How Much Do Facebook Ads Cost?

How Much Do Facebook Ads Cost?

Determining the cost of Facebook advertising

Facebook advertising has become a winning strategy for brands and businesses all over the world, and there are currently over 7 million active advertisers on the platform. Furthermore, nearly 26% of users who click on Facebook ads tend to buy the advertised product, and nearly 80% of consumers purchase products they’ve seen in advertisements on social media.

That’s one of the main reasons why brands and businesses are scrambling to invest in Facebook ads, but if you’re new to advertising, a burning question you may have is ‘How much is Facebook advertising going to cost me?’ It’s a valid question, and one of the main concerns of businesses when they think about investing in Facebook ads.

This guide is intended to be a source for all your questions related to Facebook advertising and how much Facebook ads will cost you. Keep reading to learn about Facebook advertising costs. If you want to improve your social media strategy and lower your Facebook ad costs, get in touch with our experienced strategists at SEO Resellers Canada today.

Table of Contents

1. How Much Does Facebook Advertising Cost?

Let’s get one thing straight off the bat: Facebook ads have levelled the playing field among brands and businesses of all sizes. Any startup entrepreneur can leverage Facebook ads to scale their business and land more customers. It’s not really a question of how much Facebook ads will cost you, but how far your money will go, and will it bring the results you desire.

Obviously, when business owners want to know about the costs of Facebook ads, they are concerned about the exact cost of a click, an impression, or a conversion through Facebook ads. You may be slightly irked by the fact that there’s no definitive answer to how much Facebook advertising will cost you, mainly because there are various factors that influence the cost.

When you turn towards Facebook advertising with a simple strategy and a clear focus, you’ll be astounded by the cost-efficiency. Run into it blindly, and you’ll find yourself losing money faster than Dan Bilzerian lost when betting against Connor McGregor at UFC 246 (He lost $1 million in 40 seconds!)

However, you have nothing to fear because, in this post, we’ll outline the following:

  • Average costs of Facebook ads and average CPC on Facebook
  • Costly mistakes to avoid when creating Facebook ads
  • Best practices that will help you win and optimize Facebook ad costs

When it comes to the cost of Facebook ads in 2020, you can get a ballpark figure of somewhere between $0.50 to $2.00 per click. According to a WordStream study, the average cost-per-click for Facebook ads for all industries is $1.72, but this is skewed due to some anomalies.

For example, the insurance and finance industries have the highest average Facebook ad costs at $3.77 per click. However, not all industries have such a high average. The apparel industry ($0.45 per click), retail industry ($0.70), and the travel and hospitality industry ($0.63) have the lowest Facebook advertising costs.

According to an AdEspresso study, the average cost-per-click for all countries is $0.97, and the graph below reveals the cost-per-click for every country in U.S. dollars. You can clearly see that the United States scores an average Facebook advertising cost of $1.10 per click.

You must remember that these averages must be taken with a pinch of salt, but now that you have some ballpark figures to play with, we can estimate how much Facebook ads will cost you. So, without further ado, let’s dive into how much Facebook advertising may cost you.

2. Costly Mistakes to Avoid with Facebook Advertising

The most obvious mistake you could make when trying Facebook advertising for the first time is not having a clear marketing strategy in place. Going in guns blazing without a real concept of what you’re doing in terms of your ad copy and your target audience is a recipe for disaster and won’t produce the results you desire. It’s like going into a must-win football match unprepared and hoping for the best.

Thankfully the diagnosis for costly and troublesome Facebook ads isn’t complex because marketers tend to overspend when they don’t test ads, don’t have a base retargeting strategy, don’t implement custom audiences, and try to target a broad audience. We’re going to touch on each point slightly to give you a better idea of why you must avoid these costly mistakes.

2.1. Failing to Test Facebook Ads

If you’re looking for the easiest and best way to throw your advertising budget down the drain, we recommend not testing your Facebook ads. You can’t gamble your money away on something that ‘might’ work but isn’t guaranteed to give you results.

The pressure to get results is always going to be there, but you may want to give yourself a better chance by testing the waters before you jump in. You need to test your Facebook ads first so that you have a decent understanding of how the ad is targeting consumers and what results you can expect.

2.2. Targeting Too Broadly

This is one of the easiest traps to fall into when you’re getting started with Facebook advertising, and that’s mainly because of how accessible Facebook makes everything for you. Facebook boasts a ridiculously vast array of targeting options that could make your head spin.

However, it’s important to keep things simple and pay attention to a couple of things when you’re outlining the general audience you want to target. You don’t want wasted impressions as that is technically wasted money that you could have utilized better in your campaign.

· Age Range

You must select the age range that is as close to your target demographic as possible. This sounds like an obvious choice as you don’t want your Facebook ads to target people who don’t value or want your products or services.

