Facebook Advertising has become quite an effective strategy for businesses today, which has a good reason. Facebook boasts over 2.7 billion monthly active users who make it the largest social media platform and online marketing heaven for its 9 million active advertisers. Let’s see a Facebook advertising cost breakdown.
By looking at these impressive numbers, you can quickly tell that posting your ads on Facebook could earn you great ROI, but how much do Facebook ads cost? Well, here’s the answer to that.
How Much Does It Cost To Advertise On Facebook
The cost of Facebook ads is determined using bidding models such as CPC (Cost-Per-Click), CPL (Cost-Per-Like), CPM (Cost-Per-Thousand-Impressions), and CPA (Cost-Per-Download). There is no one answer to the question “how much should I spend on Facebook Advertising Cost?” Here’s the average cost for each bidding model that can help guide you in the process of using Facebook Ads.
On average, Facebook would charge you $0.97 as CPC (Cost-Per-Click) and $7.19 as CPM (Cost-Per-Thousand-Impressions). Similarly, with CPL (Cost-Per-Like) and CPA (Cost-Per-Download), Facebook advertising cost would be an average of $1.07 per like and $5.47 per download.
Here’s a table showing the average Facebook advertising cost for each bidding model.
|Bidding Model||Average Facebook Ads Cost|
Now, one notable thing here is that these numbers are averages. Therefore, it is essential to leverage them as a reference to estimate your cost of Facebook ads. Setting them as standards would only build up unrealistic expectations and ultimately result in disappointment.
This is because multiple factors impact your Facebook advertisement costs, for example, your target audience, ad bids, industry, ad quality, etc.
We’ll further discuss these factors in this article, but first, let’s briefly discuss what Facebook ad auction is and how it works.
What is a Facebook Ad Auction?
Technically, Ad auction is the method of Facebook to determine the relevance of ad for the people. It uses the parameters such as budget and audience that you set in the ad creation process to deliver the ad only in front of people interested in it, at a price that you bid or less than that.
Here’s how the Facebook ad auction works.
How Does It Work?
Here’s a step-by-step guide to creating an ad that leads you to the Facebook ad auction.
- To create campaigns and ads, a user has to log in to the Ad Manager.
- Now, the user has to limit the maximum daily budget they’ll spend each day.
- After setting up their daily budget, the user has to choose their desired bidding model, such as CPC, CPA, and CPM.
- Next, users have to build their target audience based on their demographics, devices, interests, etc.
- The final step is to deploy ad copies and visual elements such as images and videos before launching the ad.
- Now, hit the approve button to launch your Facebook ad.
Once your Facebook ad has been launched, the next thing that occurs is the Facebook ad auction. Here’s an overview of the steps involved in the Facebook ad auction.
- All the ads are categorized based on metrics like ad quality, bid, and estimated action rates.
- After categorization, the relevance of the ad is determined using ad quality and estimated action rates.
- After that, Facebook determines the total value of the ad.
- Facebook then delivers the ad with the highest total value to the users.
By looking at the steps mentioned above, you can quickly tell that metrics like ad quality, estimated action rates, and relevance are essential. Even though ad bids play a crucial part in determining your ad’s cost, you can significantly reduce your Facebook ads cost if you focus on these metrics. Moreover, Facebook claims that highly relevant ads would get more facetime with the users and still cost comparatively lesser.
Now that you know how Facebook ad auctions work, it’s time to discuss the factors on which your Facebook advertisement cost depends.
Factors That Determine Your Facebook Ads Cost
Technically, there are eight main factors on which the cost of your Facebook ads depends. These are
- Target audience
- Ad budget
- The Ad bid
- Ad objective
- The Ad placement
- Ad quality
Understanding these factors would help you estimate a realistic budget for your ad campaigns. Also, optimizing these would help your lower down the overall costs. Let’s head into this.
1. Target Audience
The influence of your target audience on your advertisement cost is quite significant. Whether you’re targeting an audience based on age, interests, or gender, there will be a substantial difference in price between each category.
Let’s suppose that you’re targeting women in your ad campaign. Your average CPC (Cost-Per-Click) here may increase from $0.97 to $1.52 – Which is $0.15 higher than the CPC (Cost-Per-Click) of an ad campaign targeting men.
Similarly, when we talk about the age, campaigns targeting an audience aged 55 – 65 would cost you comparatively much higher than the ad campaigns targeting age 25 –34. Now this too has a fair reason – Facebook users of age 55 – 65 are only near 26 million in total, which is comparatively much smaller than the 58.3 million users of age 25 – 34.
Note that you can specify your reach by targeting specific audience attributes and interests, for example, commuters, meditation, college football, travelers, etc. If you focus on this area well, you can significantly cut down your Facebook ads cost. How? Well, here’s an example.
Let’s suppose you’re a travel agency offering a discount on flights to Turkey. If you target frequent international travelers in your ad campaign, you’ll only reach specific types of people who travel abroad. Similarly, if you target an audience that consists of frequent travelers, it may also include people who do not usually travel abroad but within the country.
