What is the minimum cost to advertise on Facebook?

With a low average cost-per-click (CPC) of $1.01 and an average cost-per-thousand-views (CPM) of $13.57, it’s easy to see why businesses use Facebook Ads to build brand awareness. The platform offers sophisticated audience targeting capabilities, and Facebook Ads cost as little as $1 per day to run, enabling businesses of all budget sizes to use it. Learn more about the average cost of Facebook Ads for your industry and how to improve your results.

Average Facebook Ads Cost Per Click, Impressions, and Action

Revealbot data shows that the average Facebook Ad cost per click across all industries was $1.01 in 2021 and $0.97 as of July 2022. The average cost per mille (thousand impressions), or CPM, was $13.57 in 2021, and $13.49 as of the date of this article.

While average prices have decreased over the past year, keep in mind that costs vary greatly, and all advertisers must meet the minimum $1 per day ad spend. Some businesses and industries will have average costs below these, as well as above these average figures for 2021:

• Cost per click (CPC): $1.01
• Cost per mille, or thousand views (CPM): $13.57
• Cost per acquisition/action (CPA): $19.68

For example, a company in the apparel industry that uses Facebook to advertise their product catalog sees an average CPC of 45 cents. However, a life insurance company that advertises on Facebook has an average CPC of $3.77.

The reason for the difference is largely related to user interest; social media users tend to use the platform for leisure, making apparel ads more enticing for most users. Life insurance ads, on the other hand, are not likely to be appealing. Small businesses can increase return on ad spend (ROAS) with Facebook advertising by understanding the market and targeting the right audience.

Key Factors That Impact Return on Ad Spend

Factors that can affect the cost of Facebook ads other than price include things like click-through rates (CTR) and conversion rates (CR). Your CTR is a percentage representing the ratio of how many times your ad was shown compared to how many clicks it received, illustrating the quality of your ad. Whereas your conversion rate is the number of times users who clicked on your ad convert on your landing page, speaking to the quality of your landing page or offer.

WordStream shows Facebook ad benchmarks for average CTR and CR as:

• Average click-through rate (CTR): 0.90%
• Average conversion rate (CR): 9.21%

For example, a business with Facebook ads that have a high CPC (cost per click) may still have a low CPA (cost per acquisition) if the average click-through and conversion rates are high. So while it may sound good to have a low CPC, this doesn’t necessarily equate to effective advertising if your Facebook ads cost is low, but you also have a very low conversion rate.

Facebook Ads Cost by Industry in 2022

Facebook advertising costs vary by business and industry, though the overall average CPC across all industries is $1.86. The cheapest industry is food and drink, with a 42-cent Facebook ad cost per click while the most expensive is internet and telecom with a $3.07 CPC. You can refer to the industry benchmarks below to get an idea of your potential Facebook advertising cost-per-click.

Also, note that these numbers are higher than the overall average CPC, CPM, and CPA as reported above. The numbers below are representative to the industries in the list rather than the total ecosphere of Facebook advertisers.

Average Facebook Ads CPC, CR & CPA by Industry

(Source: WordStream)

Facebook Business Advertising Cost Trends

The landscape of Facebook business advertising costs fluctuated from 2020 to 2021 as seen in the average CPC. Other key performance indicators, such as the average click-through rate and the average cost per action (or cost per acquisition) have also significantly changed in the last year.

While the click-through rate increased by about 4.5%, the average Facebook ads cost per click decreased by 3.8%, and conversion rates also fell by 2.5%. Notably, the cost per acquisition for Facebook ads has risen sharply. The $7.44 more Facebook advertising cost last year represents a 37.8% increase.

Facebook Ads Cost Change From 2020-2021

What Affects the Cost of Your Facebook Ads

Facebook Ads run on a bidding system, similar to Google Ads. Thus, competition plays a large part in how much an advertiser will have to spend to reach their target audience.

Ad placement and impressions are also impacted by overall ad quality, as Facebook wants to show only the most relevant ads to individual users. This is important for user experience (UX) on the platform, as seeing a bunch of irrelevant ads could cause a person to use Facebook less or stop using the platform altogether. Thus, Facebook has a vested interest in ensuring ad relevance for each user.

