Facebook advertising costs have an average cost per click (CPC) of $1.86, but can be over $5.00 depending on factors from ad quality to competition. While the average small business advertising on Facebook spends around $500 to $1,500 per month, there is no minimum monthly ad spend, making Facebook affordable for most businesses.
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Facebook Advertising Cost Estimates
The average cost per click with Facebook Ads is $1.86; however, CPCs vary greatly from business to business and many Facebook advertisers have CPCs below the average. However, those in industries less likely to produce ads that enhance a Facebook user’s experience see higher CPCs, which can be over $5. Facebook has a minimum daily ad spend requirement of $1, or two times the cost of your average CPC.
For example, a company in the apparel industry that uses Facebook to advertise their product catalog to their ideal customers sees an average CPC of $0.45. A life insurance company that advertises on Facebook has an average CPC of $3.77. Social media users tend to use the platform for clothing and style advice, making apparel ads more enticing for most users, whereas a user is not as likely to interact with an ad for life insurance.
Average Facebook Advertising Cost & Benchmarks by Industry
Facebook doesn’t have a straightforward tool to generate cost estimates (such as the Google Ad Keyword Planner), and Facebook ad costs aren’t based on keywords but rather on a number of factors that make up an advertiser’s chosen audience. Therefore, to find average costs by industry, we looked to Wordstream, which compiles data from hundreds of Facebook ad accounts.
Average Facebook CPC & Other Benchmarks by Industry
|Employment & Job Training|
|Finance & Insurance|
|Travel & Hospitality|
Average Cost per Click
The average CPC on Facebook Ads across all industries as provided by Wordstream’s data is $1.86, with CPCs by industry ranging from as little as $0.45 for apparel to $3.77 for finance and insurance. Facebook is known for being one of the lowest cost pay-per-click advertising platforms. For reference, the average CPC on Google Ads is $2.69, with many CPCs over $5.
Types of Facebook Advertising Costs
Cost-per-click ads are only one of the available Facebook advertising options. Like other paid search and social platforms, Facebook offers a number of ad types, from image ads to ads with multiple videos, as well as a number of different cost structures an advertiser can choose from. The type of cost structure advertisers choose is based on their ad type, marketing objective, and overall advertising goals.
The majority of Facebook advertisers choose the cost-per click-model. However, Facebook offers advertisers other pricing models, such as CPM (cost per 1,000 impressions) and CPA (cost per action). Using these pricing models will cost the average advertiser more than using a CPC basis. The average CPM is approximately $2.29, according to Statista. The average CPA on Facebook is $18.68, according to research done by Adstage.
Facebook Advertising Cost Types
|Cost Per Click (CPC)||For Every Click Their Ad Receives||Ads with call to actions or CTAs.|
|Cost Per Mille (CPM)||Every Time Their Ad Receives 1,000 Impressions||Advertisers looking to increase brand awareness.|
|Cost Per View (CPV)||For Every View Their Video Receives||Advertisers looking to maximize their videos ad’s exposure.|
|Cost Per Action (CPA)||When a User Takes an Action Such as an App Install||CTAs such as App Installs or Event Attendance.|
|Cost Per Like (CPL)||When Their Ad Yields a Page Like||Advertisers looking to increase page likes.|
Cost per Click (CPC)
The cost-per-click pricing model charges advertisers only when a Facebook user interacts with their ad, such as clicking on the ad’s call to action (CTA) button. Advertisers set the CTA they want to use for their ad, which includes many options from “Learn More” to “Shop Now” and “Sign Up.”
Cost per Mille (CPM)
Cost-per-mille (CPM) pricing charges advertisers based on how many times the ad is displayed, or more specifically, for every 1,000 impressions. CPM is often a lower-cost alternative to CPC ads. However, since impressions do not necessarily equate to user interactions, they are best used for advertisers using Facebook Ads with the goal of growing brand awareness.
Cost per View (CPV)
The cost-per-view pricing model is designed for video ads and charges advertisers every time their video ad is watched by a Facebook user. It is a good option for advertisers using video ads that don’t want to be charged unless their video is viewed.
