The Complete Facebook Advertising Cost Breakdown
Facebook has long been one of the leading ad providers in the digital world and just like Google advertising, Facebook advertising provides advertisers with different ad costs. On Facebook, the costs for advertising vary according to various factors, from bidding competition to ad quality and ranking.
On an average, Facebook’s cost-per-click (CPC) is $1.86, but it can also be more than than $5.00. Although small businesses usually spend between $500 to $1,500 monthly for Facebook advertising, there is no minimum monthly ad spend, hence advertisers are free to spend any amount they like.
This is one of the reasons why Facebook is a favourite advertising tool for both big and small businesses. So if you have a small business with a small advertising budget, Facebook advertising is worth considering. After all, Facebook is a platform where your customers are. Take advantage of the social media’s popularity now to help you reach your target audience.
Likewise, how much you spend on Facebook advertising is determined by many different factors — like the kind of industry you are in.
In this article, we will look into the cost breakdown for Facebook advertising, so you can have a rough idea on how much you would be spending for your upcoming Facebook ads.
Don’t forget to check out our complete Facebook Ad Sizes breakdown here.
Ready? Let’s dive in!
So is Facebook Advertising Affordable?
Absolutely! In fact, Facebook advertising offers one of the lowest CPCs you can find in town and it can be cheaper than Google Ads. On Google Ads, you can expect to see CPC of $2.69 in average.
But not all ads are equal. You could be spending more on one ad and less on another. It all depends on the quality of your ad and the competition for the ads of your industry. In general, CPCs vary a lot from business to business. Some advertisers spend less than others.
If your business falls into the category of business that is less likely to produce ads, then you could be spending more than $5 for your ads — what you could also spend on Google Ads! Facebook has a daily ad spend at a minimum of $1, or twice the cost of your average CPC.
For example, an online boutique that wants to promote their clothing to their target audience on Facebook sees an average CPC of $0.45. But an accounting software company that wants to promote their product to small businesses that might need their product sees an average CPC of $2.24.
The reason why the online boutique has lower CPC is because social media users are much likely to be more hooked to ads about beauty and fashion compared to ads for business software like an accounting software.
In other words, the online boutique has a bigger audience that is very much likely to interact with their ads.
Still, Facebook advertising is affordable. The best thing about Facebook advertising is that you can target your audience, which means your ads are only served to people who may be interested in your campaigns.
Average Facebook Ad Cost According to Industry
Unlike Google Ad Keyword Planner, Facebook does not provide their customers with a tool that shows general cost estimates for their ad campaigns. As discussed earlier, Facebook ad costs vary by various factors.
The table shown above clearly tells us that the average ad costs vary by industry. In average, CPCs on Facebook range from $0.45 to $.3.77, with apparel being the lowest whereas finance and insurance being the highest.
You may read here on how to get your Instagram business profiles verified
Exploring Different Facebook Ad Costs
Apart from CPC, Facebook also offers other Facebook advertising options such as cost per 1,000 impressions (CPM) and cost-per-action (CPA) to advertisers. Sure, the cost-per-click model is the most preferred method amongst advertisers, but Facebook’s other advertising options are effective, too.
With Facebook advertising, you can use single image or video ads, or even multiple photo or video ads to suit your advertising needs. Facebook also lets you choose from the different cost structures that they offer to suit your ad preference, marketing objective and advertising goals.
In average, Facebook’s CPM is about $2.99 according to Statista. As for Facebook’s CPM, the average cost is $18.68 according to Adstage.
Moving forward, we are going to share with you bit of information provided by AdEspresso with regards to CPC and CPL costs. The data is pulled from their users from all quarters (Q1 to Q4) of 2017. Please use this data only as a reference or a guideline.
Average CPCs by Country
The average CPC for all countries is $0.97. The countries with the lowest CPC are Croatia, Cyprus and Switzerland.
It would be wonderful if you could target people in countries where the CPCs are lower. But even if you cannot, the highest average CPC is just $2.09, which is a decent price to pay in return for getting prospects and potential customers.
Average CPCs by Age Range
Older users are usually more expensive than younger users. So if you do not necessarily need to target the older ones, you may want to focus more on targeting younger users instead.
But if you have to target older users due to the nature of your business, at least you can be happy with the fact that they are a group of people who are likely to have higher disposable income, and less debt. There’s plenty for business for you!
Average CPCs by Ad Placement
While Instagram placement is more expensive than Facebook’s, the platform is worth using as it often offers high conversions and engagement rates.
AdEspresso’s data showed that Instagram newsfeed ads have the average CPC of $1.15, which is twice higher than most Facebook placements that average around $0.50 only. That’s a big difference!
