By Ana Gotter on 05-Feb-2019 14:58:10
How much do Facebook Ads cost?
This is the most commonly asked question about the ad platform, and it’s a good one. Of course, businesses and advertisers want to know how much they need to spend to see results, and what kind of results they can expect to see for the budgets they have.
While it’s a good question, it’s unfortunately a difficult one to answer. Facebook Ad costs don’t come at a flat fee, and they’re constantly in flux as the marketplace changes, too. This means that ad costs vary, and with a large number of different factors influencing cost, you can see dramatical differences in cost-per-click (CPC) on similar campaigns, or even the same campaign at two different dates a month apart.
In flux though the ad system may be, we’re still going to take a deep dive into this question. Within this post, we’re going to look at what affects Facebook advertising cost, some benchmarks and ranges of what you could expect to pay, and how you can keep your ad costs as low as possible.
How Facebook’s Auction System Works
Facebook’s ad costs are never stable, and that’s because they run on an auction system that involves advertisers bidding to have their ad appear in a limited number of potential placements.
The number of ad placements available in any given audience’s feed, after all, is limited; even with more than 1.49 billion daily active users scrolling through the platform on a regular basis, there are still a finite number of total placements available. It’s admittedly a very large number, but there’s also a large number of advertisers with a lot at stake, too.
A large number of factors contribute to the current cost per action (or CPC) at any given point, creating the perfect storm of a hard-to-predict ad system.
However, advertisers place bids on for placements when creating their ad campaigns, and then whoever is willing to pay the most theoretically gets the placement (and only have to pay $0.01 than what their competitor was willing to).
Notice that I say theoretically. I say that because this isn’t always true; Facebook does have enough stock that most advertisers are able to get their piece of the pie, and factors like ad relevance can actually result in advertisers getting placements and results at lower costs than what they’d bid. We’re going to look at more of those factors a little later on.
If you aren’t sure what to bid, don’t sweat it. Facebook will automatically take care of that for you unless you go into advanced ad options during their creation and decide to manually set bids or bid caps to keep things at a certain cost. They’ll place you at competitive bids for the audience you’re targeting and the campaign you’re running, so if you aren’t familiar with bidding strategies, it’s a good option to use.
Facebook Advertising Cost Benchmarks
Facebook advertising costs can vary dramatically. I’m saying this again, because it’s important to register so that if you see ad costs lower than what you’re paying here you don’t immediately panic and think the system isn’t working for you. We’ll address this more later on.
In the meantime, here’s are two things to keep in mind about what you’ll pay on Facebook Ads.
- How much you actually spend depends on your budget. Some people bid as little as $1 a day (as you’ll see with Dennis Yu’s famous strategy), while others will go through tens of thousands a week. The budget is up to you.
- Ad cost, or CPC/CPA will determine how much you get for what you’re willing to pay, and what you’re paying for a single action.
According to data, here’s where the average CPCs and CPAs stand:
According to WordStream, the average Facebook Ad CPC across all industries is $1.72, with some industries costing more (like finance topping out the charts at $3.77) and some costing less (see retail at $0.70). This is a good reflection of how costs vary by industry.
Data from AdEspresso has revealed that certain objectives and actions cost more than others, with impressions costing the highest amount on average at $3.79 and link clicks coming in at only $0.44. This is a big range, especially since impressions were up to $5.99 at one point in 2017.
- There’s plenty of case studies that offer “conclusive” data that vary from each other, including one from Blue Corona stating that costs per click in 2017 cost $0.27 while 1,000 impressions cost more than $7, and another from FitSmallBusiness revealing that the average CPC in 2018 was $1.86 (which is about where I’ve seen it personally).
The Biggest Factors That Directly Affect Ad Costs
The data above shows just how much Facebook advertising costs can fluctuate, and I’ve seen it with my own eyes.
I’ve had two similar campaigns come out with drastically different CPCs, with one hovering around $1.49 and another clocking it at almost $6, and we couldn’t even figure out what was causing the drastic difference. I’ve also seen how just a simple change in copy can take a CPC from over $12 to under $2.
I say this as a reminder that ad costs do fluctuate, and they can be difficult to predict. That being said, there are factors that we know contribute to what you’re paying for specific actions on the platform. Let’s take a look at each.
The relevance of your ad campaign to your audience will obviously make an impact on how effective and successful your ad campaigns are, so that’s enough of a reason to consider how aligned with your audience your campaigns are. But there’s another good reason: a high relevance score means a lower ad cost, too.
Plenty of research has consistently proven that ads with a higher relevance score will see a decrease in CPC. This means that you’ll get more for your money, so it’s worth taking the time to make sure your relevance scores are high. To do this, focus on niched-down campaigns with targeted messaging.
