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How Much Does Facebook Advertising Cost?

How Much Does Facebook Advertising Cost?

How Much Does Facebook Advertising Cost?

Boasting 2.9 billion monthly active users worldwide, Facebook is one of the most popular and valuable platforms for advertising. 

But simply placing your advert in front of a crowd doesn’t guarantee success. Ad fatigue is a real concern and Facebook’s advertising costs can significantly vary, potentially leading you to spend more than you gain in return. 

Read on to discover what Facebook advertising costs are, and how to make sure that you’re getting the best ROI as possible. 

A Breakdown Of The Cost

A Breakdown Of The Cost

A Breakdown Of The Cost

There are 3 main metrics Facebook bills advertisers on:

  • Cost-per-click (CPC)
  • Cost per impression (CPM)
  • Cost per lead (CPL) 

 

Cost-per-click (CPC)

CPC is calculated by: total ad spend/ number of clicks received.

This means that if you are running a CPC campaign, you will only be charged every time a user clicks on your advert. For example, if you spent a total of $200 on ads and got 100 clicks, you can expect a CPC of $2.

  • Total ad spend/ number of clicks
  • 200/ 100 = 2

A good CPC for Facebook advertisements will differ depending on your industry, product, service and audience. 

But generally speaking, Facebook CPCs are heavily intertwined with your Click Through Rate (CTR) – The higher your CTR, the lower your CPC will be. 

 

Average CPC on Facebook is $0.57 per click.

How Much Does Facebook Advertising Cost?

How Much Does Facebook Advertising Cost?

How Much Does Facebook Advertising Cost?

Cost-per-impression (CPM)

  • Average CPM on Facebook is $9.29 (at the time of writing).

CPM is the cost you pay per 1000 views your Facebook ad receives. This is beneficial for businesses looking to increase brand awareness and visibility. 

CPM can be calculated by: (total ad spend/ number of impressions) × 1000

For instance, if you spend $1000 on ads and get 25000 impressions, your CPM will be 40.

  • (1000/25000 × 1000= 40 

A good CRM for Facebook Ads varies depending on the industry you are in, so don’t worry if your CPM is much higher than $9.29. As long as it is around the same or lower than your industry average, you won’t need to worry. 

As a rule of thumb, you’ll want your CPM to be on the lower end of the scale. A low CPM means that you can get more impressions for lower advertising costs.

 

Average CPM on Facebook is $9.29 per 1000 views.

Cost-per-lead (CPL)

  • Average CPL on Facebook is $8.41 (at the time of writing) 

Cost-per-lead (CPL) measures the average cost of acquiring a new lead. This is calculated by: total cost of generating leads/ total number of leads.

For example, if you spent $500 and generated 22 leads, your CPL is $22.73.

  • 500/22 = 22.73

A good CPL for Facebook ads depends on various factors like your profit margins, your industry, your KPIs, break-even point, lifetime value of customers, and much more. 

 

Average CPL on Facebook is $8.41

How Effective Are Facebook Ads?

How Effective Are Facebook Ads?

How Effective Are Facebook Ads?

It all depends on your industry and goals. But on average, conversion rates for Facebook ads are around 9-10%.

This conversion rate is better than Google Ads 4.2% (Search), while display ads humbly trail behind at 0.55%.

Additionally, consumers are actually 50% more likely to buy something they’ve seen on Facebook than other social media sites.

With this track record, Facebook ads could be the way to catch potential customers from your target market.

Different Types of Facebook Ads

  • Photo Ads
  • Video Ads
  • Carousel Ads
  • Slideshow Ads

What determines Facebook advertising costs?


Facebook advertising costs aren’t set arbitrarily. How much you can expect to spend is actually heavily dependent on a range of factors. Let’s take a closer look.