While it seems like a great idea to target an audience with broad interests, it will cost you significantly higher than targeting the audience with high-value attributes.
This is because a broader audience would mostly consist of people who would click on your ads but do not take any action – ultimately resulting in a campaign with low performance and higher cost.
2. Ad Budget
Ad budget is the amount of total cost you’re willing to spend on Facebook advertisement. You have to set this budget while creating your Facebook ad. Note that you can set a budget as per your will, and Facebook would never charge you more than that.
However, this budget would impact your ad bids, ad performance, and your campaign’s overall results. Here’s an example.
Suppose you set an advertising budget of $200 as a monthly budget for the Facebook ad campaign and $1 as the maximum bid per click. The average CPC for an ad is $0.97, as mentioned above – which means your maximum bid of $1 isn’t competitive. There results here would be the minimal number of impressions and clicks.
Similarly, if you’ve set a monthly budget of $100 and $5 as your daily expense on the Facebook advertisement, you’ll run out of funding in 20 days.
In simple words, this is to say that even though larger budgets would provide you flexibility when it comes to time, but small budgets could do the job for you as well. However, performance limitations and fewer conversions should be in your mind.
3. Ad Bid
Ad bids are also a factor that can significantly impact your Facebook advertising cost. Typically, there are two main bidding strategies – target cost bid strategy and lowest cost bid strategy. Let’s talk about them in brief.
Target Cost Bid Strategy
Also known as the manual bidding strategy, target cost bid works to deliver your ad within your desired CPC. However, one notable thing here is that this strategy works only for lead generations, installations, and conversions, etc.
Lowest Cost Bid Strategy
Unlike the target cost bid strategy, the lowest cost bid strategy bids automatically to help you achieve the lowest CPC possible. Businesses typically opt for this strategy initially because it ensures the efficient use of the overall budget.
Your business may see higher or lower bid amounts depending upon the bid strategy you opt for. However, the target cost bid strategy usually costs higher than its counterpart.
To understand Facebook advertisement’s core algorithm, it is crucial to know how the Facebook ad auction works. This would help you choose the right bidding strategy for your campaign and set the proper advertisement budget.
Let’s talk about how Facebook grades each ad and the bidder based on these three factors to help you understand this.
In simple words, we’d describe bid as the amount that you’re willing to pay for each user taking action to your ad—for example, $1 for every click or $6 for each download. Technically, a bid is the most powerful tool that you can leverage to enhance your ad performance – the higher your bid is, the better your ad performance.
- Estimated Action Rates
You can quickly tell this one with the name – estimated action rates are technically the estimated rate of how much users would interact with your ad, for example, by liking it or downloading the application. To hold a strong ad auction position, it is vital to create a highly relevant ad for your target market.
- Ad Quality
The relevance and quality of your ad are purely determined by how users interact with it. If users interact with your ad positively, your position in the ad auctions would be much stronger than the competitors.
This is how Facebook grades each ad in its ad auction. If your ad has the most substantial value based on these three factors, Facebook will deliver your ad instead of your competition in front of your target audience.
Even though having a higher bid would give you an advantage over the competition, it would significantly impact your overall Facebook advertisement cost. Therefore, we’d recommend you focus on your ad’s quality and relevance before deciding on the bidding strategy.
4. Ad Objective
The Ad objectives also affect your Facebook advertisement cost. Here’s how. When you create a Facebook ad, you have to choose the main objective of the advertisement. These objectives include Awareness, Consideration, and Conversions. Once you’re done selecting the main objective, you’ll have to choose a specific goal within your main objective that you want to achieve. Refer to this table below.
|App Installs||Store Traffic|
Typically, goals like store traffic and catalog sales would cost you comparatively higher than brand awareness and reach. Why is that so? It’s simple, these goals provide immediate value to your business, for example, revenue from sales.
However, it is still essential to focus on goals like brand awareness and reach. Even though the conversions from these goals might occur later, but they have two significant advantages.
First, Facebook ads for these goals would cost you lesser. And secondly, you can grow the audience’s interest in your brand so that they could find you straight when looking for a product related to your niche.
It’s a well-known technique followed by many businesses today when implementing social media marketing.
In simpler words, the only difference between these goals is the time taken for conversions –conversion-related purposes would connect you directly to the buyers. In contrast, the awareness and consideration of related goals would require a little time before showing the results.
5. Ad Placement
Where you plan your ad to appear on Facebook also plays a vital role in determining your Facebook ads cost. Typically, there are six ad placements on Facebook that you can choose from.
- The Facebook desktop newsfeed
- Facebook right column
- Facebook messenger
- Instagram Stories
- Audience Network
With its ownership of Instagram, Facebook enjoys a significant advantage over other platforms. If you’ve created an ad on Facebook, you can easily use it on Instagram to save your valuable time.
