17 min read
Updated: June 17, 2022

How Are Social Media Prices Determined?

Social media marketing revolutionized the way businesses communicate. By itself, it's not enough to drive business growth. However, it facilitates customer connection, increases brand awareness, and can boost leads and sales when used with a comprehensive digital marketing strategy.

Once you have an optimized website and a solid content marketing strategy, you should develop a social media marketing strategy. People spend an average of 2 hours and 25 minutes on social networks and with over 53% of the world’s population on social channels, it makes sense that big and small businesses are investing in social media marketing to reach potential customers.

In this blog, we’ll look at social media pricing and how to avoid common pitfalls that lead to wasteful ad spending.

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What Influences Social Media Ad Pricing?

Most businesses ask how much they should allocate towards their social media marketing budget. This million-dollar question (no pun intended) is challenging to answer.

Honestly, while we can provide ballpark figures, social media marketing costs depend on:

  • The size of your company
  • Your industry sector
  • The social media platform
  • Your company’s total annual revenue

Every business’s social media marketing budget is different. Across the board, research suggests most companies spend about 5% to 15% of their annual revenue on marketing. Of this, 35% to 45% goes towards digital marketing. And then 15% to 25% of digital marketing gets spent on social marketing efforts (both organic and paid).

Your overall digital marketing goals will also influence how much you allocate towards your social media budget.

How Paid Advertising Works on Social Media Platforms

With paid advertising (social media included), advertisers bid to participate in real-time auctions to show their ads within slots on a specific platform or network. Pay-per-click advertising, branded or influencer-generated content, and display ads are all examples of paid social media.

Before we delve into social media advertising options, let’s discuss some marketing concepts associated with social media advertising costs:

  • Cost-per-click: This is when you pay every time someone clicks on your ad.
  • Cost-per-impression: This refers to the rate you’ve agreed to pay per 1,000 views of a particular ad.
  • Impressions: The number of times your content is displayed, no matter if it was clicked or not.
  • Cost-per-engagement: The cost you pay for ads when users interact with them.

social media advertising costs concepts

How to Calculate Social Media Advertising Return On Investment (ROI)

It’s pointless providing a formula for determining the cost of each type of ad across social media channels because there are so many variables at play. From a business perspective, your social media marketing should be increasing sales and profits.

Ideally, social media marketing must generate enough profit and cash flow, so you don’t have to dig into business capital to pay for marketing. If you’re spending more than you’re making (excluding initial start-up costs) then you need to reevaluate your social media marketing strategy.

You can figure out the specific ROI for each social network by segmenting earnings and costs per channel using the same formula below.

ROI = Return (profit from social media marketing) / Investment (total cost spend on social media marketing x 100%

Therefore, if sales grew by $2,000 and the marketing campaign cost $200, then the simple ROI is 900%. (($2000-$200) / $200) = 900%.

ROI formula

Instagram Advertising Costs

Instagram advertising costs anywhere between $0.20 to $7.00 per click on average. This varies according to industry, location, and ad placement. Competitive industries and demographics usually cost more, and sometimes exceed $5 per click.

  • Cost-per-click: between $0.20 to $2,
  • Cost-per-impressions: roughly $6.70 per 1,000 impressions
  • Cost-per-engagement: $0.01 to $0.05 per engagement.

How Not to Waste Money

As we mentioned earlier, internet advertising works on a bidding system. If you’re inexperienced with social media advertising costs, you should use automated bidding. It is the simplest way to get a bid that’s right for your campaign.

Automated bidding is the best way to go if you don’t have historical data to determine what your ad campaigns should cost. Using it prevents your businesses from over-bidding, i.e., spending too much money per ad campaign.

In short: automatic bidding is a smart way to minimize the expense of your Instagram ads.

Facebook Advertising Costs

The industry average for Facebook ads is between $0.50 and $2.00 per click. According to Wordstream, the average cost-per-click across all industries is roughly $1.72. Again, this depends a lot on your business, campaign objective, target audience, and many other factors.

  • Cost-per-click: around $0.35 globally, and $0.23 in the U.S.
  • Cost-per-impressions: roughly $7.19 per 1,000 impressions
  • Cost-per-engagement: about $0.12 per engagement

How Not to Waste Money

Social media marketing with positive ROI is laser-targeted. Millions of people are online, and the only way to reach your niche is to create the type of Facebook ad that appeals directly to them and not some vague, generalized idea of who your target audience is.

By narrowing your target audience, you dramatically reduce competition from other brands running ads to a similar audience. Keep in mind that you’re in a “bidding war” with hundreds of other companies, so you should only bid on whom you really want to reach.

This means tailoring ads to a target market in a specific demographic and geographical area with a specific set of interests. This gives you the best chance of lead generation and traction on popular social media networks.

P.S. It’s also important to stick to your social media budget. It’s easy to spend more money to improve cost-per-click or cost-per-action. So many businesses fall into the trap of increasing their monthly ad spend without optimizing their ads first!

Why Using Ads Manager is Better Than Clicking the Boost Button

It’s essential to identify exactly what you want to achieve with a social media marketing ad. For instance, if you want increased audience engagement on your Facebook Page or to develop brand awareness, then boosting a post is a great way to maximize visibility.