· Interests

You don’t want to make the mistake of targeting audiences that ‘may like’ your products or services because that’s like selling boats to individuals who like sunbathing on the beach. You must spend most of your time, ensuring that your targeted interests are relevant to your target audience.

The main hurdle with interest targeting is that you could end up getting stuck in the broad-thinking mindset. You must take time out to envision yourself as a targeted user and brainstorm all possible topics that would be relevant to you and search for them.

You’ll learn that having a couple of specific interests is infinitely better than having a dozen of broad interests that lead you nowhere.

· Location

Another costly error could be targeting audiences that are outside of your market. If your target audience is located in a state, you don’t want to be targeting the entire United States. It’s a rookie mistake and one that could cost you a lot in ad spend because the specificity to target with such detailed granularity isn’t offered on other platforms.

If your target demographic speaks English (or another language), you should include that because selecting a language helps trim down your Facebook audience. It also allows you to define further the type of individuals who are going to be the most interested in your products or services.

· Ignoring Reach

An important thing you must keep an eye on is ‘the estimated audience reach,’ as it will help you know your approximate audience size. For instance, if you’re advertising Zumba lessons in small towns in the USA with a population of 12,000, your audience size of 25 million will appear to be a little excessive.

Keep checking the meter when you make changes to the targeting, as it’s vital you know what variables will have a major impact on your Facebook ad costs.

3. How Does Facebook Decide What Ads to Show?

We’ve now established the benchmarks on Facebook advertising costs, which are crucial for understanding how the Facebook advertising system works. Now we can finally talk about how Facebook decides or chooses which ads to show each user on the platform.

Facebook claims that they try to balance two things:

  • Offering positive, relevant experiences to people using Facebook or Instagram.
  • Creating value for advertisers by helping them reach people and get results

The best way to go about this is to hold an auction where both interests are represented. This allows advertisers to reach people who are receptive to their ads, and users can see something they’re interested in. That’s different than a traditional auction as the winner isn’t the ad with the highest monetary bid, but the advertisement that generates the most overall value.

So, when Facebook finds an available ad space, it will batch a group of ads that are vying for that space and auction the spot. The winner of the auction will have their ad shown to users on the platform, and the best part is that these auctions take place every day.

3.1. How Does the Facebook Ads Auction Process Work?

It’s not a traditional auction because Facebook advertising space can’t be won by making the highest monetary bid. You need to understand that Facebook wants to offer a relevant and positive experience to all its users, and the winner of the auction is decided by measuring the overall value created by the ad for its targeted users.

Facebook measures the potential value created by the ad by analyzing three vital factors, which are:

  • Advertiser bid – how interested you are in showing your ad
  • Ad quality and relevance – whether your ads will interest your users on Facebook
  • Estimated action rates – the chances of your users taking the action you are optimizing for with your ads

Whenever there is real estate space for advertising on Facebook and is up for auction, Facebook will combine the three factors into a total value and will display ads with the highest values. That means you don’t need to make the highest bid in the auction to have your ad shown because your ad will win if it is of higher quality and relevance than your competitors.

After winning the auction, Facebook will consider all the ads competing for that ad space and will charge the winning ad the minimum amount required to win the auction.

4. Factors that Determine Facebook Ad Cost

Just like pay-per-click (PPC) advertising costs on Google Ads, there are various factors that impact your Facebook advertising costs. If you’re looking to build a realistic budget for your company, you must understand how these factors influence the cost of Facebook ads. There are technically eight factors that determine how much your Facebook ads will cost, and these include:

  1. Audience
  2. Ad budget
  3. Ad bid
  4. Ad objective
  5. Ad placement
  6. Ad quality
  7. The season
  8. The industry

To help you make sense of what role these factors play and how they influence Facebook ad cost, we will discuss them in greater detail below:

4.1.  Audience

AdEspresso revealed in their study on Facebook advertising costs that the target audience has a massive impact on the price of Facebook ads. Whether you’re targeting a specific gender, age, or interest, it does shift your ad expenses. For instance, if you’re targeting women in your ad campaign, your CPC may increase by $0.55, which is $0.15 more than if you targeted men in your ad campaign.

When you look at the age, Facebook ads that target people in the age bracket of 55 to 65 years or older tend to have significantly higher costs than campaigns that focus on users between 25 to 35 years old.

This is because Facebook has about 26 million users between the ages of 55 to 65 years old, and even though it is a high number, it pales in comparison to the 58 million users between the ages of 25 to 35 years old that use Facebook.

When you’re advertising on Facebook, you have the option to target specific interests or audience attributes, which include outdoor recreation, meditation, philanthropy, college football, commuters, and more. It’s a useful feature that impacts how much it is going to cost your business to advertise on Facebook and may help you target broad interests or high-value attributes.

For instance, if you aim to target frequent travellers instead of frequent international travellers, you have a broad target audience that may incur extra expenses.