Generally, ads with the highest ad quality and bid will be placed, and average costs-per (click, acquisition, impression) should be lower than ads Facebook deems of low quality. Here are the three main factors Facebook looks at to determine ad placement and cost:

• Bid: The amount of money an advertiser is willing to pay (lifetime and daily budget of a campaign)
• Audience relevance: Beyond targeting, ads receiving high engagement, show they are the most relevant, and will receive more placements
• Projected conversions: As users are engaging with ads, the ads getting conversions will see more placement

To get your ad to display, start with a highly targeted audience, a competitive bid, and ads tailored to spark engagement with your audience. Once your ad is live, and users are engaging with it, Facebook will consider the ad’s high quality and may reduce the price while increasing reach.

Ready to start spending money on Facebook advertising? Read our step-by-step article showing how to create a Facebook ad.

How To Calculate Return on Ad Spend (ROAS) of Facebook Ads

First, decide how much to spend on Facebook Ads monthly. Next, estimate how many clicks per month you’ll receive by dividing your budget by your industry’s average CPC. Then multiply the estimated monthly clicks by the average conversion rate to find your number of new customers per month. And finally, multiply that by your estimated customer lifetime value (CLV) to calculate your revenue return on ad spend, or ROAS.

Estimate your Facebook Ads ROAS with a calculator or spreadsheet in five steps:

1. Determine Your Estimated Monthly Ad Spend

First, consider how much you would want to allocate toward Facebook ads per month. Facebook has a minimum daily ad spend of $1, so you will at least need to determine a budget of $31 per month. For reference, the average small business spends around $1,000 to $3,000 on Facebook ads every month. However, you can achieve results with a minimum spend such as a weeklong ad campaign or boosted post with a $50 budget.

2. Calculate Your Estimated Monthly Clicks

Next, find your industry’s average cost per click (CPC). With your average CPC, calculate your estimated monthly clicks by dividing your monthly ad spend by your average CPC.

Equation: Monthly ad spend / Industry CPC = Estimated monthly clicks

For example, let’s say your business is in the fitness industry and your monthly ad spend is about $800. Per the table above, your industry’s CPC is $1.90. That would equate to 432 clicks per month.

Example: $800 / $1.90 = 421 clicks

3. Estimate Your Monthly Conversions

To estimate how many conversions your ad might yield each month, multiply your number of monthly clicks by your conversion rate.

Equation: Monthly clicks x average conversion rate = Conversions

Continuing the example above, the industry average conversion rate for fitness is 14.29%. With 421 clicks per month, you’re acquiring 60 new customers per month.

Example: 432 x 11.65% (or 0.1165) = 60 new customers acquired per month

4. Estimate Your Potential Ad Revenue

To estimate the potential revenue expected to be generated by your ad, multiply the number of conversions per month (if your conversion point is a new customer) by your average customer’s lifetime value (CLV). In other words, how much a new customer is worth to your business in the long term.

Equation: Number of new customers x Customer lifetime value = Revenue generated

In the case of the fitness business above, the CLV is estimated at $100. Multiplied by 60 customers, the fitness business generates $6,000 in new revenue every month from ad spend.

Example: 60 x $100 = $5,000 projected revenue generated from your monthly ad spend

5. 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 profit. If you’re not at least breaking even, you may want to with a professional Facebook Ad agency like Lyfe Marketing, or allocate spend to other advertising channels.

Equation: Revenue generated – monthly ad spend = Estimated return on ad spend

As the final piece of the fitness business’ Facebook ROAS calculation, we would need to subtract $800 in ad spend from the $6,000 in total revenue to determine total profit (or return on ad spend). That comes to $5,200.

Example: $6,000 – $800 = $5,200 return on ad spend per month

Keep in mind that you can also start with the desired number of new customers and work the calculation in reverse. For example, calculate how many leads you need to get the desired number of new customers based on your conversion rate.

Next, multiply the number of leads needed by your industry’s average cost per click. This is the budget you should allocate to Facebook Ads to meet your goals for new business.

What Is a Good ROAS for Facebook Ads?

Before you spend money on Facebook Ads, first get an idea of what is a good ROAS for Facebook Ads. For example, Ingrately.com suggests that at a minimum, your return on ad spend should be at least twice your investment (200%). For every $100 you spend on Facebook Ads, your business generates $200 or more.

This could be different for your business, as what will be a good ROAS will tie directly to your revenue, operating costs, and profit margins. Nor does it factor in other costs such as the salaries of employees managing Facebook Ads or outsourced Facebook ads management.

It also doesn’t account for costs associated with advertisement creation such as professional copywriting, graphics and images needed, etc. For each of these additional cost factors, your ads will need to generate enough revenue to meet these expenses and produce the revenue return you are looking for.