If cost is a major concern, consider looking at the audience network which is a more affordable placement.
Average CPCs by Month
The time or season that you run your ad or campaign matters a lot. If you choose to have your ad running during peak seasons, then you should expect to spend more money on your ad. AdEspresso found that during the summer months, the average CPC can go up to $0.50.
Average CPCs by Month
In 2017, AdEspresso found that in Q1 Tuesday was the most affordable day for running an ad, costing just $0.34 per click.
In Q4, however, Sunday had the lowest CPC with $0.40 in average. In fact, around this time of the year, Tuesdays and Thursdays became the most expensive to advertise with a CPC reaching nearly $0.50.
Average CPCs by Gender
It is usually more expensive to target women than men and AdEspresso knew that all too well. According to their report, every quarter (except Q3), it cost about $0.15 more to target women instead of men.
But that does not mean that you should not target women at all. If you are selling women’s sanitary pads, you are not going to target men, are you?
Average CPCs by Campaign Objective
As mentioned early on, CPM is usually cheaper than CPC, but that is not always the case. You see, optimized link clicks do not always guarantee conversions. So even if you are paying for clicks in the hope that every one of them will lead to conversions, you will not get every click to convert into sales.
As for CPM, the reaches and impressions that you are getting are exactly what you are paying for.
In the case of AdEspresso’s study, the lowest CPC they saw was $0.44 which happened by the end of Q4.
Cost per like is great for helping you gather more page followers and posts likes. Once you have people liking and following your page, you can have plenty of their information thanks to Facebook News Feeds. There is no need for you to pay for their information.
AdEspresso did a report on their CPL campaigns, which involved countries like Norway Denmark, Switzerland, Germany, Japan, Canada, Singapore and more. They learned that Norway’s CPC is not the most expensive, yet it has the most expensive CPL at $2.70. On the other hand, Sweden which used to have a high CPC now has a mid-range CPL.
Understanding the Different Facebook Ad Cost Types
There are a few ad types you could use for your Facebook campaigns such as :
Let’s explore them to understand what exactly they do, what they are best for, and how you are charged when you advertise with them.
Cost per Click (CPC)
CPC is widely used by advertisers as it is an excellent pricing model that only charges advertisers when Facebook users click on their ad’s call-to-action button. The commonly used CTAs are:
Cost per Mille (CPM)
CPM is also a great pricing model for you to consider and it is usually cheaper than CPC. For CPM, advertisers are charged for every 1,000 impressions their ads get. Unlike CPC, CPM relies on impressions that do not always equate to Facebook user interactions.
If your goal is to get clicks and potentially conversions, then you are better off using CPC instead of CPM. Use CPM when you are trying to create brand awareness.
Cost per Action (CPA)
CPA is similar to CPC, but not exactly like it. Instead of getting charged when someone clicks on your ad’s CTA button, you get charged as soon as someone interacts with your website. What kind of interactions are they exactly?
Well, Facebook lets you choose what you expect from users. Once you have chosen the goal of your campaign, then Facebook will show your ad to people it believes are more likely to take action and help you reach your goal.
If you are promoting a mobile app and you want users to download it, then your CTA could be ‘Download now’. Or if you are selling clothes on your e-commerce website, then your CTA could be ‘Buy now’. It is entirely up to you.
In the end, your goal is to get people to look at your ad and take action. The pricing for this model can be expensive, but rewarding. According to AdEspresso, a mere reach can cost you $1.01 per click! On the other hand, offsite conversions can cost you $0.37 per click, whereas link clicks can cost you $0.12 per click.
Cost per View (CPV)
This pricing model is specifically used for video ads. Advertisers will only be charged when their video ads are being watched by Facebook users. This is an excellent option when you have a cool video to promote. Many businesses promote videos of their new products on Instagram, too.
Cost per Like (CPL)
Similar to CPC, CPL uses CTA, but the difference is that its CTA is set to like your Facebook business page. This is an excellent pricing model for you if you are a brand new business (or a newbie on Facebook) looking to grow your fan page and spread brand awareness.
The cost for CPL is usually low and affordable. If you choose to go for this option, make sure you are active on Facebook. Otherwise, gaining page likes is rather useless. If you are not active on Facebook, the worst case scenario is that your Facebook fans will unlike your page.
Understanding Facebook Ad Auction
As we have discussed earlier on, how much you spend on your Facebook ad is determined by various factors, with bidding competition being one of them. Facebook Ads are similar to Google Ads that work like an auction.
You cannot just approach Facebook with a bunch of cash and get an ad. Instead, Facebook makes you compete with other advertisers (with cash to spend, like you) in order to get the best ad placements.