Instagram has maintained its position as one of the biggest platforms for online marketing – not to mention it has the highest CPC when it comes to the advertisement cost. It has an additional CPC of $0.88 more, more than that of Facebook itself. Similarly, there is an increase of $0.78 to feature your ad on Instagram stories.
Facebook is indeed an all-rounder platform for online marketing. However, the CPC here is nearly $0.30 lesser than that of Instagram. The key benefit here is that your ad would be featured in the Facebook feeds and on Messenger – A popular messaging app from Facebook.
Audience network means that your ad would be featured on mobile apps and websites via a redirect link. The average CPC for ads featured on the audience network is the lowest among these three options.
Even though you can set up your ad to appear on your desired placement, but Facebook recommends that you use Automatic Placements instead.
This is because it allows Facebook to make the most out of your advertisement budget and feature your ad on the platform with high potential results.
However, if you want to cut down the advertisement cost, you can turn off this feature anytime. By doing this, you’ll have to select the platforms manually where you want your ads to appear.
6. Ad Quality
According to Facebook, your ad’s quality and relevance are among the most significant factors affecting the advertisement cost. In simpler words, if your ad quality is excellent, and it is highly relevant for the users, you’re most likely to see lower CPC rates.
Facebook grades your relevancy between scores 1 to 10, where 10 is the best score, while 1 is the worst. It is worth noting that Facebook determines this score based on the audience’s interaction with your ad.
Here’s an example.
According to a recent study, a company created an ad with two different versions, having a relevancy score of 2.9 and 8, respectively. It was noted that the advertisement with a higher relevancy rate had an average CPC of $0.03, while the ad with a low relevancy score had an average CPC of $0.14.
Now that you know how vital quality and relevancy is, here’s how you can monitor it on a routine basis.
Follow these steps below.
- Go to the ad that you want to view in the Ads Manager.
- Tap/click on the columns dropdown menu.
- Tap/click Customize Columns.
- Select the Relevance Score Option and hit Apply.
Note that you need to have 500 ad impressions or views before Facebook could determine your ad relevancy score.
It is also worth noticing that Facebook would only monitor your ad for relevancy if it’s still alive. Therefore, it is vital to opt for a proactive approach and make minor tweaks to your ad.
Ensuring your ad’s quality would help you cut down overall Facebook advertisement cost and enhance the performance of your campaign.
The time of the year that you’re posting your ad would also affect the advertisement cost. The reason is quite simple. In their peak seasons, businesses of different niches tend to spend more on their advertisement, increasing the overall competition and leading to bigger campaign budgets and aggressive biddings. Some example include
- New year
- Black Friday
- Cyber Monday
Even though this factor makes you increase your advertisement budget, you can leverage it to make the most out of increased demand for your niche products.
Even though the average CPC for Facebook ads is $0.97, this may change depending upon the type of industry you’re advertising. To help you build an adequate Facebook marketing budget, we’ve created this table, including the Average CPC of Facebook ads for each industry.
Let’s have a look at that.
|Average CPC Of Facebook Ads|
|Job Training And Employment||$2.72|
|Finance And Insurance||$3.77|
|Travel And Hospitality||$0.63|
These prices mentioned above are averages; therefore, setting them as standards would cause unrealistic expectations.
Facebook also offers more cost-friendly options to help you build awareness and expand your reach based on your industry.
Now that you know how much Facebook advertisement would cost you in 2021 let’s go through some quick FAQs that you might be wondering.
Q1: What is the average Facebook ad cost for impressions?
The average Facebook ad cost per 1000 impressions is $7.19.
Q2: What is the average Facebook ad cost for App Installs?
The average Facebook ad cost per app installation is $5.47.
Q3: What is the average Facebook ad cost for likes?
The average Facebook ad cost per like is $1.07.
Q4: What are the Factors that influence Facebook ad cost?
The factors having an impact on your Facebook ad cost are
- Ad bid
- Quality and relevancy
Q5: How much does it cost to advertise on Facebook per month?
Typically, companies would spend $200 – $800 per month on Facebook advertisement. This amount could fluctuate depending upon your company’s size and, obviously, your budget.
While the budget doesn’t define your ad campaign’s success, it undoubtedly holds a significant advantage. For example, two companies A and B set their budget for Facebook ads of $200 and $500, respectively, and both of them pay an average CPC of $0.97.Company A would receive 206 clicks, while company B could afford nearly twice more likes than that.
Q6: How much would it cost to advertise on Facebook per month?
A business would usually spend more than $2000 going up to $10,000 each year on Facebook ad campaigns. The cost is heavily influenced by the size of your business and social media marketing strategy. How? Well, here’s an example.
A well-known brand would generally spend less on Facebook ads because of their established brand awareness and loyal customer base. On the other hand, an e-commerce brand with a following on Facebook would opt to spend more on their campaigns because they bring conversions.
Wrapping It Up
By reading the details mentioned above, you can now easily estimate the cost to advertise on Facebook and create a stellar marketing plan for this year. Also, read our detailed guide on leveraging social media for small businesses to raise your knowledge on the subject.