Your Chosen Audience
The audience that you’re targeting can impact ad costs quickly, though this isn’t something in your control; you have to target the people you want to reach. If certain audience groups are in high demand (which Millennials and new parents currently are, for example), your costs will go up.
There’s not much you can do about this factor, but sometimes a smaller audience will drive up costs while a slightly larger one can keep them a bit smaller. If you can expand your audience size without sacrificing relevance, this could be a good option.
Objective & Optimisation Choices
The objective that you choose for each campaign does more than simply categorise it; it will optimise all of the ads underneath it for specific goals like increasing traffic to your site or driving traffic to your store. They’ll also determine what specific actions you can optimise for later, like link clicks, ad recall, or 10-second video views.
Different actions will sometimes cost more than others in the long run. I once found that a conversion campaign to a cold audience was more affordable when paying for impressions than paying for clicks, though isn’t always the case. Test strategies for yourself to see what works.
The placements you choose can affect CPC, because some cost more than others. Instagram placements, for example, have historically cost more than their Facebook counterparts (though that gap is closing in some cases), and the audience network is more affordable.
Facebook gives you the option to essentially let them handle the bidding for you. If this is what you want to do, full-steam ahead; it’s a good option for advertisers in general, but especially those new to the system.
If, on the other hand, you decide to set a bid cap to ensure that you never pay more than a certain amount for a single placement, that can keep your ad costs to a level you need them to stay, influencing ad cost. Note that while this can keep costs down, it may also cost placements in the long run, and that sometimes using the law of averages can get you good results at a good average cost.
Current Competition in the Marketplace
Again, this is another factor completely outside your control. The chaos everyone else is creating will affect you, and it’s not easy to predict. Peak advertising periods typically see an increase in ad cost, which is why you can expect to see CPCs increase towards end-of-year holiday time, or around other big marketing holidays.
Easy Tips to Keep Facebook Advertising Costs Down
If you’re feeling a little overwhelmed about how much ads cost or how unpredictable the costs can be, don’t give up hope yet. Well-developed ad campaigns can yield exceptional results at low enough costs that you’re still seeing a huge ROI, and there are certain steps you can take to keep your ad costs down as low as possible.
These strategies include:
- Run retargeting campaigns. While some of your campaigns should be focused on appealing to a cold audience, retargeting campaigns can be an amazing tool to get results and keep your costs down. Because your audience is typically familiar with your brand, they’re more likely to engage, increasing CTR and relevance and decreasing CPC.
- Diversify your placements. Unless you’re running a Stories-only campaign or focusing on carousel ads for a specific ad group, shake things up (and bring costs down!) by tossing a few more placements into the mix. Certain ad placements-- like the audience network-- have lower-than-average CPCs and will help you keep your average costs down without sacrificing results.
- Watch that relevance score. I can’t say this enough. Not only will a high relevance score indicate that your ad is, you know, relevant to your target audience (and therefore likely to get results), it will also actively lower your CPC. Keep your relevance score to a 7 or higher, with “or higher” being the key word.
- Split test. Split testing (or A/B testing) is the practice of running two similar ad campaigns and changing just one factor to see how they perform. With Facebook’s newish split testing feature, you can easily test dozens of variations of the same ad all at once, seeing what pictures, videos, copy, and audience targeting works better. Split testing will help you find what works so that you can channel that moving forward and keep your costs down overall as a result.
- Remember that the more targeted your copy is, the better. When people have problems with their ad campaigns, it’s typically one of two problems: the audience or the copy. And in a lot of cases, it’s some combination of the two. You’ll get more results if you create niche audiences and then write hyper-targeted copy that appeals to them specifically. You can learn more about this here.
We did warn you that there was going to be a complicated, in-depth answer to a simple question, but now you have the best answers that current data can give you.
When looking at these numbers, remember to be conscious of the fact that these are accumulations of the data of case studies and pools of small audiences, and that costs can vary dramatically and unpredictably based on things like location or time of the year. Some industries even consistently see a much higher CPC than others, and this is perfectly normal.
If your costs are higher than average but stable for you-- and you’re happy with them-- there’s no reason to rock the boat too much so long as you’re walking away with a positive ROI. Try to be cognisant of factors that can include ad campaigns and implement our strategies to keep your costs down. As long as you’re doing that and don’t see any big spikes, you’ll find your lowest ad cost and be on the path to the best profitability.
What do you think? Were you surprised by the ad costs we had listed? What factors have you found to be most influential on Facebook advertising cost? Share your thoughts, knowledge, and questions in the comments below!