Facebook Ads Cost 2024: We Did the Math

How much do Facebook ads cost? Are they worth it? Should I try advertising on Facebook?

If you’ve ever asked yourself these questions, you’re not alone.

Over the last few years, Facebook has finally evolved into an effective marketing platform and businesses are starting to take notice.

Since you’re reading this article, some part of you is probably hoping that Facebook will be a breakout opportunity for your business—the ads will be cheaper and the results will be better.

Well, I’ve got good news for you. Facebook is an incredibly powerful and affordable way to promote your business online.

Facebook Ads Costs Breakdown: 

There are four main billing models for Facebook Ads, each catering to different goals and ad types:

Cost per 1,000 impressions (CPM): You pay a set amount for every 1,000 times your ad is shown, regardless of clicks. This model is ideal for maximizing brand awareness and reach.

Cost per click (CPC): You only pay when someone clicks on your ad. This model is suitable for driving traffic to your website or landing page.

Cost per action (CPA): You pay only when someone takes a specific action on your website or landing page, such as making a purchase or signing up for a newsletter. This model is ideal for generating leads and conversions.

Cost per engagement (CPE): You pay only when someone engages with your ad, such as liking, commenting, or sharing it. This model is good for increasing brand engagement and interaction.

The average cost of Facebook Ads can vary depending on the billing model, targeting options, ad competition, and campaign goals. However, here are some general estimates:

• CPM: $7-12 per 1,000 impressions
• CPC: $0.50-$1.00 per click
• CPA: $10-$20 per action
• CPE: $0.01-$0.05 per engagement

Cost per 1,000 impressions (CPM)

When it comes to Facebook advertising, two metrics play a crucial role in measuring your campaign’s success: impressions and CPM (cost per mille).

Impressions are a simple yet powerful indicator: they tell you how many times your ad has been displayed on Facebook users’ screens. Think of it like a billboard – every time someone walks by and sees it, that’s one impression. This metric is especially valuable for building brand awareness, as repeated exposure to your ad helps solidify your brand in users’ minds.

However, just showing your ad isn’t enough. You need to understand the cost associated with each impression, which is where CPM comes in. It stands for “cost per mille,” which translates to the average cost you pay for every 1,000 impressions your ad receives. In simpler terms, it’s the price tag you pay for every thousand viewers.

Think of it as buying tickets to a concert. If you spend $100 and purchase 10 tickets, the CPM would be $10 per ticket. Similarly, if your campaign spends $100 and receives 10,000 impressions, your CPM would be $10.

Understanding both impressions and CPM allows you to gauge your ad’s effectiveness and optimize your budget accordingly. While high impressions are desirable for raising awareness, a low CPM ensures you’re reaching your target audience efficiently.

Average CPM cost in November 2021: $14.67 across all industries.

Cost per click (CPC)

Want to drive more website traffic with your Facebook Ads? Focusing on CPC (Cost-Per-Click) optimization can be key. In essence, CPC is the amount you pay each time someone clicks on your ad.

Since 2015, Facebook only charges for clicks relevant to your campaign objectives, ensuring your budget goes towards qualified leads. Previously, any link click within your ad triggered a charge, but now “all clicks” are solely tracked for performance analysis.

The average CPC on Facebook in November 2021 was a mere $1.22, significantly lower than CPM (Cost-Per-Thousand Impressions). This indicates that achieving a click often requires fewer impressions, making CPC a cost-effective way to boost website visits.

Cost per action (CPA)

CPA stands for Cost per Action, and it’s a key metric for measuring the effectiveness of your marketing campaigns. Simply put, it tells you how much you spend to achieve a specific outcome, like a new signup or a completed purchase. You define this action, making CPA a versatile tool across various marketing goals.

Calculating your CPA is straightforward:

CPA = Total Ad Spend / Number of Actions

For example, if you spend $100 on ads and generate 10 new leads, your CPA would be $10.

Optimizing your campaigns for targeted actions is crucial. When promoting an app, prioritize app installs. Conversely, focus on acquiring new leads when promoting your newsletter.

Understanding average CPA benchmarks can be valuable. In October 2021, the average CPA for leads was $9.25. This cost often aligns with CPM (cost per thousand impressions) as it can take hundreds of ad impressions to convert a single impression into a lead.

Cost per engagement (CPE)

Running Facebook campaigns specifically for boosting engagement can be a cost-effective strategy. By optimizing for “engagement” and measuring the price in Cost per Engagement (CPE), you can maximize your reach and interaction with your audience.

Here’s why running engagement-focused campaigns is a smart move:

Low Cost: The average CPE in November 2021 was just $0.194, making it significantly cheaper than targeting clicks or conversions. This is because engagement happens directly within Facebook, making it a less resistant action for users.