Ask yourself how much you are willing to spend for specific actions on an ad, like views, clicks and conversions. At the bidding section, you can manually adjust the amount you wish to spend. Otherwise, Facebook will help you calculate a bid for you simply by looking at your budget and your ad period.
There are two types of budgets on Facebook:
Daily budget — the average daily amount you are willing to spend on an ad set or campaign
Lifetime budget — the amount you are willing to pay for the whole run-time of your ad set or campaign
In order to get the best of the auction, advertisers must produce good quality ads that typically involve good quality texts, images or videos. It does not matter if you have the highest bid in the bunch; if the quality of your ad is bad, Facebook will not be bothered to give you the best placements.
Facebook only cares about ads that are relevant and attractive to Facebook users.
So how exactly does Facebook choose its ‘winners’? Facebook looks at three important things: bid, ad relevance and projected ad success.
When it comes to bidding, Facebook will look at the highest bidder. Then, Facebook will evaluate the ads that it receives and decide which one of them is the most suitable for the specified audience. And finally, Facebook will identify the ad that it believes will perform the best and create the most conversions.
By ensuring that you come up with an ad good enough to convince Facebook that yours is the best and that it is the most relevant to your target audience, your ad should be able to gain traction and do better than all of the other advertisers who are competing with you.
Sure, Facebook’s algorithm is not like as it used to be. A lot of things have changed, with page content not becoming a priority anymore. Organic reach is not going to help you much these days. Your content needs to rely heavily on the ad system in order to thrive.
Factors That Can Influence the Cost of Your Facebook Ads
One thing you should always remember: Facebook decides if your ads are good enough for their users and when they will display your ads. There are various factors that can influence how much your ads are going to cost.
When crafting an ad, always put yourself in your customers’ shoes. Your ad must be appealing, easy to understand, and relevant to your target audience in order to meet Facebook’s standards.
Make sure you know exactly who you are targeting, what you are willing to pay for ads, with whom and how many advertisers you are competing with for the same ad placement, where you wish to display your ad, and if your ad is relevant to your target audience.
The factors are: audience, bidding, objectives, competition, ad placements and ad quality. Let’s explore these factors together.
To make sure that you get the best results for your ads, make sure that you already know exactly who your target audience is. Unlike Google Ads, Facebook Ads are designed to help you reach specific groups of people rather than help connect you to potential prospects based on specific keywords.
Choose your audience wisely. Be as specific as you can. The broader your targeting, the higher your cost will be. You can choose your audience by looking at their age, gender, location, interests, zip code, connections, languages and search history.
There is no point pushing your ads to everyone because no matter what you are selling, there will always be some people who are more relevant to your ad than others. Follow the steps of big brands — they only target people who resemble their typical customers.
Different audiences mean different costs. If Facebook deems a group of audience to be high in demand, then you will have to spend more money on the ads you show to them. Otherwise, you will pay less.
So, ask yourself who you are promoting to. Are you advertising to people (B2C) or businesses (B2B)? B2C is often more expensive than B2B.
Older users, especially those at 65 years of age or more, are more expensive to target compared to the young ones. On the bright side, these older users are the ones who are likely to have more income, and less debt. You can be happy that they will have money to spend with you!
Also, bear in mind that women are more expensive to target than men. That does not mean that you should not advertiser to women. You should!
Facebook bidding is basically an auction. Facebook will see how much an advertiser is willing to pay for a certain action, like app install, CTA click or video view. The more an ad receives positive interactions, the more money that the advertiser has to spend.
Bidding plays a huge role in your ad as it has the power to heavily impact your ad. With the bidding system, the performance of your ad is influenced by what what you are willing to pay for. There are two types of bidding strategies:
Lowest cost — Use this strategy if you are looking to get the most value out of your budget, which also means that you are telling Facebook to help you get the lowest cost per optimization and still spend all of your budget by the end of the day or campaign.
Target cost — Pick this strategy if you are looking to have a stable average cost, which also means that you are telling Facebook to help you get an average cost per optimization event as close to your target cost as possible.
When you set up your Facebook ad, you need to choose your objectives. The objectives are:
Awareness — Pick this if you are looking for brand awareness and Facebook reach. The end goal is to get people (who have never heard of you before) to get to know you.
Consideration — Use this if you are looking to drive traffic, encourage app installs or gain better engagement on Facebook. The end goal is to make people want to learn more about what you have to offer, visit your website, interact with you via Facebook chat, or give you their personal information such as email address or contact number.
Conversion — Choose this if your mission is to drive and close sales. This is the final stage in your marketing funnel that involves product promotions, store visits or online purchases.