To make the most of your budget and encourage higher ROAS relative to your Facebook advertising costs, consider hiring a graphic design professional from Fiverr. For as little as $5 a project, they can help you write effective ad copy, generate images and graphics for your ads, or even manage Facebook ad campaigns on your behalf.

Visit Fiverr

How To Improve Your Return on Facebook Ads

With Facebook and any other kinds of paid social, your goal is to optimize your ads to get the most out of your marketing efforts. Although there are plenty of tips on how to make ad campaigns more successful, there is one proven way to optimize your ROAS: testing.

Here are four ways to improve ROAS for Facebook ads with testing and lookalike audiences:

Test Different Objectives

The campaign objectives are the backbone of any Facebook Ad campaign. Your campaign objective affects the ad unit options, bidding strategies, and optimization techniques. Don’t be afraid to mix up your campaign objectives to attain different goals throughout your campaign. Learn more about these objectives and the options that go along with them in our small business guide to Facebook Advertising.

Test Different Bidding Strategies

Facebook’s bidding algorithm progresses more smoothly if it starts with a low budget and scales over time. This gives small business owners and advertisers the opportunity to test different bid strategies with a low budget instead of simply opting for cost caps. Cost caps provide a sense of control to advertisers, but they often restrict results volume (which Facebook relies on).

By testing different bid strategies, you can find the optimal approach to boost your ROA. Facebook outlines three types of bidding strategies you can play around with:

• Spend-based: Spend your full budget to get the possible value (e.g., promoting high-value purchases) or highest volume of results (ad delivery and conversions, such as generating web traffic, event signups, coupon code redemption, and so on).
• Goal-based: Set bids based on the projected returns to stay profitable or hit a specific ROAS.
• Manual: Manual bidding is setting specific max bids across auctions. It’s only recommended for experienced advertisers who can project conversion rates to calculate their bids. Most advertisers are better off letting Facebook’s system control the process to get the best return.

Test Different Ad Creatives and Formats

Explore different ad types, creatives, and placements to find the ones that resonate with your audience the most. At the same time, you can also mix up your ads depending on purpose. For example, if video-format ads aren’t capturing your audience’s attention enough, try out a different design or a carousel format to highlight what your business can offer.

Extend Your Reach With Lookalike Audiences

Effective targeting is essential for successful Facebook advertising campaigns. Creating lookalike audiences allows you to reach people who share the same characteristics as your existing customers. Aside from identifying your key user base, it dissects commonalities to help you reach highly-qualified prospects you might not have been able to target otherwise.

You can build a lookalike audience simply by selecting an existing audience and setting additional parameters such as audience size, age, location, gender, and other demographics. Remember that the source group should have at least 100 people based on your customers, site visitors, or page fans.

Frequently Asked Questions (FAQs)

Which is cheaper: Google Ads or Facebook Ads?

Costs-per click tends to be lower for Facebook Ads than Google Ads, but you need to keep in mind that user intent is different on each platform, as are click-through and conversion rates. Facebook may be cheaper, but it’s more geared toward generating interest in your brand. In contrast, Google search ads are directed at users actively looking to make a purchase, book an appointment, visit a local business, or take some other type of action.

Learn more about Facebook Ads vs Google Ads.

What are the best ways to target Facebook ads?

Facebook offers several excellent targeting parameters, from life events to interests, job titles, and behaviors. Every advertiser can use these targeting options to create audiences that closely match their ideal customer. Learn more about what types of audiences Facebook ads work well for and which social media advertising platforms are best for your digital ad strategy.

Where can I find a Facebook ad management service?

Opting for professional ad management services is often a smart move, especially if you’re a new advertiser struggling to understand digital marketing or the Facebook ad platform. However, many management services are available, and it can be hard to pick the right one. We highly recommend Hibu and Lyfe Marketing—learn more about them in our list of the best Facebook Ad management services.

Bottom Line

Understanding how much Facebook Ads cost for your industry can help you determine whether you have the budget for advertising on Facebook and if you’re getting a good return on ad spend, or ROAS. Looking to learn more about using Facebook to grow your business? Get ideas and inspiration from our list of Facebook marketing strategies for small businesses.

You Might Also Like…

• Before you start advertising, make sure you’ve done all you can to create a Facebook business page for maximum results.
• Find out if another social media advertising platform offers better opportunities for you to reach your target audience.
• Combine on and offline local marketing tactics—see how affordable the cost of billboard advertising can be.

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