Cost per Action (CPA)
Cost per action is similar to CPC, with the difference that rather than being charged when a user clicks your ad’s CTA button, advertisers are charged when users take a certain action on their website. Advertisers set the action they want to be charged by and actions can include anything from newsletter signups to an app download or an online purchase. They are typically the most expensive pricing model, but they yield the most qualified users.
Cost per Like (CPL)
Cost-per-like pricing is similar to CPC, but with the CTA set to like your business’ Facebook page. It is typically a low-cost pricing model, though its scope is limited and best for advertisers who are new to Facebook and looking to build their presence. It’s also worth noting that those using a CPL should plan to be very active on their business page; otherwise, paying for likes isn’t the best use of ad spend.
How the Facebook Ad Auction Works & How It Affects Facebook Ads Cost
Facebook Ads are a type of auction, similar to Google Ads, where advertisers bid to have their ad shown. To determine which competing advertiser gets their ad displayed, Facebook doesn’t consider max bid, but overall ad quality. They look for ads that they score as being the most relevant to users and therefore will be best-received by users.
Facebook looks at these factors to determine which ad will land on Facebook:
- Bid – Which advertiser is willing to pay the most?
- Ad Relevance – Which ad best fits the position in relation to the defined audience?
- Projected Ad Success – Which ad is most likely going to get the most conversions?
To get your ad to display, you will need to prove to Facebook that your ad is a good fit for your chosen audience. By starting with a competitive bid and creating a highly targeted audience with ads tailored to that audience, your ad will be determined a good fit by Facebook’s internal relevancy scoring. Once the ad is live and gains traction, your ad will outrank competitors who do not have a history of good ad performance—even if their bid is higher.
Factors That Influence Facebook Ads Cost
Facebook uses an algorithm to determine if and when an ad will display, as well as at what price. Many factors are considered, though what Facebook is really looking for comes down to which of the competing ads best serves the audience. It’s not in Facebook’s interest to show ads that they deem aren’t relevant to the audience or don’t provide their users a good experience, as this would make users less likely to click on ads or take actions.
Factors that influence the cost of Facebook ads include:
- Audience – Who exactly you want to see your ad.
- Bid – What you are willing to pay for ads.
- Competition – How many others are competing for the same ad placement.
- Ad Objective – What your goal is and how likely your ad will achieve that goal or objective.
- Ad Placement – Where you want your ads to display.
- Ad Quality – How relevant your ad’s media, messaging/copy, and your landing page is to your audience.
“There are things we can do as advertisers to ensure that we are paying a great price for highly qualified prospects. Things like Relevancy score (which is calculated using expected engagement) determine how much your bid will be, and use automated Lowest Cost bidding to get in front of people who will convert at a fair price.”
– Tony Palazzo, Vice President of Operations & Marketing, Logical Position
Facebook Ads are designed to reach specific audiences, rather than users searching for specific keywords, making them different than paid search ads, such as Google Ads. There are hundreds of audience targeting options advertisers have to choose from, allowing them to pinpoint exactly who their ads will display to. Ads will cost different amounts based on the competition for those audiences, so the broader the audiences, likely the higher your cost.
Facebook bidding is based on how much an advertiser is willing to spend for a certain action, such as a click, video view or app install. Unlike other pay-per-click platforms, such as Google Ads, Facebook Ads is not based on a keyword bid. Instead, audiences are created by the advertiser during the ad setup process and based on those audiences, advertisers set a maximum bid on how much an action by a user in that audience is worth to them.
As a general rule of thumb, the more user intent involved with the action, the higher the cost will generally be. For example, the CPA (cost per action) for an app install is likely to be much higher than the CPM (cost per mille), which involves no user actions, just simply ad impressions.
Facebook Ad Objectives
Facebook ad objectives are the overarching marketing goals advertisers have to choose from when creating their ad. Depending on the advertiser’s goal, they will be given different options as to which ad type they can use, as well as which objectives (or outcomes) they’re looking for by advertising on Facebook.
The 3 primary Facebook Ad objectives are:
- Awareness – To capture recognition from those who have never heard of your business.
- Consideration – To foster interest and to drive user’s through the sales funnel.
- Conversion – To drive and close sales.
