It’s frustrating, but there’s no one answer to the question, “How much will it cost me per lead?”. We understand that clients want direct answers. But sometimes we can’t give them because there aren’t any to give.
Social media is a great way to reach people. But as a businessperson, you need to be able to create a budget and have a good idea of what the results will be. That means you’re judging how much a lead is worth against how much it costs to get that lead.
So it’s natural to want to know what it costs to get a lead on social media. But any competent digital marketing company is going to tell you, “It depends.” There’s a lot of information that has to be filled in before we can give you even a rough answer.
It’s important to realize, first of all, that you pay for views, not for leads. You’re charged when your ad is seen, not when it produces a result. Of course, the calculations are easy to make from there. Still, it’s crucial to understand this point. For instance, this can factor in evaluating the quality of your ad.
Every Ad Is Priced Separately. Every. Single. One.
If you put an ad on a billboard, you generally pay a flat fee. That fee depends on a lot of factors – the amount of traffic that goes by and the demographics of the people in that traffic, for instance. But your price is constant.
Social media ads work differently. It works like an auction. You’ve probably heard that before, but what you might not realize is that every single impression of your ad is an auction. You don’t buy an entire “lot” of ads at a certain price per ad. Instead, each time your ad shows, it’s the result of a separate auction.
That can get confusing because there can be a wide range in the cost of each impression. Also, you’ll likely be dealing with thousands of impressions, even with a small campaign. At the same time, though, it can help fine-tune your campaign when you look at the cost as it relates to the time of day, day of the week, and target audience. It can help you fine-tune things to get the best results.
What Factors Contribute To Your Cost
As you can imagine, numerous factors figure into your cost per lead. Again, you pay per impression but you’re most interested in getting leads, so we’ll talk about it that way.
We can use a few of the common “question words” to address this. We’ll leave out that part about needing a quality product or service at a reasonable price. That’s a given, and your digital marketing manager doesn’t have control over that.
Who?
One of the great things about social media is that you can create a specific target audience. Some of the factors you can account for are age, gender, interests, and location.
All of those factors will affect your cost. Again, this is based on an auction, so it’s connected to how much competition you have for the same market.
The relationship between all your demographic factors is a huge component of your cost. The more competition, the higher the cost. The more unique your target audience, though, the less you’ll pay. Of course, you still need to have enough of an audience to make it work.
What?
Of course, your service or product is part of the “what.” But here, we’ll use it to refer to what’s actually in the ad.
You need good text and an attractive visual to make your ad convert. Even if you have a great audience targeted, you have to catch their attention and raise their interest.
The call to action, the headlines, the text, and the image all need to win the viewer over.
When?
Yes, the timing of your ad can matter.
Most markets have some “seasonality” to them. Yard supplies will sell well in spring and fall Swimsuits do well as summer starts, and winter coats do well in late fall. It’s hard to push Christmas decorations in June, though.
That’s the easy stuff to see. But there’s finer detail, too. Certain days of the week may be better for certain markets. For instance, Thursday and Friday are often best for real estate. Interested buyers are thinking about weekend open houses.
Even the time of day matters. Selling business-related courses or materials? Weekdays during business hours may work best. Food or kitchen supplies? Try the evening, when people are feeling hungry.
You might even pay less per impression overnight. But a lower cost per impression might not mean a lower cost per lead, because fewer people may be inclined to buy in the wee hours. It often takes a good bit of experimentation to get things right.
Where?
Yes, you can often choose where you advertise, too.
Of course, you can target geographic locations, but we’re including that under “who” you target. But you can also choose the placement and type of ad you want.
For example, with Facebook, you can choose whether you want to publish only on desktop or only on mobile, or both. You can place your ad in the feed or, on desktop, in the right column. They provide similar options for Instagram.
Your cost per impression will vary based on the location. At the same time, not all locations are as likely to convert. As always, it can take some experimentation.
Why?
There are many different kinds of conversions. Which are you trying to get?
The end goal is to sell, but you can take many intermediate steps in between. You might consider a website visit or a message to be an immediate goal. You could be looking for more page followers. Maybe you just want to create brand awareness at this point. Or you could be going directly for an actual sale.
Before running an ad, you have to think about why you’re doing it. It’s often helpful to advance in small steps and have short-term goals that will produce long-term success.
How?
We all know how to get to Carnegie Hall: “Practice, practice, practice!”
For paid advertising on social media, it does take practice. But it also takes tweaking, tweaking, tweaking. It would be great to say you can just set it and forget it – but you can’t. You may get results, but those won’t be the best results you can get.
The first few days after your ad starts won’t provide much information. But after four of five days of a campaign, you can begin to see trends. You can follow when your impressions are leading to results. And you can see weaknesses and strengths. From there, you should check regularly (or make sure your specialist is). Making adjustments is a good thing, not a sign of a bad campaign. And it will affect your overall costs, leading to more conversions.
Estimates, Yes. Precision, No.
Of course, you don’t have to go in completely blind. As a campaign is being set up, the platform will give an estimated range of how many impressions and conversions you might achieve. We’ve found that, over time, those numbers are pretty spot on. The longer your campaign runs, the closer it conforms to the estimates. For instance, Facebook might say you can expect 90-100 conversions per day. Some days you might have 10, others may reach 200. But in the end, you’re going to be right around an average of 95.
Unless a specialist has worked with a campaign almost identical to yours recently, they won’t be able to give you a number without research. Even then, it’s an educated guess based on similar campaigns.
In the end, you’re not going in blind. But there’s also no immediate answer without investigation.
It’s Not About The Cost, It’s About The Value
It’s important to remember that a “reasonable amount” to spend per lead isn’t a constant. It depends on your product or service and what your profit margins are. It also depends on how frequently the client or customer will buy from you.
We won’t get into the details of customer lifetime value here. For now, it’s enough to remember that this newly-acquired client will hopefully remain your client over some extended period. And their value to you isn’t just based on an initial purchase.
The lifetime value has to be factored in when you try to figure out if any marketing campaign is worthwhile. Remember, your marketing is an investment in making them a returning customer.
Social media ads aren’t sold at a set price. A lot of factors go into the cost, and most of those are based on competition. Your cost per lead will vary widely based on your target audience and the quality of your ad.
Someone may pay $1 for a lead while someone else may pay $50. The first may be paying too much if their profit margin is just $.75. The second may be getting an amazing deal if they make $1000 on every sale.
So when your digital marketing specialist tells you they can’t tell you off the bat what it will cost – there’s a good reason for that.