Key To Reducing Facebook Ad Cost

How much do Facebook ads cost? How much can you expect to have to put into the platform before you can expect to get something out of it? If these questions have ever crossed your mind when you’ve considered adding Facebook Ads to your strategy, you’re not alone.

Facebook is known for being the platform that will get your ads in front of people even when your budgets are lower. It’s friendly to most budgetary restrictions. But that doesn’t necessarily mean that any budget will get you results.

Many advertisers opt to be charged for impressions on Facebook, and the minimum daily budget you’d need to have in that case is just $1. You can certainly make the daily budget that low, but would you want to? The number of people you’d reach would be small, and you’re not likely to get any results that matter out of it, like leads or purchases.

Some clients have $1,000 per month to spend on Facebook. If I’m honest, that’s probably the lowest I’d go, and it’s still not ideal, but you can make that budget work to a degree.

On the other hand, some clients spend hundreds of thousands of dollars on Facebook each month. That also tends to be unusual for the majority–generally, most medium to small businesses don’t venture that high.

The nice thing is, no matter what you specify you want your budget to be, Facebook ads will never cost you more than that budget. If you can only spend $300 a month, Facebook ads won't exceed $300.

Additionally, a bigger budget isn’t always better on Facebook. Blasting the platform with as much budget as you can doesn’t guarantee optimum results. This is why instead of focusing on the sheer amount of money you put into it, you should focus on using your Facebook advertising budget in a way that maximizes ROI for your business.

In this post, we’ll tell you everything you need to know about Facebook advertising costs—industry benchmarks, factors determining the average cost of Facebook ads, and (more importantly) ways to lower costs.

Facebook ads average costs vary depending on your bidding model. But to give you an idea, check out the benchmarks for Facebook advertising costs based on data accumulated by Revealbot from January 2021 to December 2021.

To give you a brief general snapshot, if we do the math, the average CPM on Facebook for all of 2021 was around $14.93. Breaking that down further, that’s about 1 cent for each individual impression.

This tool can also show you the data broken down by your campaign objective. You’ll notice that this changes how high or low the average CPM will be, and how much fluctuation you can expect. Banking on lead generation? You might want to come prepared with a little more budget for that.

And if you’ve decided you want to be charged for something other than impressions, you can view average data by month for that as well. For example, if you’re paying for clicks or link clicks, here is the average CPC (cost per click) trend:

Coming prepared with the correct budget often depends on how you pay for your ads, whether that’s impressions, clicks, or otherwise. 

It’s wise to know the benchmark averages before jumping in, but you’ll also need to consider that the amount of competition you’re up against affects how expensive your advertising will be. And the amount of competition you face tends to vary by industry. 

We often find it’s more efficient to pay for impressions. Even though paying for impressions doesn’t guarantee you a click, you can still set up your campaign to prioritize and drive specific conversions (using the Conversions objective). So you’re paying for the impressions, which are more affordable, but reaping the benefits of Facebook’s algorithm as it works to drive more results that matter. Ultimately, that’s what’s most important.

Facebook advertising costs are similar to how pay-per-click (PPC) advertising costs on Google Ads work. If you want to build a realistic marketing budget for your business, you have to understand the eight factors that determine the overall cost of Facebook ads. 

Let’s learn more about them.

If you want users to see your ads, you’ll need to select a Facebook ads bidding strategy that works best for your goals.

The bidding strategies available will depend on how you decide to set your budgets and what campaign objective you choose, but as a brief overview, your options are:

• Highest value or lowest cost
• Cost cap
• Bid cap
• Minimum ROAS

If you use Campaign Budget Optimization (CBO), you may be able to use any of these depending on your campaign objective. If you decide to set your budgets at the ad set level, then you’ll only have access to the bid cap and cost cap strategies.

Typically using the “manual bidding” strategies–bid cap and cost cap–tend to be less cost-efficient. It leaves a lot in your hands to determine your max cost or max bid while still trying to get sufficient results. Using an “automatic bidding” strategy like lowest cost has its goal in the name: More results at the lowest possible cost, automatically managed by Facebook.

Before you zero in on a bidding strategy, if you’re still a little confused about how bidding works, we recommend that you read up on the Facebook ad auction process. This will help you build a better ad strategy and determine the right advertising budget.

Facebook advertising is highly competitive. Your target audience is also your competition‘s target audience, which is why audience targeting has a significant impact on the prices of your Facebook ads.

For certain industries and products, it could be more costly to advertise to men than women. It may even be more costly to advertise to different age ranges, or to different languages.

Whether you decide to target broad or specific audiences has an effect on costs as well. Pro tip: The broader the audience, the cheaper it tends to be. At first glance this might seem counterintuitive–wouldn’t broad audiences be more costly, since they contain more people to advertise to?