#1. Audience

#1. Audience

#1. Audience

Your target audience significantly influences how much you spend on your Facebook ad. This can include:

  • Demographics
  • Location
  • Interests
  • Income level

Highly specific or highly competitive segments can drive up costs, since there will be more marketers trying to advertise to those groups. 

It’s all about supply and demand. The more popular an audience segment is, the more expensive it will be to target them. 

For example, 

  • Did you know that targeting women can increase your CPC by $0.55?
  • Ads that target 55-65 year olds cost more than ads targeting 25- 34 year olds?

This is because of a lack of supply. Women tend to be more selective about the ads they click on, and there tends to be less 55 – 65 on Facebook than 25 – 34 year olds. 

However, being specific with your targeting can help make sure your ad is relevant to the right audience, increase CTR and reduce costs. 

#2. Ad budget

#2. Ad budget

#2. Ad budget

Your ad budget is another factor that influences how much your Facebook advertising will cost. The higher your budget, the higher your cost – it’s a no brainer. 

But your budget also directly corresponds to how well your ads perform. 

A small budget will limit how many people see and click on your ad. We suggest you spend at least $5 a day on your campaign, to strike a balance between visibility and cost. 

Your overall budget will also depend on how long you can run your ads for. A budget of $100 will let you run your campaign for 20 days, while a budget of $150 lets you run for a whole month. 

This ultimately comes down to what your objectives of the campaign are.

#3. Ad bid

#3. Ad bid

#3. Ad bid

Facebook ads work as an auction. Businesses need to bid in order to secure a place for their ad. This process takes into account your budget, your bidding strategy, target audience, and previous ad performance to determine how well your ad might perform. 

In regards to bidding strategies, you can choose from three main bidding strategies on Facebook.

1. Highest volume

Highest volume bidding tells Facebook to maximize results within your budget. It will make bids for you based on what they see is the best low-cost opportunity for your ad.

This is best for beginners who are just starting out, people who want to spend their full budget, and those who don’t have a specific cost-per-action goal. However, you should keep in mind that the highest volume bid very limited in its capacity.

2. Bid cap

Big cap tells Facebook the maximum amount you’re willing to pay to reach your target audience. This gives you more control over your bid costs and your budget. However this is a hard limit, so if your bid cap is set to $5 but the cost is $5.30, you’ll lose the auction. 

3. Target cost

This is also called “manual bidding.” It’s where you try to keep your bids at the same cost. This strategy only applies to lead generation, product catalog sale campaigns, app installs, and conversion. Keep in mind that Manual bidding costs more than automatic bidding.

#4. Ad objective

#4. Ad objective

#4. Ad objective

When creating a Facebook ad, you’ll need to choose from the three main objectives:

Awareness

This focuses on reaching a broad audience and building brand awareness. Ads are optimized to maximize impressions – rather than engagements or clicks. Awareness can be a great way to generate initial interest, but it might not always encourage users to act, which might result in lower ROI. 

Consideration

This aims to drive specific actions like website visits, lead generation or app installs. Ads focused on these goals often have higher costs per click or action because they target users who are more likely to engage with your content. The costs can vary based on competition and the specific action you want users to take.

Conversion
These ads are designed to drive conversions, like sales and traffic. Conversion ads tend to cost more, because they target users who are more likely to make a purchase or complete a desired action. Facebook optimizes the ads for direct results, that can drive up costs but potentially offer higher ROIs if audiences convert. 

#5. Ad placement

#5. Ad placement

#5. Ad placement

For those that don’t know, Facebook owns Instagram – another social media giant with 1 billion users! This gives advertisers a lot of options to choose from:

  • Instagram
  • Instagram Stories
  • Facebook Desktop Newsfeed
  • Facebook Right Column
  • Facebook Messenger
  • Audience Network

Different ad placements can have different levels of competition and engagement, affecting advertising costs. 

For instance, CPC Instagram ads cost an average of $0.30 more than Facebook. Ad on Audience Network tend to cost less than Facebook or Instagram. 

