How Much Does Facebook Advertising Cost?
April 22, 2021
If you’re thinking of advertising on Facebook, one of the questions you’ve undoubtedly asked yourself is, “how much does Facebook Advertising cost?”
In this article, we discuss the various factors that affect the cost of Facebook advertising and how businesses can keep advertising costs low without limiting their marketing strategy. Keep in mind that these costs are just averages, and that your business may spend more or less depending on these factors. But before we get to them, we will look at a few crucial facets of Facebook advertising, such as the process of creating and submitting ads and the Facebook ad auction.
Advertising on Facebook will cost your business an average of $0.97 per click, $1.07 per like, and $5.47 per download. For businesses that are more concerned with impressions, expect to pay an average of $7.19 for every thousand impressions.
This guide is based on information that was collected after a thorough review of Facebook’s ad services plus several independent reviews that detail the experiences of other digital marketers. It takes an in-depth look at the cost of running an ad on Facebook and discusses why and how various factors affect your advertising budget.
Purchasing Facebook Ads – How is it Done?
To start, all you need to do is log in to Ads Manager, the platform’s ad management tool. Here, you have full control over every aspect of your advertisement. You must first set your budget and bid amount so that Facebook knows your maximum spend limit.
Although this means that businesses can spend as little or as much as they can afford, your budget and bid amount will affect your reach and your ads' impact. We will discuss that later on.
Next, you will be required to select your target audience. Facebook allows you to use demographics like age, gender, and current location, or parameters like interests, browsing history, and devices to choose who you want your ads displayed to.
Once you’ve chosen your audience, you can select the actions that you want to pay for. Most businesses that advertise on Facebook are looking for three things: conversions, considerations, and impressions.
You can select to pay for likes, clicks, views, or downloads, which is ideal for aligning your advertising strategies with your business objectives.
When you’re done tailoring the financial parameters and preferred actions for your ads, the next step is creating the ad. Facebook is unrivaled when it comes to ad quality and engagement levels.
Advertisers are encouraged to add captivating visuals to improve their ads' relevance and capture more attention. A combination of visuals and text can make for a powerful advertisement on Facebook.
When your ad is ready, you can finally submit it to the Facebook ad auction. Before we talk about how the ad auction works, there are two lesser-known ways to buy ads on Facebook. They’re lesser-known because they appeal to larger businesses. They are:
Reach and frequency buying
If your ad campaign is targeting over 200,000 people, this option offers you controlled and predictable ad delivery at a flat rate. With this option, you get to choose the number of people that see your ads, how often they see them, and the order in which your ads appear to them (if you’re running multiple ads simultaneously).
Reach and frequency buying allow businesses to manage these and more ad details for up to six months in advance.
The other benefit of using this method is that you can clearly see how far your budget will take you. This allows you to figure out how much you need to invest in advertising to reach your target audience. Your ads are automatically delivered according to the budget you set.
How is reach and frequency buying different from standard Facebook ad buying?
For starters, reach and frequency buying is only applicable to campaigns that are aimed at least 200,000 people. Unlike standard Facebook ads, you will be able to see precisely how many people your ad can reach—and that number fluctuates depending on your budget.
This option also allows you to tailor things such as the frequency of your ads and the order in which they appear to your target audience, something you can’t achieve with the regular method of advertising on Facebook.
Target rating points (TRP) buying
The TRP buying option gives advertisers a more familiar ad procurement method—one that mimics buying TV ads. Here, you can buy ads on Facebook, Instagram, or the Audience Network much like you book ad spots on TV.
Furthermore, you will get reports on your Facebook video campaigns' performance the same way you get metrics from online video channels and TV advertising campaigns.
This is a modern adaptation of one of the oldest forms of digital advertising, specifically targeting businesses looking for a more familiar way to showcase their brand.
Facebook Advertising has seemingly leveled the playing field for businesses by allowing advertisers to tweak every aspect of their ads, including the budget and target audience.
Anyone can purchase an ad on Facebook, but it is the algorithm that decides if or when your ads are displayed to your desired audience. To understand how that works, we’ll have to take an in-depth look at the Facebook ad auction.