Actually, that’s exactly why they’re cheaper. A broader, larger audience affords you more opportunities for more impressions from more people, which means even if your competition is high, there’s enough to go around, so to speak.

When you advertise to smaller and more specific audiences, that’s when you can expect costs to rise. The size of the audience may shrink, but the competition for it may not. Therefore, you’ve got the same amount of competitors jockeying for less available attention.

Consider your audience size when setting up your campaigns, and for the most cost-effective results, try to spend around 75% of your budget prospecting to a large audience.

For a more detailed look at Facebook ad targeting, check out this article.

Your Facebook advertising costs also depend on how Facebook ranks ad quality and ad relevance. Formerly known as “relevance score,” Facebook doesn’t score anymore but ranks your ads in three categories: Quality, Engagement Rate, and Conversion Rate. 

If you consistently show an ad that your target audience finds irrelevant or annoying, they might leave negative feedback on the ad and opt to have it hidden. This reflects poorly on your ad quality. And remember, ad quality plays a role in determining whether your ad will win an auction, and what it will cost.

Ads with better quality tend to win auctions with less spend. This is because they’re perceived by Facebook to be highly relevant, and to Facebook, this contributes to a better user experience. But if your ad is poor quality, you’ll be forced to bid higher to try to compensate for the quality the ad lacks—even still, you might lose opportunities to ads of better quality.

Focus on creating ads that rank high in quality. Improving engagement rate and conversion rate rankings can also put your ads in higher standing during auction time. Routinely monitor your rankings to improve performance and lower the costs of running your Facebook ad campaign. 

When you create an ad on Facebook, you specify your highest priority via campaign objective. Currently, you have three main ad objective categories:

Awareness Objectives

These objectives create awareness about your brand or product offerings to people at the top of your sales funnel. You can target users who aren’t aware of your brand or who want to know more about your new product offerings.

Consideration Objectives

These objectives provide your targeted audience with more information about your product or brand. While you may not see an immediate increase in conversion rates, consideration objectives further familiarize your target audience with your brand and products, turning them into high-quality leads in the future.

Conversion Objectives

These objectives let you fulfill the final stage of the sales funnel and are designed to encourage users to take an intended action through your ads. It lets you reach hot leads—users familiar with your product or service—to fulfill the required CTA.

Each main category has different sub-categories, which gives you a total of 11 options. Here’s what it looks like:

When building ad campaigns, many users focus on actions like purchases or lower funnel leads because they’re of more value to businesses. But brand awareness and consideration are equally important. Think of it this way–if you never build your top of funnel audience (awareness), you won’t have a bottom of funnel audience (ready to buy or send in a lead).

Pro tip: Connecting with users in the early stages of the buying funnel decreases your Facebook advertising costs. This is because awareness and consideration-related goals are cheaper than conversion-related goals. The intent is lower, competition may be less fierce, and top-of-funnel audiences like this tend to be broader, larger audiences.

Ad placements describe where your ads will appear within Facebook‘s ecosystem and partially determine the cost of Facebook ads. This includes Instagram ads as well. Across the two, ad delivery can happen across:

• News Feeds
• Stories and Reels
• In-Stream
• Reels overlay
• Search
• Messages
• In-Article
• Apps and Sites 

You can manually choose placements or let Facebook automatically do it.

Pro tip: If you’re just beginning, choose Automatic placements at first. After the ads have run for a while, you can check the costs per placement and optimize from there.

When the number of marketers advertising on Facebook increases, so will the cost of your ads. And when does the competition most famously and exponentially increase? Black Friday.

There are many other peak shopping seasons in a year when advertisers spend more on advertising than normal. This also varies by industry; for example, Memorial Day is a popular time for car dealerships and furniture retailers to amp up their advertising efforts, but it’s not necessarily a competitive holiday across the board.  

Holiday rushes lead to increased competition for ad space, resulting in more aggressive bids and bigger campaign budgets. Consequently, this greater demand inflates the cost of advertising on Facebook.

Despite the additional costs, you get to take advantage of the increased demand from consumers, which can result in higher sales. So it’s better to increase your budget for these high-demand seasons or audit your ad strategy to improve your ad’s quality.

Depending on your industry niche, achieving goals like promoting brand awareness, generating leads, and driving conversions can be more or less cost-effective on Facebook. If you are in a competitive industry, you can expect costs to rise proportional to the competition you face. If you’re in an especially niche industry with less competition, costs will likely be lower. 

It’s a good idea to spend time building an effective social media marketing strategy to maximize your ad budget and secure the best results.

It’s great to know average cost benchmarks, and what factors affect costs, but the question of the hour is: How much should I actually spend to get the results I want?