Targeting high-value attributes may help you reach your specific audience, but broad interests allow you to inflate your target audience with low-value users. As these users are the ones who will click on your ads but don’t interact with your CTAs, targeting them will only result in a poor performing campaign.

You must focus your campaign on targeting people who matter and are offering the most value to your business. You don’t want to be the one paying for clicks or views that offer zero value when it comes to long-term goals such as generating a lead or driving a sale.

4.2.  Ad Budget

When you’re launching an ad campaign on Facebook, you’re going to be setting an advertising budget. Irrespective of your budget, whether it’s $200 or $800 per month, it’s going to impact how much Facebook advertising will end up costing your business. So, if you’re setting a budget of $200, it will affect your ad bids, ad performance, and the results from your Facebook advertising campaign.

For example, if you launch an ad campaign with a monthly budget of $100, you can set a maximum bid of $1 per click. The average CPC for Facebook ads is $0.97, so it’s easy to see that your bid isn’t competitive and is going to result in a low number of clicks and impressions.

Social media strategists also recommend setting a daily budget of $5. However, if you’re spending $5 per day on your ad campaign, you will use up your $100 budget by the 20th day, which isn’t feasible for running your ad campaign for a month.

Having a large ad spend gives your business additional flexibility, but you can even make a small budget work for your company. The decision-makers in your company should know that a low ad budget offers fewer conversions as it means working with performance limitations.

4.3.  Ad Bid

Another major factor that impacts the cost of your Facebook ads is your ad bid. Thankfully, Facebook offers several bidding strategies, which include:

  • Target cost bid strategy:

Also known as manual bidding, this option works to reach your desired action or cost-per-click. This strategy can only be used for lead generation, app installs, conversion, or product catalog sale campaigns.

  • Lowest cost bid strategy:

Also known as automatic bidding, this option helps your business achieve the lowest action or cost-per-click. This strategy aims to make your use of budget efficient, which is why it is the starting strategy of most companies.

Depending on what bid strategy you select, and the amount you bid, your Facebook advertising costs may be lower or higher. In most cases, manual bidding creates higher advertising costs, and automatic bidding helps you make most of your budget.

When deciding on what bidding strategy to choose, you must have knowledge about the auction process as understanding Facebook’s algorithm for its advertising services can help you maximize your budget. In the ad auction, Facebook will rate each bidder and their advertisements on three factors:

  • Ad quality and relevance

The negative and positive interactions of users with your ad help determine its relevance and quality. An ad with high quality and relevance improves your chances of success in the auction.

  • Bid

The bid will be the amount of money you’re paying for a user to interact with your ad. For instance, you bid $1.50 per click. Facebook considers the bid to be an integral tool for improving the performance of your ad.

  • Estimated action rates

Your estimated action rates will demonstrate the likelihood of users who interact with your ads by downloading your app or clicking on your ad. For your ad to be competitive, you must aim to get a high estimated action rate, which is essentially creating an ad that is relevant to your audience.

If Facebook finds your ad to be one with the highest total value, you’ll win the auction, and Facebook will show your ad to your target audience. An aggressive bid may increase your ad’s total value, but it will also raise your Facebook advertising costs. That’s why your focus should be on creating a high-quality and relevant ad first, and then assess your bid investment and auction strategy.

4.4.  Ad Objective

When creating an ad on Facebook, you must choose your ad objective, which will be defined by awareness, conversions, or consideration. After choosing your ad objective, you must figure out a specific goal. In most cases, advertising objectives such as product purchases or store visits tend to result in higher ad costs, which is only because these actions offer immediate value to the business.

When building your ad campaign, you must focus on brand awareness because reaching and connecting with users at the beginning of the buying funnel allows you to generate interest in your brand and move them down the sales funnel, ensuring a sale. This helps in bringing down your Facebook advertising costs, as most brands pay less for awareness related goals.

4.5.  Ad Placement

The cost of Facebook ads is also shaped by the placement of the advertisement. Facebook offers six different areas where your ads can appear, which are:

  • Instagram
  • Instagram stories
  • Facebook desktop newsfeed
  • Facebook right column
  • Facebook Messenger
  • Audience Network

Facebook owns Instagram, which gives it a significant advantage in social media advertising and allows businesses to create Facebook and Instagram ads easily.

Facebook even allows you to modify where your ads will appear, and it’s recommended to try Automatic Placements. It’s a tool that lets the delivery system of the platform to place your advertisements at areas where they will generate the best results.

You can turn off this feature to cut down on your Facebook advertising costs and allow your team to decide where you want your ads to appear and on what platform.

4.6.  Ad Quality

The relevance and quality of your ads will also affect how much Facebook advertising is going to cost your business. So, if you create ads with a higher relevance and engagement score, you’re going to see lower advertising costs. The power of an ad’s relevance score or quality was demonstrated in a recent study by Hootsuite.