However, in the long term, it is better to use Ads Manager to create more advanced ad types and social media campaigns. While boosted posts let you focus on website clicks, page engagement and local business promotions, Ads Manager lets you choose objectives like increased traffic, greater conversions, and lead generation.

With Ads Manager, you can expand your content’s reach, while also optimizing your targeting. Boosting is more limited, while Ads Manager offers greater and better customization better for increasing traffic, driving sales, creative control, and advanced targeting.

Twitter Advertising Costs

Social media marketing costs on Twitter depend on your ad type, which includes promoted tweets, promoted trends, and promoted accounts. According to WebFX, promoted accounts cost $2 to $4 per follow and promoted trends cost $200,000 a day!

  • Cost-per-click: roughly $0.38 globally.
  • Cost-per-impressions: roughly $6.46 per 1,000 impressions
  • Cost-per-engagement: around $1.35 per engagement

How Not to Waste Money

We all know Twitter is the king of hashtags. They help build engagement and get your audience to interact with you on social media posts. However, when it comes to Twitter ads, be wary of the hashtag!

They can be distracting and prevent your target audience from clicking on your ad. If your main objective is to get people to follow your Twitter page or build brand recognition, then hashtags can be a great supplement to engage audiences because they can learn more about your business via the hashtag.

However, if you want to earn conversions avoid using hashtags, so your audience focuses more on clicking on your ad. The last thing you aim to do is spend money on an ad campaign only to yield poor results that could be avoided.

Minimum Budget for Social Media Ads

Your overall ad spend varies depending on whether you’re doing B2C or B2B marketing. B2B businesses typically spend up to 5% more on their total marketing budget. Remember, social media advertising costs have to include ad spend, technology, talent and social media agency services.

Social media advertising services cost around $1,500 to $5,000 per month if you’re outsourcing your social media management and social media advertising to an agency. Some will offer a social media marketing package, while others provide more customized services.

Meta recommends the following when working with social media marketing budgets:

  • Allocate enough budget for your specific campaign. Generally, the more difficult a goal is to achieve, the more expensive it is. For instance, if your campaigns are designed to encourage buying, they will cost more than campaigns designed to increase website views.
  • For set budgets, most advertisers charged from impressions should allocate at least $1 per day for your daily budget.
  • If you choose to cap your bidding, your daily budget should be at least five times that amount. For example, a cost cap of $2 equates to $10.

The best way to save money on monthly ad spend is to do proper market research. In other words, don’t waste time using social media accounts that your customers aren’t on. Additionally, you’ll want to keep tabs on analytics, paying close attention to which types of content work best, so you can create more to boost sales. Hiring a social media marketing agency can also help save time and money.

Why You Need Paid Advertising on Social Media

So, why should you spend money on social media marketing services and paid ads when social media is free? Good question!

It is as simple as this: You get what you pay for. Today, non-paid (organic) posts on Facebook business pages receive less than 2% of their target audience’s attention. Hate it or love it; you have to have serious skin in the game to succeed.

paid social media ads - why you need it

And this doesn’t necessarily mean loads and loads of cash. It’s a combination of smart social media strategy and wise spending that can help you compete with established brands.

Essentially, paid ads boost distribution. With them, you’re guaranteed to reach a defined audience and can utilize your content to elevate your business with specific targeting. Paid advertising is a must, and it works when it is part of a strategic digital marketing campaign.

Instagram vs. Facebook vs. Twitter

Again, it’s not so much about the platform. It’s about your audience. It’s absolutely pointless advocating for a social media platform if your audience doesn’t use it.

Below is a brief summary of each platform’s advantages.


  • Instagram is entirely visual.
  • Its sole purpose is to let users share videos or images with their audience
  • The majority of Instagram users are Millennials or Gen Z.
  • This social media platform is excellent for eCommerce stores, especially retailers.


  • Facebook is designed to connect with people who share similar interests.
  • Users can share pictures, videos, and articles.
  • Generation X is most likely to use Facebook, although it has a wider audience base than other social media platforms, including Gen Z, Millennial and Boomer audiences.
  • It’s not specifically visual-based, although image-based ads do perform better. Considering its broad user base, Facebook caters to all sorts of businesses, especially home services and professional services, as well as retail.


  • Twitter is a microblogging platform. It is often considered the SMS of the internet.
  • While Twitter is mostly used by Millennials, Gen Z and Gen X are close behind.
  • Tweets with copy between 50 and 100 characters, accompanied by strong images. Surprisingly, images outperform video.
  • Twitter supports all types of businesses, although retailers, brand names, and professional services tend to do best (B2C).
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Achieve Results With a Social Media Marketing Agency

As you can see, there is no set answer to the question, “how much do social media ads cost?” Your social media advertising cost is ultimately a percentage of your revenue, which is unique to your business. As such, most business owners hire digital marketing agencies to help navigate social media platforms.

Comrade Digital Marketing Agency is a full-service digital agency that specializes in social media advertising. Our experts are up-to-date with the latest trends to ensure our clients get the most value for money. When you partner with us, you get a unique social media strategy, that’s specific to your business aspirations.

I hope you enjoy reading this blog post.

If you would like to discuss your project, reach out to our specialists.

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About the Author
Sasha Berson
Sasha serves as Managing Partner and VP of Client Solutions for Comrade Digital Marketing, a Chicago-based marketing agency dedicated to solving client’s most pressing digital challenges.
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