We know a lot of people are hesitant to jump in and start throwing ad spend at a new platform without knowing an estimate of what it’ll give you in return. And a lot of higher-ups do want to know what they’ll get by investing more in Facebook marketing before they do.

Unfortunately, there are no constants in digital marketing—the best we can do is estimate. We don’t recommend you go to your boss or a client and say, “If you have this Facebook ad budget, you’ll get these exact results, guaranteed.” Especially if you’ve never advertised on Facebook before and have no historical data to base estimations on.

There are a couple of helpful cost and budget estimators out there that can give you better insights on potential ad spend. One of them comes from AdEspresso, and can help you estimate what you should spend on Facebook Ads to try to achieve your goals if you have an eCommerce business.

But what about lead generation businesses? When your product has a longer buying cycle and doesn’t make immediate revenue, calculators like Adespresso’s that are designed to estimate budgets based on the profit you want to make don’t really work out.

In this case, a basic method to forecast costs is looking at how many leads you’d like to see from your campaign, and the cost per lead you’d like to hit. Social Media Examiner has a great example of this, which also goes into more detail.

Essentially:

Number of leads desired  X  Your CPA goal  = Estimated spend to meet those goals

Some of you may have an idea of your CPA goals, but if not, you can look at the projected average CPAs for your industry and start there. Or, you can simply test some ad spend on Facebook and see what your CPA looks like after the first month. Then, make that your baseline.

To an extent, the power to determine Facebook Ads costs for your business is within your control.

Some factors will always remain outside of your control, but if you play your cards right, you can lower costs and get a higher return on investment (ROI). Having said that, there's no shortcut to lower Facebook Ads costs. You still have to put in work to get what you want. 

For starters, look into trying campaign budget optimization (CBO). With CBO, you’ll allow Facebook to allocate campaign-level budgets across all contained ad sets, and more budget will automatically be funneled into those that perform best. 

So, you’ll no longer be wasting money on ad sets with a lower chance of producing results. And your campaign may even need less budget overall to get you more results than when you were budgeting your ad sets individually.

Ideal customer profiles, buyer personas, target audience—you’ve heard them all and know what your perfect customer looks like.

But… do you really?

In the past, Facebook had a handy feature known as the Audience Insights Tool, which could tell you more granular information about your target audience, down to the top pages they’ve liked, purchase activity trends, and level of their Facebook usage.

Around July 2021, Facebook retired the Audience Insights Tool–but it hasn’t completely disappeared. In your ads manager menu, details about your audiences can now be found under Insights. Once in Insights, clicking the “Audience” tab on the left will direct you to information about your audience.

Much less information is available now than there had been with the Audience Insights Tool, but that doesn’t mean you can’t get anything out of these insights today. 

Audience insights will still show you what demographics hold the majority in your current audiences, and what locations (city and country) they’re found in. You can also see statistics about your potential audience network, including the top pages your potential audience likes.

Allocating more funds and attention to the top demographics, and even the top locations among your target audiences has the potential to put your ads in front of a more interested crowd. This can increase your ad quality, which can require you to bid less for the same placements.

Know the top cities your audience is located in? Why not test targeting that city and localizing your ads to be more relevant to that audience?

Amateur Facebook marketers create amazing Facebook ads and move on to the next ones. Experienced Facebook marketers create amazing Facebook ads and continually split test them to ensure the best results.

Split testing involves running the same ad twice with small changes to test performance. It helps you improve your ads to ensure they keep performing better, and it helps you to know what changes do or don’t have an impact on performance. 

In turn, this can reduce your Facebook advertising costs through continual improvement toward better ad quality. Continually refreshing and testing new elements on your ads can also help reduce ad fatigue and costs along with it, which we’ll talk about later. 

Not to mention, your ROI stands to benefit from testing new ads to find out which one is most successful, focusing more on your winners, and endeavoring to create better winners.

Remember, experimenting with copywriting can be equally as effective as experimenting with images. In fact, a small tweak we did in the copy for this ad led to an 11% increase in conversions:

Our messaging about using it for “date night” was much more effective than other ads that were only highlighting the “reignite spark” messaging. It was a great low-effort, high-value test that lowered costs.

Find the same success with your ads by following our 121-point master guide to Facebook ad testing. Be the expert—not the amateur. Always, always split test.

Many advertisers tend to default to images when advertising on Facebook. They’re cheaper and faster to produce–we get that.

However, video is increasingly taking over as the medium of choice, with studies across the web proving that the right video can increase impressions, clicks, clickthrough rate (CTR), conversions, and engagement all while lowering costs.

For instance, a study from Biteable comparing video ad types to image ad types revealed that video ads were 497% cheaper CPC and 280% cheaper per lead. And they’re not the only ones who have shown similar results.