There were two versions of an ad created by the company, one had a relevance and engagement score of 8, while the other had a relevance and engagement score of 3. The CPC of the high-scoring ad was $0.03, while the low-scoring ad had a CPC of $0.14.

When it comes to engagement and relevance score of an advertisement, they are generally rated between 1 and 10. Facebook assigns the scores based on positive and negative ad feedback. Ensure that you maximize your ad spend on Facebook by keeping your goal to create ads with high engagement and relevance scores.

You should know that Facebook needs around 500 ad impressions or views before it assigns a score, and your ad will be monitored by Facebook as long as it runs. Therefore, you must be proactive and monitor your ad feedback regularly to improve its performance.

4.7.  The Season

The season or time of the year also has a massive impact on the worth or cost of your Facebook ad campaign. In peak shopping seasons, you’ll find businesses spending more on their advertising, which increases the demand for ad space on Facebook. This creates a competitive marketplace and can result in aggressive bidding and larger campaign budgets, which inflate the cost of Facebook ads.

Some of the most expensive days to advertise on Facebook are Thanksgiving, Black Friday, Cyber Monday, Christmas, Boxing Day, New Year’s Eve, and New Year’s Day. Even though seasonal factors may increase your Facebook ad costs, you will want to take advantage of increased demand from consumers.

Therefore, it’s a good idea to increase your advertising budget during these high-demand months, so that you can maximize your ads and ensure that you target as many people as possible.

4.8.  The Industry

The average cost of Facebook ads is estimated to be around $0.97, but you can gain considerably more insight for your Facebook advertising costs by checking the average price of Facebook ads in your industry. The data will provide you with a complete estimate that helps your team build a solid and winning social media advertising campaign.

Depending on your industry, Facebook advertising may end up providing you with a cost-effective option when it comes to generating leads, building brand awareness, driving conversions, and more. Even businesses in competitive markets, like consumer services, will benefit hugely with the right Facebook advertising strategy.

Your competitors are already advertising on social media platforms and getting results from their efforts. Studying their approach could give you an advantage as well. When looking at benchmark numbers for Facebook advertising, it’s wise to not give too much importance to them.

Adopting this perspective allows the decision maker’s in your company to set realistic expectations when approaching your Facebook advertising campaign.

5. Cost of Facebook Advertising per Month

Most businesses tend to spend an average of about $200 to $800 per month on Facebook ads. You may be easily spending close to $1000 a month or $100 a month on Facebook advertising depending on the size of your business or how aggressively you bid on ad spaces.

How much you spend on Facebook ads also depends on your brand and your advertising budgets. You don’t need to spend more than your competitors to gain a competitive advantage as far as advertising on Facebook goes because ads with higher relevancy and engagement scores will always win.

This doesn’t mean that the price doesn’t determine the success of your advertising campaign, but it does help you in the auction. With a larger budget, your brand can pay for more ad clicks, which will result in greater revenue and more conversions.

5.1. Facebook Advertising Costs Per Year

On average, businesses tend to spend anywhere around $2400 to $9600 per year on Facebook ads. How much you invest annually in Facebook advertising depends on the size of your business and the social media marketing strategy you’ve adopted. Even small-to-medium sized businesses may spend upwards of $9000 per year on Facebook ads.

For instance, an eCommerce store that has an active following on Facebook may invest more in Facebook advertising because their campaigns are targeted to drive product orders. In comparison, a well-known business may be spending less because of its extraordinary brand awareness.

When it comes to the annual advertising costs of your business, you should consider what channels are offering you the most value. If you’ve never advertised on Facebook before, you may start to think about your goals and your audience. Businesses that have an active audience on Facebook and objectives, which align with the strengths of the platform, should invest in Facebook advertising.

6. Conclusion

If you’re thinking about improving your ad campaign performance on Facebook or are looking to reduce Facebook advertising costs, you should get in touch with SEO Resellers Canada. We are industry leaders when it comes to digital marketing and also offer social media management and advertising services.

Whether you’re looking to build brand awareness, generate sales, discover qualified leads, or create high-value Facebook ads, our team of experts can help. Learn more by contacting us online or call us to talk with one of our representatives.

ABOUT THE AUTHOR
author – Jamie – Barton
Jamie Barton
CEO of NASN Licensing Inc. & Shopincities.com

Jamie has more than two decades of experience in accelerating brand visibility for online businesses. His company operates SEOResellersCanada.ca, a white label SEO and digital marketing agency. With his unique and actionable business processes, agencies and small businesses can successfully expand online operations without the traditional associated cost overhead.

For over 18 years we have been the solution to fit any size agency or business. Our team of creative SEO experts and marketers develop some of the best results driven campaigns in the industry.

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