Likewise, Facebook Ads work like an auction. In the hunt for getting the best ad placement, you need to compete with many other advertisers who are also competing for the same ad spot. Of course, when the competition gets more intense, the ad costs become more expensive.
Also, your ad cost can be influenced by the time of the year that you wish to run your campaign. If you are running your ad during peak times, then you should expect to see higher costs. You can expect to see higher prices during Thanksgiving, Black Friday, Christmas, Boxing day, or New Year’s day.
Where you place your ads matters a lot when it comes to Facebook advertising. You should aim for the best spots, which are places where ads can be easily seen by a lot of people, especially your target audience. Facebook offers 13 ad placements. They are:
Facebook news feed
Facebook right column
Facebook instant articles
Facebook in-stream video
Instagram news feed
Audience network native, banner and interstitial
Audience network in-stream video
Audience network rewarded video
Where you place your ad is crucial to the success of your ad campaign. You can let Facebook help you decide, or you can do it yourself. On Facebook, you can have your ad appear on the newsfeed, right column and Marketplace. Or you can also have your ad appear on Instagram, Audience Network or Messenger, with all of them having their own options.
Note that Instagram is the most expensive platform for you to show your ad due to its increasing popularity. Facebook is the second most expensive option, followed by Audience Network.
The quality of your ad is vital to the success of your Facebook ad campaign. It will also influence your ad costs.
You need a high-quality ad. A high-quality ad is a well-targeted ad — one that gives you positive interactions and less negative feedback compared to other ads.
A well-targeted ad will perform at its best and give you the result you hope for, whereas an ad with a blurry image which is poorly targeted will not get good interactions.
It is also helpful for you to know that the amount of time people spend on Facebook matters, too. How much time they spend scrolling through their news feeds and looking at ads will have an impact on your ad cost. If users spend more time on Facebook, then there will be more ad space available to advertisers.
By creating an ad that people can regularly engage with, you will be able to reduce your ad cost. Check your ad quality before you run your ad. You can do this with the help of Facebook Ads Manager.
This ad tool will help you find your ad relevance score that will determine how your ad is doing. To get your ad to perform better, you should improve your relevance score (between 1 and 10) that can significantly reduce your Facebook ad costs.
Managing Your Monthly Ad Spend and Budget
As mentioned earlier, there is a minimum daily ad spend of $1 on Facebook, or at least two times higher than your CPC bid. It is up to you how much you are willing to spend. Here’s an example:
If your maximum CPC bid is $3, then your daily budget is $9.
It is important to set a budget for your ad. In average, small businesses spend between $500 and $2,500 a month on Facebook Ads.
Not in your budget? It’s okay. Start at a small budget first before you are ready to increase your bid. Stick to it until you are able to gain more insights on your Facebook ad performance and when you are ready to do more for your ad campaigns.
Remember, you can always increase your ad budget if you like. Do that only when you are able to see positive results from your ads.
If your ads are doing well, you may want to invest more on them. For ads that do not perform as well as you have hoped for, it may be best for you to remove them, or at least reduce their budget.
Estimating Return on Ad Spend
You can estimate your return on ad spend (ROAS) using the table for average advertising cost according to industry provided in this article.
When calculating your ROAS, you need to look at your CPC in order to know how much a click costs. Then you need to look at your monthly ad spend in order to determine how many clicks your ad spend yields. For conversion rate, look at the number (in percentage) of your ad clicks and determine how many of those clicks equate to customers. Lastly, you need to evaluate the total value of each new customer.
Here’s how to calculate your return on ad spend:
1. To calculate your estimated monthly clicks, divide your monthly ad spend by your average CPC. This will help you find the total number of clicks you will get per month and how many people you have reached.
2. To estimate your monthly acquired customers, multiply your monthly clicks by your conversion rate. Your conversion rate will show you your ad’s overall performance.
3. To estimate your ad’s potential revenue, multiply the amount of new customers acquired monthly by your average customer’s lifetime value. The result will show you the value of your new customer that will be beneficial to your business down the road.
4. To know how much your return on ad spend is, subtract your monthly ad spend from your revenue. If your ad is doing well, it should be giving you something good in return.
Should You Use Facebook Advertising?
Of course, you should — because why not? While Facebook ads costs are different from business to business, it is undeniable that Facebook Ads are loved by many. They are still relevant, cost-effective and efficient. When done right, Facebook Ads can take you right to your customers’ doorsteps!
Sure, Facebook advertising can be challenging, confusing and time-consuming. Hang in there; learning something new requires patience and dedication, especially if you are planning to master it. Take your time.
But we can understand if you do not have much time to learn, or train yourself to be a Facebook advertising expert. Why not contact us the eCommerce agency?