Direct Platform Interaction: Unlike clicks or conversions, which might require users to leave Facebook, engagement takes place entirely within the platform. This means you’re more likely to capture users’ attention and maintain their interest.

Competitive Bidding: While you might bid based on per-lead, per-click, or per-action models, Facebook ultimately calculates the price based on the impressions needed to achieve your desired results. This ensures your campaign competes effectively for valuable ad space.

Lower Overall Costs: Ultimately, all campaign models rely on impressions. By focusing on engagement and achieving higher engagement rates, you require fewer impressions to reach your goals. This translates to lower overall costs, regardless of your chosen cost model (CPC or CPA).

Optimize for Success: Regularly analyze your campaign performance, particularly your most engaging posts, to identify patterns and refine your strategy. This continuous optimization helps maintain a high engagement rate and maximize your campaign’s effectiveness.

Unlock the Power of Engagement: Prioritizing engagement in your Facebook campaigns, you can leverage its inherent advantages to reach a wider audience, build stronger connections, and ultimately achieve your marketing goals.

How are Facebook Ads costs determined?

Facebook Ads employs AI-powered real-time auctions to set the price of each impression or click, resulting in a dynamic landscape influenced by several factors.

From your target audience’s location, interests, and age to the seasonality and placement of your ad, each element contributes to shaping your Facebook Ads campaign costs. This breakdown delves into some of the key aspects that determine what you pay for each view and click.

Audience and demographics

Reaching specific audiences on Facebook comes with varying costs, influenced by both demographics and psychographics. Targeting users in the U.S. aged 65+ can significantly outprice campaigns aimed at the 25-34 demographic.

This disparity arises from two key factors: the relatively small size of the 65+ audience (only 10.6% of Facebook users) and their attractiveness as a lucrative target.

Furthermore, psychographic factors can also influence cost. Audiences demonstrating prior interest in a specific industry, for instance, often command higher per-impression fees. This reflects the increased likelihood of their engagement with relevant advertisements.

Location

Local businesses rejoice! Facebook’s geotargeting features let you reach customers in your specific area. Advertise to potential patrons and drive foot traffic to your brick-and-mortar store. It’s like having the power of a high-end geofencing service, but without the hefty price tag.

Nevertheless, Facebook’s geotargeting offers an affordable way to attract local attention and boost your business.

Objective

Facebook offers three broad categories of campaign objectives, each tailored to specific marketing goals. These categories are:

Facebook advertising costs vary depending on several factors, impacting your ad’s success. Here’s an overview of the key influences:

1. Objectives:

• Awareness: Targeting broader audiences for brand recognition typically costs less than conversion-focused objectives.
• Consideration: Sub-objectives like website traffic and video views fall between awareness and conversion in cost.
• Conversion: Driving actions like add-to-carts and purchases requires higher bids as Facebook deems these users closer to conversion.

2. Seasonality:

• Peak periods: Expect higher advertising costs during peak shopping seasons like holidays due to increased competition for ad space.
• Example: CPMs jumped 30% during Thanksgiving week 2020 as businesses geared up for Black Friday and holiday shopping.

3. Industry:

• High-ticket industries: Driving clicks or leads in industries like finance or technology often costs more due to higher customer objections and competition.
• Example: The internet and telecom industry had the highest CPC ($3.07) in 2020, while food and drink industry had the lowest ($0.42).

4. Placement:

• Platforms: Facebook Ads can appear on Facebook, Instagram, Messenger, and WhatsApp, each with varying cost structures.
• Ad format: Different formats like images, videos, and stories have different pricing models, impacting your overall cost.

5. Targeting:

• Audience size: Targeting a smaller, highly specific audience might cost more than a broad audience due to lower competition for ad space.
• Interests and demographics: Targeting specific interests and demographics can increase costs depending on their demand and competitiveness.

6. Bidding strategy:

• Automatic bidding: Facebook’s algorithm automatically optimizes your bids to achieve your campaign objective within your budget.
• Manual bidding: You set the maximum amount you’re willing to pay for each action, providing more control but requiring careful monitoring.

High Cost:

• Instagram Stories: Prime real estate with high engagement, attracting a premium CPM.
• Facebook Newsfeed: Highly visible and engaging placement, leading to a higher cost.

Moderate Cost:

• Facebook Right Column: Less visually prominent than the newsfeed but still visible, resulting in a moderate CPM.
• Facebook Messenger: A targeted placement reaching users in a private setting, incurring a moderate cost.

Low Cost:

• Audience Network: Offers a broad reach across third-party apps and websites, often at a lower CPM.

