Why running ads on Facebook and Instagram is still underpriced compared to Google?



Orange County, California

If you haven't been living under a rock for the past couple of decades, you know that the best advertising platforms on the internet are Google, Facebook, Instagram, Twitter, LinkedIn, and a couple of others like that.

Out of them, Google, Facebook, and Instagram are the three biggest players.

It's simply because of the sheer amount of traffic that come into each of these platforms.

Now, if you've been around the industry, you know that Google's cost of advertising is higher (sometimes, way higher) than the others.

At the same time, Facebook and Instagram ads don't seem to increase in prices like Google's.

Here's the thing. Not all of these platforms are the same. Nor the mechanics of advertising.

Let's see how they differ.

Google is a search engine. That's all it is.

Now, what people do on a search engine, is searching. Searching for things. Many things. 

Out of all the things that they search for, sometimes, they're looking to buy, or willing to spend money on whatever they're searching for.

So, if I'm going to search on Google for the "best online copywriting course", on top of the search results, Google is going to show me a couple of ads of copywriting courses - provided that there were people who paid for any copywriting ads to display in the first place.

Now, if the copy of that ad is good, I mean, really good, I'll probably click on it. KACHING! Since Google's ads are only CPC (cost per click), the advertiser is charged - because I clicked on the ad.

Now, there's a couple of things to consider.

1. People search using keywords. These keywords 'trigger' the ads (if there's any) that have been set up to that keyword. Now, keywords are the only way you can 'target’ a potential customer. But, since there's a bidding in place to see whose ad is going to show up first, the price for an ad space is 'hyped up', simply because there's always someone who's willing to pay more for that spot.

2. The people who search, are actively 'looking for something'. Meaning, that they're ready to buy, if all went smoothly. So, they're considered 'hot leads'.

And, hot leads, are always expensive. I mean really expensive.

So, due to these 2 reasons, Google ads cost more. Also, due to these 2 reasons, brands go after Google, because they want the sales. Google suitable is for sales, not for awareness. That's why you don't see articles getting promoted over Google. But guess what? They do get promoted on Facebook, Instagram, Twitter, LinkedIn, etc.

The thing about social media ads, is that there's a load of options and variables that you can tweak with, in order to reach your 'perfect' ideal customer.

So, the chances of getting a whole new set of parameters for an ad, is high. Since it's new, Facebook can hardly determine a price tag for a lead. So, they let you advertise on their basic rate, and see if any others are interested in using it.

For example, say if you own the only law firm in Wakanda. I know it's a bit much, but bear with me. Now, you're targeting people in Wakanda, and since there are no other law firm to out-bid your offer, you're going to get the same basic rate for your ads.

Also, the people on Facebook (or any other social network) aren't targeted by something they 'actively' search, but because of the demographics they belong to. So, they're not seeing your ad on search results. They're seeing your ad on their feed.

So, they're basically 'cold leads'. Cold leads are very cheap.

Running ads on social media is very much suitable for awareness campaigns, opt-in offers, etc. because the audience on these platforms are cold, and you can use their demographics to target them in a more efficient way, and thus capture their attention. After they got into your funnel, you can nurture (most of) them into hot leads.

The reason to why social media ads is still underpriced, is that not a lot of people spend on awareness and branding, aka the long-term game. They want the 'quick sale'.

Of course, in some instances, sales can be occurred through social media ads, like in the model used by almost all of the dropshipping stores, but that's because they're targeting unique demographics, thus getting a basic rate. If they target a market like US, or UK, they'd go bankrupt in a day.