Stick around to learn how the algorithm behind it picks the best ads to display.
The Facebook Ad Auction Explained
To understand how different factors will affect your Facebook ad spend, we must look at how the Facebook ad auction works. Learning this will help you optimize your advertising costs to get the highest return using the least amount of resources.
We’ve already reviewed the ad submission process, which starts by logging into Ad Manager and ends with creating and launching an ad. By this point, you’ve already selected your target audience, budget, and desired actions. So, here’s what follows once you submit your ad:
- Your ad’s bid, quality, and estimated action rates are graded by the ad auction algorithm
- Facebook determines the relevance of your ad using estimated action rates and the ad quality (visuals and text included)
- Your ad’s total value is calculated based on its bid price, ad quality, and estimated action rate
- Facebook picks the ad with the highest total value and delivers it to the specified audience
So far, it is quite evident that Facebook values specific metrics when assessing and determining ad quality. These metrics are ad bid, ad quality, ad relevance, and estimated action rates.
This gives you, the advertiser, a clear line of sight to the factors that impact your ads the most. Optimizing these metrics, whether it’s by bidding higher or improving relevance and quality, will lower your overall Facebook ad spend.
Understanding the process of ad selection is essential if you want to optimize your advertising costs on Facebook. Now, we move on to the meat of the matter: the factors that determine Facebook advertising costs.
What Factors Determine my Facebook Advertising Costs?
Facebook ads are a lot like Google Ads’ pay-per-click (PPC) advertising in the sense that your overall ad spend will be governed by a number of factors.
The key to creating a realistic and financially sound budget for your business’ marketing needs is understanding these factors and how they affect your bottom line.
There are eight factors that decide how much you will spend on Facebook advertising. They are:
- Target audience
- Advertising budget
- Advertising bid
- Marketing objective
- Ad placement
- Ad quality
Let’s take a closer look at each of these factors.
The audience you’re looking to reach has a significant impact on how much you will ultimately spend on Facebook ads. This is regardless of whether you’re tailoring your ads for a specific gender, interest, or age.
Ad campaigns that target women, for instance, generally cost more than campaigns that target men. When targeting women, your cost-per-click (CPC) goes up by $0.55.
In comparison, ad campaigns that target men may attract an average CPC of $0.40. Therefore, you will spend significantly more if your ads target women than if they target men.
The same applies to ads that target individuals based on age. Targeting older audiences (55 – 65 years or older) generally costs more than targeting the young users (25 – 34 years) of Facebook. The reason behind that is simple.
Facebook has around 26 million users aged between 55 and 64 years old, according to these stats. That’s less than half the number of users that are between the ages of 25 and 34, which currently stands at around 58 million.
That’s why targeting older audiences—the minority of users on the platform—comes at a premium.
Facebook’s superior audience granularity allows you to target specific attributes and interests as well. Aside from demographics like age and gender, you can also target audiences based on niche topics such as commuting, college sports, meditation, and outdoor recreation.
Useful as this feature is, it impacts the cost of advertising on Facebook, especially if you target high-value attributes or broad interests. To illustrate this point, think about an advertiser that targets chefs.
If they only target chefs in general as opposed to smaller audiences like gourmet chefs or home chefs, they may pay more to access the broader audience.
Targeting high-value attributes is considered more effective than focusing on broad interests. When you target a single attribute, you increase your chances of reaching a specific audience. That means most of the people you reach will be interested enough to act on your calls-to-action (CTAs).
But targeting broad audiences increases the number of low-value users that see your ads. These users may not necessarily click on your CTAs, so your campaign's performance will suffer significantly.
Targeting broad audiences is a sound strategy for businesses with larger budgets and generic items that fit most people's needs, such as hygiene products.
However, to get good results without inflating your advertising budget, it is advisable to focus your campaign on the audiences that bring the most value to your business.
Remember, you’ll be paying for clicks or views, so if they offer zero value, your bottom line and your long-term goals, whether it is conversions or lead generation, will be affected accordingly.
