When it comes to Facebook ads, $0.79 is the average CPC, while $11.01 is the average CPM. Read on for the details and learn how to optimize your return on ad spend.
Here you’ll find:
- A breakdown of the CPC model
- What factors affect Facebook ad cost
- What you can expect to get for a $100 budget
- Tips for how to reduce your Facebook ad cost
Social media continues to dominate the advertising landscape. Understanding the average cost, metrics, and factors influencing Facebook advertising (Meta) is crucial for optimizing your ad budget and maximizing return on ad spend (ROAS).
According to eMarketer, in 2021, Facebook Ads accounted for nearly one-fourth of digital advertising spending. That’s a big chunk of any marketing team’s budget, so you want to make sure those dollars aren’t going to waste.
In this article, we’ll dive deep into the details of Facebook ad costs. We will answer your burning questions and provide actionable tips on how to reduce your Facebook ad cost effectively while simultaneously increasing leads.
How much does an ad cost on Facebook?
Facebook ads cost $0.79 per click, on average. Unfortunately, there is no end-all-be-all number for how much Facebook ads cost. But we can examine the benchmarks by industry to get a general idea.
To break down what you get for your money and really understand what your ads cost, you first need to understand the Facebook Ads pricing models.
Cost-per-click (CPC) model
The first and most popular choice for Facebook ads pricing is cost-per-click (CPC). This model charges you for each click your ad receives. According to Revealbot, the average cost per click (average CPC) in May of 2023 is $0.79. But keep in mind that this figure can vary widely depending on factors such as industry, targeting options, and ad quality.
Cost-per-mile (CPM) model
The cost-per-mille (CPM) model charges you for every 1,000 impressions your ad receives, offering a different perspective on your ad costs. This pricing model typically works best when your goal is to raise brand awareness rather than generate leads.
The same Revealbot data shows that the average Facebook CPM in May of 2023 is $11.01. As you can see, this is a lot higher than the CPC model.
Cost-per-lead (CPL) model
As the name suggests, the cost-per-lead (CPL) model focuses on the cost of lead acquisition.
It is particularly effective for Facebook ad campaigns centered around lead generation and acquiring valuable customer information.
When you are paying for each individual lead, you can directly measure the effectiveness and cost-efficiency of your lead acquisition efforts. The average cost of Facebook CPL ads in May of 2023 is $9.57. Again this is a more expensive pricing model.
Understanding these alternative pricing models gives you some insights into the nuances of Facebook ad costs and can help you decide where you want to allocate your budget.
But as we mentioned above, it’s important that you don’t place too much weight on the average costs. Sometimes these will be unachievable for you because of your industry, and you may spend more or less. For example, Wordstream says CPC for Apparel is $0.45, whereas Finance & Insurance is over 8 times as much at $3.77.
What factors go into Facebook ad costs?
Those numbers may make you feel a little confused. When Facebook ad costs vary so much, how can you plan your PPC budget?
Well, the first thing you need to do is understand what causes those variations in prices.
“As most Meta buying objectives are auction based, the primary factor that indicates auction cost is competition,” explains Magnolia Deuell, one of HawkSEM’s lead strategists. “Things like audience and time of year will definitely have implications on all costs, especially CPM.”
She adds that, in the ecommerce space, she sees a huge increase in CPMs during Q4 (specifically around cyber week) vs. Q1, where she sees huge CPM efficiencies.
Here are some of the main factors that dictate the cost of advertising.
1. Auctions and bidding
Facebook uses an auction system to decide who gets an ad placement. Basically, you and a bunch of other advertisers who target the same audience will compete for the same spot.
The auction process focuses on bidding (how much you want to pay for said spot), but the algorithm also takes into account things like ad quality and estimated action rates to choose which ad will be shown. Your bidding strategy and the bid amount you set directly impact your ad costs.
2. Audience targeting
How specific your target audience is will affect the cost of your Facebook ads. Highly competitive or broad audience segments will result in higher costs. You have greater competition vying for the attention of those users, so bids quickly get expensive.