Facebook Ad Objectives & Supported Ad Types
|Awareness||Brand Awareness ||To get people familiar with your business|
|Reach||To get people to begin thinking about your business|
|Consideration||Traffic||Increase the number of visits to your website|
|App Installs||Increase the number of installs of your app|
|Engagement||Get more people to see and interact with you on Facebook|
|Video Views||Use videos to raise awareness of your business|
|Lead Generation||Collect user’s information such as email addresses via ads|
|Messages||Get people to start conversations with you on Facebook|
|Conversions||Product Catalog Sales||Advertise items you have for sale|
|Store Visits||Promote your brick-and-mortar business to a local audience|
|Conversions||Get people to use and take action on your website, such as purchases|
Remember that Facebook Ads work like an auction where a number of businesses are competing for the same advertising space. As with any auction, the amount of competition will directly affect the price. The more advertisers competing for the same audience and ad placement, the higher the advertiser’s costs will be.
Facebook Ad Placement Options
There are a number of Facebook ad placement options, which is how advertisers determine where their ads will be displayed. This includes different areas of Facebook to other platforms such as Instagram. Advertisers should choose the ad placement that will reach their target audience.
Facebook’s 13 ad placement options include:
- Facebook Feed
- Facebook Right Column
- Facebook Instant Articles
- Facebook In-Stream Video
- Facebook Marketplace
- Facebook Stories
- Instagram Stories
- Instagram Feed
- Audience Network Native, Banner and Interstitial
- Audience Network In-Stream Video
- Audience Network Rewarded Video
- Messenger Inbox
- Sponsored Message
Ads that are well-targeted with messaging and media that speaks to their audience and provides them value will rank higher than ads that don’t. For example, low-quality ads, such as those with blurry images, see very little user interaction even if the ad itself otherwise conforms to Facebook ad specs. In order to display at all, they would require little (to no) competition and an advertiser would likely be charged their maximum bid.
How to Determine Monthly Ad Spend
Facebook has a minimum daily budget of $1, or at least twice your cost-per-click (CPC) bid. So, if your maximum CPC bid is $2, then your actual daily budget will be $4. Advertisers are free to set any budget beyond that at their discretion and based on their available advertising budget and goals.
Setting Your Budget
Budgets are unique to the advertiser, and determined by their available advertising budget and goals. The average small business spends around $500 to 2,500 per month on Facebook Ads. If you’re new to Facebook advertising, it is advised to start at the low end of your budget. This allows accounts to gain momentum and provide advertisers with performance insights before more aggressively advertising on Facebook.
Choosing Your Ad Schedule
Keep in mind your ads do not need to actually show every day of the week. Advertisers can choose an ad schedule, which allows them to determine which days and times their ads can display. This is particularly helpful for many advertisers seeking a specific action that would need to happen within their business hours, or during days/times when users are more apt to be interested in what you’re advertising.
For example, a dental practice advertising teeth whitening services with the call to action of scheduling an appointment would want to display their ad during their business hours. Otherwise, users may call and receive no answer, leading to wasted ad spend.
When to Increase or Decrease Your Budget
To decide whether or not you should increase or decrease your Facebook advertising budget, consider how well your campaigns perform. If ads are successfully reaching your advertising goal, and you’re seeing a good return on ad spend, then you’ll probably want to increase your budget. On the other hand, you may find some ads and campaigns that are not seeing the results you were hoping for, so those would be worth removing or decreasing the budget on.
Estimating Return on Ad Spend (ROAS)
It can be difficult to know how far your Facebook advertising budget will go before starting, but it is possible to estimate your return on ad spend (or ROAS). Using the Average Facebook CPC by Industry table found at the top of this article, find your industry’s average CPC, click-through rate, and conversion rate. Existing Facebook advertisers can calculate their ROAS using the same figures, which they will see in their Facebook Ads Manager account.
What you will need to calculate ROAS:
- CPC – How much does each click cost?
- Monthly Ad Spend – How many clicks does your ad spend yield?
- Conversion Rate – What percent of those clicks become customers?
- Customer Lifetime Value (CLTV) – What is average the total value of each new customer?
You can easily calculate your return on ad spend in four simple steps. For example, let’s say your business is in the fitness industry, which has an average CPC of $1.90, a monthly ad spend of $800, an average conversion rate of 14.29 percent and a customer lifetime value of $100.