#6. Ad quality

#6. Ad quality

#6. Ad quality

Facebook rates the quality and relevance of your ads, and this will affect how much you pay. Ads created with a high relevance and engagement score cost less. These ads will get a rating out of 10, 10 being the most favorable score.

Facebook gives these scores based on the feedback (whether it’s positive or negative).

In order to check out your ad’s relevance and engagement score do the following:

  1. Go to Ads Manager
  2. Select the ad you wish to see
  3. Choose the Columns dropdown menu
  4. Click Customize Columns
  5. Select Relevance Score
  6. Hit Apply
  7. View your Relevance and Engagement Score.

Know that Facebook needs, on average, 500 ad impressions or views before giving your ad a score.

#7. Season

#7. Season

#7. Season

Seasons and specific times of the year significantly impact Facebook ad costs. During popular advertising periods, increased demand for ad space drives up competition and costs.

The most expensive days of the year to advertise are:

  • Black Friday
  • Cyber Monday
  • Thanksgiving
  • Christmas
  • Boxing Day
  • New Year’s Eve
  • New Year’s Day

Even though these ads will cost you more, the huge number of potential shoppers might very well be worth the investment.

#8. Industry

#8. Industry

#8. Industry

Different industries are not created equally in the eyes of Facebook. Here are some current average prices of CPC per industry:

  • Apparel: $0.45
  • Auto: $2.24
  • B2B: $2.52
  • Beauty : $1.81
  • Consumer Services: $3.08
  • Education: $1.06
  • Employment & Job Training: $2.72
  • Finance & Insurance: $3.77
  • Fitness: $1.90
  • Home Improvement: $2.93
  • Healthcare: $1.32
  • Industrial Services: $2.14
  • Legal: $1.32
  • Real Estate: $1.81
  • Retail: $0.70
  • Technology: $1.27
  • Travel & Hospitality: $0.63

As you can see, the most expensive CPC industry is consumer services, while the cheapest is apparel.

How You Can Lower Facebook Advertising Costs

How You Can Lower Facebook Advertising Costs

How You Can Lower Facebook Advertising Costs

1. Pick the right campaign objectives

There are multiple objectives to choose from: Awareness, traffic, engagement, Leads, App promotion, and Sales. The algorithm pairs your objective with users who fit its criteria. If you’re bidding for sales, your ad is more likely to be shown to users who made purchases through the platform before. 

Selecting the wrong campaign can lead to higher costs, since you wouldn’t only be paying for the ad itself but would also have to incur the cost of advertising to the wrong audience. 

2. Use Advantage+ Options

Advantage+ automatically optimizes targeting, budget usage, placements and more. If you are a beginner to Facebook advertising, consider using this tool to get you the best results for lowest overall Facebook cost

3. Run retargeting campaigns

This approach effectively re-engages users who have previously interacted with your business. By targeting individuals who already know and trust your brand, you can boost conversions at a lower cost compared to acquiring cold traffic.

4. Increase your click-through-rate (CTR)

Higher CTRs lowers your ad cost. This is because Facebook rewards ads that engage users. If more people click on your ad, Facebook sees it as relevant and interesting, so they show it to more people at a lower cost, reducing your cost-per-click (CPC) or cost-per-impression (CPM).

5. Hire a Facebook advertising service agency. 

There are so many moving parts when it comes to running a Facebook ad. From selecting the right target audience, to setting the budget, to conducting and implementing the results of an A/B test, there are many nuances to Facebook ads. While there is a huge audience on the platform, simply putting an ad in front of them will not guarantee success since there are a million other advertisers doing the same. Hiring an experienced agency can ensure that you’re getting bang for your buck. 

Conclusion.

Conclusion.

Conclusion.

If you want to grow your business with Facebook ads in your marketing campaigns, achieve your marketing objectives, and work with a leading Facebook advertising agency, call us today to speak with a Digital Strategist.

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