In contrast, more refined targeting, which takes advantage of the precision targeting options that Facebook ads offer, can help increase ad relevance and potentially reduce costs.
3. Ad quality and relevance
Facebook wants to serve relevant ads to its users so that they enjoy a pleasant user experience. As such, it rewards relevant, engaging, and valuable ads with lower costs.
Your relevance score will range from 1 to 10 and assigns a numerical value to the relevance of your ad to the target audience. A higher relevance score indicates better ad performance and can potentially reduce your Facebook advertising costs.
Designing high-quality ad creatives with compelling copy will please both Facebook users and Facebook’s algorithm.
4. Ad placement
Different ad placements, such as the news feed, right column, or audience network, may have varying levels of competition and user engagement, which can affect pricing. If you test and optimize your ad placements can find the most cost-effective options for your campaign.
5. Seasonality and demand
Certain times of the year or specific events can impact the demand for ad space. Increased competition during peak seasons or popular events can lead to higher ad costs. This is something you should consider ahead of time so that you can adjust your budget and bidding strategy accordingly.
As with other digital marketing platforms like Google Ads and TikTok, competition is the single biggest factor to affect pricing. When there are many competitors in the space, they vie for the target audience’s attention and set their bids and budgets higher and higher. In the end, average CPCs rise and cost per acquisition increases with it.
7. Many ad types and formats
Meta offers a variety of ad types and formats. You can run carousel, image, video, and collection ads to showcase your product or service to your audience. Ad types include lead ads, traffic ads, and conversion ads. These types are designed to help you reach your campaign’s goals. Just bear in mind you can’t mix ad types in ad sets.
Deuell does have a warning about some ad types. “Low-funnel ad formats that ask a user to take action should be spared for audiences who are already brand aware. You should not be asking a net new prospect for information exchange or to purchase a product upon the first touch.”
“Focus on relationship building before you ask a user to give their first-party data up,” she says, “Users are hyper-aware of privacy and will only connect with brands they trust.”
Is $100 enough for Facebook ads?
A common question businesses have when approaching Facebook ads for the first time is how much budget they need. Initially, you may want to dip your toe in the water and see how things go. Perhaps you want to start with a small budget of $100, but is that really enough?
Set realistic expectations
While $100 may seem like a substantial budget, it’s important to manage your expectations when it comes to Facebook ads. Over what time frame do you plan on spending the $100? A daily budget of that size would allow you to reach a large audience.
A week or a month, however, would be a different story. The budget would be stretched thin and would not be adequate to help you achieve your goals.
With a limited budget, focusing on specific goals and prioritizing targeting options yielding the best results is crucial.
Allocating the budget strategically can still generate meaningful outcomes and provide valuable insights. But in general, you will want to allocate a larger budget to see more notable results.
How do Facebook ads compare to other ad types and social ads?
When considering your advertising options, it’s important to understand how Facebook ads stack up against other ad types and social media platforms like TikTok.
Reach and user base
Facebook boasts an enormous user base, with over 2.96 billion monthly active users as of 2023. This vast reach provides an unmatched opportunity to connect with a huge audience and target specific demographics, interests, and behaviors.
Facebook’s robust targeting options allow you to hone in on specific audiences with precision. You can target users based on demographics, interests, and behaviors and even retarget those who have engaged with your brand previously. It’s very easy to build custom audiences to fit your target market. This level of granularity sets Facebook apart from many other advertising platforms.
Facebook ads offer a range of pricing models (which we covered above), so you can choose the model that aligns best with your campaign goals. With careful planning and optimization, Facebook ads can be cost-effective, particularly when compared to traditional advertising methods such as TV or print ads.
Performance metrics and optimization
Facebook provides comprehensive performance metrics and robust optimization options that will help you carefully measure your results and continue to improve your campaigns. You can track key metrics like impressions, clicks, conversions, and engagement.
