line buying mechanism provided by Facebook. His quote was $3,000 to reach 1-1.8 million fans. The midpoint of 1.4 million fans in this example is a CPM of about $2. Assuming we pay the same rate to reach our 100,000 fans on each post this would be $200 per post or $31,200 per year for posting 3X per week.
Reach
Unlike the 20% open rate of email 100% of our budget spent on promoted posts will go to reaching 100,000 on each post or 15,600,000 unique user impressions for the year at 3 posts per week.
Total cost per unique user impression:
So let’s look at the totals for our hypothetical Facebook example. $150,000 acquisition costs plus $31,200 Promoted Post expense equals $181,200 to deliver 15,600,000 impressions. This is an all-in cost of $.01 (yes, a penny) per unique user impression delivered via Facebook.
This is 18 times more cost effective than email.
Now obviously these are big budgets used in these examples, but it is all relative. Put your own numbers to it and the equations are going to be very similar. If you are using Social Media the way it should be, as a communication tool, you can grow your “community” with Ads and then promote your content in a very economical manner.
If you are ready to launch into the world of Facebook Ads, but don’t know how to get started, we are here to help! From creating an effective ad campaign to managing and promoting your posts, we can fulfill the role of a Marketing Department without the high cost. Call today for a FREE consultation – 813-933-2788.