The proof is in the pudding. Not all video ads will be destined to succeed–hence why I said the right video ad can reduce costs for a better return. Structuring your video ad in a way that ensures its success is vital, so take the time to produce quality video ad experiments. Start with these tips for success.

When you begin advertising on Facebook, it might be tempting to spend more on smaller, more honed audiences. Many advertisers think that focusing efforts on the bottom of the funnel heavily or even exclusively is their best chance of success, because those users have the high intent you need to get a purchase out of them.

But here’s the rub–as we mentioned earlier, these smaller, more specific audiences are pricier to advertise to. Retargeting tends to be one of the most popular, but also one of the priciest. Not to mention, if you’re not building onto a retargeting list with new prospects, you’ll eventually run it dry, and wear out your welcome.

You can choose to expand your targeting with interest audiences, which will open up your prospects at a lower cost, but here’s a cost-efficient alternative that could perform even better: Lookalike Audiences.

A Lookalike Audience refers to a Facebook audience built of new people with similar traits and preferences as your existing custom audiences.

These audiences are much larger (they can contain millions of users) and as a result, they tend to be less expensive. Not only that, but lookalikes can bring in some pretty impressive results for a much lower CPM. Just look what they did for one of our clients:

Using a Lookalike Audience of people who had submitted a lead and a Lookalike Audience of a customer list both resulted in substantially more leads at much lower CPMs than retargeting (the “website visitors” ad set pictured above).

Not only are we reducing costs hereby targeting Lookalikes, but we’re also getting more of what we want–leads.

To be blunt, who wants to pay double to advertise to the same audience? Probably no one.

When you have two or more ad sets that contain the same audiences, or different audiences that contain a large amount of the same users, you end up competing with yourself for the same advertising space, to the same people. You’re raising your own average CPMs, or average CPCs, etc.

Cutting your advertising costs down can sometimes be as simple as removing yourself from your competitor list. 

Go through your campaigns and ad sets, and ensure you’re not advertising to the same audiences in multiple places. For instance, make sure there are no ad sets targeting a football interest audience if another ad set is also targeting a football interest audience, even if it’s narrowed down by a homeowners audience.

Additionally, implement an effective audience exclusion strategy to keep some of your audiences from hosting some of the same users. You can’t keep all your audiences from sharing some amount of users, but one thing you can do is exclude your remarketing lists from any non-remarketing ad sets. 

This way you can ensure that you’re not competing against yourself for your own remarketing list, and you can also ensure that remarketing audiences are only seeing your remarketing-focused ads.

If you don’t update your ads and create new ads regularly, your targeted audience will suffer from a serious case of ad fatigue.

Ad fatigue means people have gotten tired of seeing your Facebook ads after a specific timeframe. It doesn’t matter how great your campaign is, it’ll lose its impact eventually. 

What does this mean?

• Users may stop clicking on your Facebook ads. Your clickthrough rate (CTR) will decline, CPC may rise, and conversions will likely drop.
• Users may stop noticing your Facebook ads on their Facebook feed. This means you will get fewer likes, shares, and comments. Users may even opt to hide your ads, preventing the ad from being shown to them again.
• Your ad quality will suffer. When users stop engaging with your ads and start hiding them, that’s a red flag to Facebook that your ads are no longer high quality, and because of this, your bids may rise to compensate for the lack of quality.
• Your ad campaign costs will increase exponentially to get the same level of sales. You’ll have to pay (way) more money to get the same results as you did when you had newly launched your campaign.

The easiest way to avoid ad fatigue is to check your Facebook ad frequency, a metric that tells you how many times an average audience member has seen your ad. Here's how you can view the metric:

1. Open Facebook Ads Manager and select the campaign you want to look at, then go to the ads tab for that campaign
2. Open up your Columns selection and click Delivery
3. Check the frequency of each ad. Ads that have a frequency higher than 2-3 need a refresh

You can avoid the negative effects of ad fatigue if you act quickly. What’s more, you don’t have to start from scratch each time.

All you have to do is spruce up your ads. You can keep the same audience, but change your ad image, copy, and offer. For example, these ads from Quad Lock use the same copy and call-to-action but have refreshed the visuals. 

Gives it a brand new feel, doesn’t it?

This is also an excellent time to apply the data you collected when split testing to rotate in new ads. 

That’s all folks. 

By now, you should know how much Facebook ads cost, the factors that determine the cost, and a handful of strategies to help lower your costs.

If you’re having trouble getting started, you can use the service of a reputable Facebook ad agency to ensure a positive ROI. At KlientBoost, we have a team of experienced ad professionals that understand the ever-changing Facebook algorithm and help you achieve your advertising objectives. Customize your marketing plan with us today.