One of the preliminary steps of launching an ad campaign on Facebook is setting an advertising budget. Your ad budget affects more than just your financial bottom line. It is directly linked to your ads' performance, your bids, and the returns of your Facebook advertising campaigns.
One of the reasons why Facebook Ads is such an accessible digital marketing platform for startups is affordability. You have the freedom to set your budget to be as high or as low as you can afford. However, there is a catch.
A company that invests $100 a month into an ad campaign might quickly notice that they get a low number of clicks and impressions. With a $100 monthly budget, your maximum bid might be not more than $1 per click.
Remember, the average CPC for ads on Facebook is $0.97, so your bid will be on the lower end of what most advertisers on Facebook are paying for per click. That inevitably means that your campaign will perform poorly due to the low bid amount.
We’ll discuss how your bid affects your ads in the next section. To be perfectly candid, a low ad budget comes with performance limitations.
However, there is nothing to suggest that you can’t make a small budget work for your company. Many businesses have grown from the ground-up using small budgets and gradually improved their bids as their companies scaled up.
However, it must be said that a larger ad budget gives your business a lot more flexibility. Social media strategists recommend spending at least $5 a day on your ad campaign. That is the lowest amount you can expect to invest in a Facebook ad campaign if you want good, consistent results.
Advertisers have the option to choose between two bidding strategies on Facebook ads. Both of these will affect the cost of advertising on the platform. They are:
Automatic bidding (Lowest cost bid strategy)
Automatic bidding is suitable for businesses that are looking to achieve the lowest possible cost per action.
This strategy helps your business to utilize your advertising budget as efficiently as possible. That’s why most companies, especially startups and small businesses, elect to start with the lowest cost bid strategy.
Manual bidding (Target cost bid strategy)
Manual bidding, also known as the target cost bid strategy, suits businesses with a desired cost per action. This strategy is called the target cost bid strategy because it allows businesses to tailor their advertisements based on how much they’re willing to spend per click or per action.
Unfortunately, this strategy is only applicable to app installs, lead generation, conversions, and product catalog sale campaigns.
Depending on the bid strategy you choose, your Facebook advertising costs may be lower or higher. In a nutshell, manual bidding typically demands higher advertising costs, while automatic bidding squeezes all your marketing needs to fit your budget, no matter how limited it is.
It makes sense, especially for small businesses, to opt for the latter bidding strategy (automatic bidding).
However, before you settle on this strategy, you need to be fully aware of how the algorithm behind Facebook’s advertising service will affect your ad’s performance based on your bidding strategy.
How Facebook rates your bid will depend on the following three factors:
- How much you’re willing to bid – A bid is essentially how much you’re willing to pay for every user that interacts with your ad. It goes without saying that the higher the bid, the more favorably your advertisement is looked upon by Facebook’s algorithm.
- The likelihood of users interacting with your ad – This is otherwise referred to as estimated action rates. It refers to how likely users are to click on your ad, like your page, or download your app after viewing your ad. According to Facebook’s algorithm, you need a high estimated action rate to increase your ad's relevance.
- The quality and relevance of your ad – Ad relevance and quality are determined by the aggregation of users' negative and positive interactions with your ads. Ads that score highly in terms of quality and relevance are more likely to win the auction.
The Facebook algorithm decides the ad with the highest total value based on the above factors. If your ad scores highly on all three factors, then it wins the auction. That means that it will be chosen over your competitors’ ads to be shown to your target audience.
The takeaway here might be that you need to bid more aggressively to win auctions. However, higher bids will inevitably raise the cost of advertising on Facebook, and that may not be a feasible strategy for companies with limited marketing budgets.
The key to improving your bids without bidding aggressively is to refine your ads' quality and relevance first.
The algorithm will always favor relevant, high-quality ads as they provide the most value to users. Once you’ve got an ad that the algorithm loves, then you can consider revising your bidding strategy and investment.
Earlier in this guide, we mentioned that marketers on Facebook are only after three things: awareness (impressions), consideration, and conversions. Before creating an ad on Facebook, you need to know where your marketing objectives lie.