Integration with Instagram and audience network
Facebook is part of Meta, which is also the parent company of Instagram. That means you can access both Facebook and Instagram ads under Facebook ads manager. Additionally, Facebook’s Audience Network allows you to display your ads on third-party websites and apps, further expanding your ad’s reach.
Competition from other social ads
While Facebook remains a dominant force in the social media marketing landscape, it faces competition from platforms like Instagram, Twitter, LinkedIn, and Pinterest. Each platform has its own unique strengths and audience demographics. Understanding your target audience and their preferences can help you identify the most effective platforms for your specific advertising goals.
How to tell if Facebook ads are a good investment for your business
To decide whether Facebook ads are a worthwhile investment for your business you need to carefully evaluate a few factors.
Deuell has provided some insights on this. “Having clearly defined business objectives that latter down to marketing/channel goals is very important when deciding where you want to invest your advertising spend,” she says.
“Because Meta can drive upper-funnel brand awareness and also low-funnel conversion efforts, it’s important to set clear expectations so you are maximizing your ROI.”
She gives this example, “If you have no other awareness efforts, but you know paid search converts your customers, maybe the opportunity for Meta is to drive awareness (i.e., search volume).”
Here are some key indicators to help you establish if Facebook ads will be a good choice for your business.
Define your advertising objectives
Clearly define your goals before investing in Facebook marketing. What do you want to get out of your ads? Increased brand awareness, more website traffic, more leads? Align your objectives with the capabilities of Facebook’s ad platform to help you understand if it’s the right fit for your business.
Know your target audience
There is no point in running Facebook ads if your audience doesn’t spend time on Facebook. Evaluate whether your audience aligns with the demographics, interests, and behaviors that Facebook can effectively reach and engage with.
Consider your industry
Do some research into how your industry performs in the Facebook advertising ecosystem. Some industries may naturally fare better on Facebook due to its broad user base and targeting capabilities. Research your competitor’s presence and ad performance to get an idea of the potential impact your Facebook ads could have.
Analyze cost and ROI
Assess the cost-effectiveness of Facebook ads based on your budget and expected return on investment (ROI), not vanity metrics like video views.
Consider the lifetime value of your customers, expected conversion rates, and average order value to estimate the potential ROI. Compare the costs of Facebook ads to other advertising channels to see if it is a good place to allocate some of your marketing budget.
Monitor competition and ad performance
Get sneaky and spy on your competitor’s ads. Review how your competitors are leveraging Facebook ads and monitor their ad performance. Analyze their messaging, targeting strategies, and engagement levels to gauge if Facebook ads are driving meaningful results for businesses similar to yours.
Review key metrics like click-through rate (CTR), cost per action (CPA), CPC, and link clicks, and plan your marketing strategy based on the results.
How to reduce your Facebook ad cost
Once your Facebook ads are up and running, you don’t want to leave them to stagnate. Even if you already have your costs under control and within your budget, there may still be additional ways to optimize your ads to reduce spending.
Here are a few things you can review.
Select the right campaign objective
Choosing the appropriate campaign objective is crucial for optimizing your ad cost. Align your objectives with your overall marketing goals to ensure your budget is allocated effectively.
Narrow your audience targeting
By narrowing down your target audience, you can increase the relevance of your ads and minimize costs. Leverage Facebook’s robust targeting options to refine your audience based on demographics, interests, behaviors, and past interactions.
Run retargeting campaigns
Retargeting campaigns are a powerful way to reach users who have previously engaged with your brand. By serving ads to a warm audience, you can increase conversions and lower costs, as these users are already familiar with your products or services.
Facebook ads hold immense potential for marketers who want to reach and engage their target audience. By understanding the factors that influence Facebook ad costs, such as bidding strategies, audience targeting, and ad quality, you can optimize your campaigns for maximum results.
Remember, each business is unique, and what works for one may not work for another. Experimentation, testing, and continuous refinement are key to finding the right approach and unlocking the true potential of Facebook advertising for your business.