1. Calculate Your Estimated Monthly Clicks
To calculate your estimated monthly clicks, divide your monthly ad spend by your average CPC to find the total number of clicks you will receive per month. Your estimated monthly clicks represent the average number of people your ads are actively reaching each month.
Equation: Monthly ad spend CPC = Estimated monthly clicks
Example: $800 divided by $1.90 = 421 clicks
2. Estimate Your Monthly Acquired Customers
To estimate how many customers you are acquiring each month from your ad, multiply your number of monthly clicks by your conversion rate. Your conversion rate is more important than the number of clicks you receive per month, as it is more indicative of an ad’s overall performance.
Equation: Monthly clicks average conversion rate = Number of customers acquired per month
Example: 421 multiplied by 14.29 percent (or 0.1429) = 60 new customers acquired per month
3. Estimate Your Ad’s Potential Revenue
To estimate the potential revenue expected to be generated by your ad, multiply the number of new customers acquired per month by your average customer’s lifetime value to find your estimated revenue generated. Your average customer’s lifetime value is how much a new customer is worth to your business in the long term.
Equation: Number of new customers customer lifetime value = Revenue generated
Example: 60 multiplied by $100 = $6,000 revenue generated from ads per month
4. Determine Return on Ad Spend
Subtract your monthly ad spend from the revenue generated to find your estimated return on ad spend. Effective advertising should yield a return. If you’re not at least breaking even, you may want to seek professional account management or allocate spend to other advertising channels.
Equation: Revenue generated monthly ad spend = Estimated return on ad spend
Example: $6,000 minus $800 = $5,200 return on ad spend per month (or $62,400 per year).
Every business will see varying returns and ad performance. Understanding your return on ad spend is key in determining your true ad performance. Get more detailed information about calculating return on ad spend and how to measure ad spend in our article Return on Advertising Spend (ROAS).
Frequently Asked Questions (FAQs)
What Are the Facebook Ad Specs?
Facebook ad specs vary for every ad and media type. For example, the size for a single image ad is 1,200 x 628 pixels with an image ratio of 1.9:1. Get detailed ad specs for every ad type, from image ads to carousel ads, by reading our Complete List of Facebook Ad Specs.
Should I Use the Facebook Pixel?
Advertisers who use the Facebook pixel tend to see higher conversion rates and higher return on ad spends, meaning it’s a powerful tool for Facebook advertisers. If you are looking to gain more insights into user behavior and/or retarget ads, and have access to your website’s code, then you would be a good fit for the Facebook pixel. See how you can use the Facebook pixel and install it easily by reading our article Facebook Pixel: What It Is & How to Use It.
Which Is Cheaper: AdWords or Facebook Ads?
CPCs tend to be lower on Facebook Ads than on Google AdWords. Keep in mind user intent on each platform, as well as click-through and conversion rates. See our article How Much Does Google Advertising Cost to compare.
What Are the Best Ways to Target Facebook Ads?
Facebook offers a number of great targeting options, from life events to interests and behaviors. Every advertiser will use these targeting options differently to create exact audiences who match their ideal customer. Learn more about the top ways to target Facebook Ads and how you can use them to create your perfect audience in our article, Top 7 Facebook Ad Targeting Options.
Where Can I Find a Facebook Ad Management Service?
Choosing to use a Facebook Ad management service is often a smart move. Finding a good one can be tough when there are so many to choose from. To make it easy, we have done the research for you. Here are the Six Best Facebook Ad Management Services.
Bottom Line – Facebook Advertising Cost
Facebook advertising costs are relatively low and are a cost-effective advertising opportunity. Facebook ads cost varies from business to business, but most businesses find Facebook to be a good way of using ad spend thanks to a cost structure that only costs them money when a user takes a specific action, and the advertising platform’s ability to target ads on precise audiences.
However, Facebook advertising can be time-consuming and requires a certain degree of marketing know-how to ensure positive results. For that reason, many businesses turn to professional advertising services such as Hibu. Hibu is highly rated Facebook ad management company with no management or setup fees. Even better, they offer a free consultation, so you can speak with them about your advertising goals before committing to a campaign. Click here to talk to a representative today.