These three over-arching objectives can be broken down further into specific goals. For instance, awareness can be refined to suit goals like brand awareness and reach.
The consideration objective can be further broken down into several goals, including engagement, traffic, app installs, messages, video views, and lead generation. Conversions-related ads can either lead to more store visits or lead to direct sales.
Some ad objectives are considered more valuable than others. Conversions-focused objectives are a prime example. Marketing goals like store visits and product purchases may incur higher ad costs because they provide immediate value for your business.
Actions that generate immediate revenue, therefore, will cost more compared to actions that don’t necessarily lead to sales or conversions. Does that mean that you should invest in conversion-focused objectives alone? Not necessarily.
A sound marketing strategy, particularly when building a long-term ad campaign, may require you to incorporate brand awareness and consideration. These objectives are still valuable even if they don’t have immediate returns.
They help you reach users during the initial stages of the buying funnel, providing you with future opportunities to drum up their interest in your brand and ultimately push them further down the sales funnel.
Not only do these objectives have a real and tangible value, but they’re also more cost-effective and will keep your Facebook advertising costs low. The majority of the 7 million advertisers on Facebook prefer to pay less for awareness and consideration-focused goals than to spend more for conversion-related objectives.
If you’re willing to bear with the longer turnaround time for a conversion, then centering your advertisements on brand awareness and consideration is a cost-efficient way to advertise on Facebook.
However, a conversion-related goal will connect you to users that are ready to buy, which means you’ll generate revenue much faster. The only downside is that you have to spend more on such direct marketing objectives.
Ad placement is another factor that impacts your total cost of advertising on Facebook. When you advertise on Facebook, your ads can appear in any of the following six spots:
- Facebook desktop newsfeed
- Facebook right column
- Facebook Messenger
- Instagram Stories
- Audience Network
One of the benefits of using Facebook for your social media advertising is that you automatically get a competitive advantage. Facebook owns Instagram, so once you create an ad on Facebook, it will get displayed on Instagram, too, saving you the effort and time it takes to create another ad.
Let’s take a closer look at the advertising spots placed at your disposal by Facebook ads:
Facebook is the most versatile option here, and with an average ad CPC that is roughly $0.30 less than Instagram, it is also the most cost-effective option. Ads that appear on Facebook will also appear on their proprietary messaging app, Facebook Messenger, at no extra cost to you.
Instagram has the highest CPC of the three options. Companies spend an average of $1.27 per click to advertise on the platform. To advertise on Instagram Stories, you will have to part with an extra $0.78 per click, which makes for a significant hike in CPC.
This is an advertising platform that puts your ads on external websites as well as mobile apps, sometimes at an even lower CPC than Instagram and Facebook.
On average, companies may have to part with an extra $0.20 above the average Facebook advertising CPC for their ads to appear on the Audience Network.
Can you choose where your ads appear?
It is possible to modify where you need your own ads to appear, but Facebook recommends using Automatic Placements instead. This tool maximizes your ad spend by placing the ads on the platforms that promise the best results.
Consequently, this tool can drive up your Facebook ad spend if it routinely displays them on more expensive platforms like Instagram Stories.
To reduce advertising costs, some marketers put off this feature. Doing so allows you to manually select where you need your ads to show up, which can lead to more predictable costs.
Ads with high engagement and relevance scores typically see lower costs. Therefore, your ads' relevance and quality is one of the most impactful factors affecting your overall cost of advertising on Facebook.
This theory was proven by a Hootsuite demonstration whereby two ads of the same version were put to the test. The first version scored 2.9 on the engagement and relevance score, while the second version scored an 8.
The ad with the lower score recorded an average CPC of 0.14$. Meanwhile, the ad with the higher engagement and relevance score attracted an average CPC of $0.3—a difference of $0.11.
Your ads will be gauged according to their relevance and rating and given a score of between 1 – 10. One is the lowest possible score, and therefore the worst, whereas ten is the best possible score your ad can get.
Facebook uses the positive and negative feedback your ad gets to assign a suitable relevance as well as engagement score. That means that it is the users who decide how relevant your advertisement is, not the algorithm.
Therefore, if you’re interested in spending less on Facebook advertising, one way to do so is to create highly relevant and engaging ads. Such ads impart the most value to Facebook users.
It is advisable to routinely monitor your ads' engagement and relevance scores to keep your Facebook advertising costs low.
Your engagement and relevance scores can be accessed via the following easy steps.
- Step one – Log into Ads Manager
- Step two – Click on the ad you need to view
- Step three – Click on the dropdown menu labeled Columns
- Step four – Click on the option that says Customize Columns
- Step five – Click on Relevance Score
- Step six – Click on Apply
- Step seven – Check out your Relevance and the Engagement Score
One more thing that you should know about relevance and engagement scores is that your ad only receives a score after getting at least 500 ad views/impressions. Also, Facebook will continue to adjust these scores for as long as your ad is live.
Therefore, keeping these scores high is a matter of checking in and regularly adjusting your ad feedback to maintain relevance and engagement.
As with most digital marketing practices, staying relevant on Facebook requires a proactive approach, which is necessary if you want to keep your results, performance, and advertising cost consistent.
If you want more insight into the average Facebook ads costs, you can filter the average CPC of Facebook ads by industry.
The aforementioned $0.97 average is just a broad estimate, so for more accuracy when building your social marketing media budget, consider looking at estimates from your industry.
For example, advertising in the finance and insurance niche attracts an average CPC of $3.77, whereas the apparel industry’s average is at about $0.45. The auto industry has an average CPC of $2.24, while the healthcare industry’s average CPC stands at $1.32.
Therefore, the actual advertising cost on Facebook will significantly depend on the industry you’re in, whether you’re building brand awareness, driving conversions, or generating leads. It is not advisable to go in without a sound social media strategy.
Remember that your competitors are also advertising on Facebook regardless of how high the CPC in your specific industry may be.
That’s because they’re getting results from it, whether they’re looking for more page likes, followers, or direct conversions such as purchases or direct visits to their physical location.
Lastly, all the aforementioned prices are merely estimated averages, and you will likely be paying more or less of the specified amount once you consider all the other factors.
The cost of advertising on Facebook fluctuates depending on the time of the year as well. That’s because every year comes with peak shopping seasons and events that lead to more purchases from users.
During these seasons, there is increased demand for ad space, which in turn hikes the advertising costs significantly.
These high-demand seasons trigger a more competitive marketplace where advertisers bid more aggressively and allocate bigger advertising campaign budgets. All these factors inflate the cost of advertising on Facebook.
Advertising on Facebook will be more expensive on the following days:
- Black Friday
- New Year’s Day
- New Year’s Eve
- Boxing Day
- Cyber Monday
Even though such seasonal factors will undoubtedly increase your Facebook ad spend, the extra cost allows you to take advantage of the increased demand for products and services.
There are two ways to leverage these periods for more revenue without dramatically increasing your ad costs.
First, you can temporarily increase your budget for these high-demand months. Thanks to the versatility of Facebook’s advertising service, it’s easy to revise your budget upwards or downwards depending on your business’s objectives, even if it’s only for a specific period.
Second, you can revise and audit your ad strategy as a means of improving your ad’s relevance and engagement score. Remember, high-quality ads typically cost less to run, while low-quality ads will attract a higher CPC.
If you’ve made it this far, then you’re likely still curious about a few specifics. We’ve discussed the process of creating and submitting ads, how the Facebook ad auction works, and the factors that determine the amount of money you’re likely to spend when advertising on Facebook.
A few questions remain unanswered, so if you still haven’t found what you’re looking for, keep reading for more answers.
FAQs on the Cost of Advertising on Facebook
What is the average cost of advertising on Facebook per month?
It will cost your company an average of $200 - $800 a month to advertise on Facebook. These are ballpark figures, not accurate costs.
The size of your business and your social media advertising budget will ultimately decide whether you need to spend more than $800 or less than $200 a month on Facebook advertising.
Your business’s decision-makers ultimately have the final word. Some enterprises invest upwards of $5,000 a month on Facebook advertising alone, while others get by with a $150 monthly budget.
While you don’t need to spend as little or as much as the averages suggest, these figures represent the most competitive range for advertising on Facebook.
The price will not decide whether your campaign is successful or not. However, a larger budget has its benefits. For example, you can pay for more actions (clicks, likes, downloads, etc.), which in turn will generate more revenue and conversions for your business.
The competitive advantage is evident when you picture business A, which has a budget of $200 a month, and business B, which spends $400 a month. Based on the average CPC ($0.97), business A will be able to afford around 206 clicks a month, while business B will afford twice as many clicks within the same period.
Business B is, therefore, able to drum up more views, get more clicks, and earn more revenue due to how big its marketing budget is.
Be that as it may, a larger ad budget is not necessarily the key to a successful campaign. For the most part, it all depends on your digital marketing team's expertise, which is why it’s not uncommon to see companies partnering with professional digital marketing agencies.
What is the average cost of advertising on Facebook per year?
The average ad spend for companies advertising on Facebook ranges between $2,400 and $9,600 a year. Again, this price is heavily influenced by two factors: your social media strategy and the size of your business.
It’s not accurate to say that only large companies can spend $9,600 a year on advertising. Many small-to-midsize businesses (SMBs) spend more than this annually on Facebook ads alone.
A company that relies on purchases from their e-commerce store may spend as much as $10,000 a year on Facebook advertising because they rely on these campaigns to drive product orders.
Similarly, a well-established brand such as Nike or Adidas may spend significantly less than that as they have already achieved exceptional brand awareness, and therefore do not need to spend much on impressions.
When deciding how much of your annual marketing budget to dedicate to Facebook advertising, you must first consider all your other digital marketing avenues, where your audience is, and your primary marketing objectives.
Companies with an active audience on Facebook or objectives that can be satisfied by the advertising platform’s strengths stand to benefit the most from advertising on Facebook.
In essence, any company that receives a tremendous return on investment from social media marketing stands to benefit from investing heavily in Facebook advertising.
How can I get better results from my Facebook ads?
There are two ways to achieve better results from your Facebook ads, and they both depend on how much resources you’re willing to dedicate to that end.
First, you can ensure that your in-house team has a social media strategy that aligns with your business’s objectives and goals. If you’re looking to generate brand awareness, you will require a strategy that’s different from that of a company that’s interested in sales and conversions.
Remember that marketing objectives impact the bottom line of your ad spend, so a strategy not only gives you a plan of action but it also makes your ad spend more predictable.
Most companies, especially startups and SMBs, may not be able to afford a dedicated in-house social media team, which is why the second option is to hire a professional social media strategist to handle your Facebook advertising needs.
Hiring a professional digital marketing agency is a far more affordable strategy for companies with limited resources. These are professionals that have trained and studied the nuances of advertising brands, products, and services online.
They are capable of handling all your advertising needs, whether you’re looking to get more leads, increase your brand awareness, get more app installs, or improve conversions and sales.
Hiring a professional digital marketing agency will allow you to focus on running other aspects of your business, such as monitoring your ROI.
Their services are available at a fraction of the cost of hiring an entire social media department for your company, plus many of them can work remotely, so you can access their services regardless of your geographical location.
Whether you’re looking to boost brand awareness, generate more leads, or convert more potential leads into revenue, Sparrowboost is a professional digital marketing agency that can help you achieve your marketing objectives in the most cost-efficient manner possible.
With years of experience and a large team of dedicated experts at your disposal, you can expect tangible results, regardless of what your objective might be.
Contact us or fill out our online form to receive free estimates and start making the most of your Facebook advertising today.
About THE AUTHOR
After working for multiple digital advertising agencies and managing hundreds of client accounts, spending millions of dollars via Google Ads, Facebook Ads, Native Ads and Direct Media Buying, I took things out on my own and started SparrowBoost. Now, my tight-knit team and I continue to get smarter and more efficient at running our own campaigns and we share our knowledge with you.Learn more about SparrowBoost