While Facebook ads are generally less expensive than Instagram ads, individual placement costs can fluctuate based on several factors, including industry, ad format, and targeting options. For optimal results, consider a comprehensive strategy that utilizes various placements according to your budget and campaign objectives.

How does Facebook Ad bidding work?

Online advertising platforms auction off ad space to businesses, with your bid and other factors determining your position. While the highest bid often wins, it’s not the sole deciding factor. Irrelevant ads, even with high bids, won’t generate clicks or sales, harming the platform’s reputation in the long run.

Therefore, these platforms consider more than just bids when selecting the winner for each ad slot.

Facebook’s algorithm: Factors beyond price

Facebook’s ad auction system works with two main factors: your bid and your ad’s relevance. This system ensures a win for Facebook, advertisers, and users alike.

Your Bid:

• You set a maximum bid, which is the most you’ll pay for an ad view.
• However, you often won’t pay the full amount. Facebook’s system charges the minimum needed to beat other bidders.
• For example, if you bid $1.75 and your competitor bids $1.50, you’ll only pay $1.51.
• For click-based bids, Facebook considers the predicted click-through rate (CTR). Even with a lower bid, a high CTR can win the auction.

Ad Relevance:

• Facebook judges how relevant your ad is to the target audience, aiming to maximize engagement and conversions.
• They use diagnostics instead of a simple score, providing a clearer picture of your ad’s performance.
• Three diagnostics are used: Quality Ranking, Engagement Rate Ranking, and Conversion Rate Ranking.
• Each ranking categorizes your ad into one of five groups (Below Average to Above Average).

This information can seem overwhelming, but the key takeaway is that both your bid and your ad’s relevance impact the auction outcome.

Spend-based bidding

Lowest-Cost: Aiming for maximum conversion opportunities, it prioritizes volume over individual cost. This exposes your ads to more bids, potentially increasing costs due to lack of caps. Opt for this strategy if specific cost-per-action (CPA) requirements aren’t crucial.

Highest-Value: Focused on maximizing purchase value, it targets high-spenders instead of simply acquiring the most customers. This translates to fewer but potentially more valuable conversions. Choose this strategy if maximizing total purchase value is your primary goal.

Both strategies ensure your budget is fully utilized, tailoring optimization towards your specific objective: quantity or quality.

Goal-based bidding

This innovative strategy lets you maximize specific actions or results, like website visits or app downloads, while adhering to your cost goals.

Controlling your ad spend is crucial for any successful online marketing campaign. Two common strategies employed to achieve this are cost cap and minimum return-on-ad-spend (ROAS).

Cost Cap Strategy:

This approach sets a target cost per action (such as purchase) that Facebook strives to maintain. For example, if you set a $10 cost cap per purchase, Facebook will aim to acquire purchases at that cost, maximizing your profit margin. While you won’t pay more than the cap, you may pay less if Facebook negotiates lower costs with publishers.

Minimum ROAS Strategy:

This strategy lets you dictate the minimum return you want to see on your ad spend. Represented as a decimal, it signifies the minimum amount you expect to earn for every dollar spent. For instance, a 1.200 minimum ROAS control means you want at least $120 in return for every $100 invested in ads.

This strategy prioritizes profitable conversions over maximizing ad spend, ensuring efficient resource allocation.

Both cost cap and minimum ROAS strategies offer valuable tools to control ad spend and maximize return on investment. Choosing the right approach depends on your specific campaign objectives and budget constraints.

Manual bidding

Facebook’s manual bidding option gives you greater control over your ad spend by allowing you to set a maximum bid across all auctions. Instead of relying on Facebook’s dynamic bidding algorithm, you dictate the highest amount you’re willing to pay per auction.

This approach can be particularly beneficial for companies with smaller audiences, where the algorithm might not have enough data to optimize spending efficiently.

Best practices for lowering Facebook Ads cost

Now that you’ve grasped the workings and costs of Facebook Ads, let’s delve into effective strategies for reducing campaign expenses and boosting your return on investment (ROI) and other key pay-per-click (PPC) metrics. This exploration will equip you with valuable insights to optimize your Facebook advertising and maximize its impact.

Hone in your targeting

Now that you’ve grasped the workings and costs of Facebook Ads, let’s delve into effective strategies for reducing campaign expenses and boosting your return on investment (ROI) and other key pay-per-click (PPC) metrics. This exploration will equip you with valuable insights to optimize your Facebook advertising and maximize its impact.

Use lookalike audiences

Lookalike audiences unlock a powerful way to reach new users who share similar characteristics with your existing customer base. Imagine connecting with people who, just like your past customers, are likely to engage with your brand by liking your page, purchasing a product, or taking another desired action. This is the magic of lookalike audiences.

Leveraging your existing customer data, either through a custom audience or the Facebook Pixel, lookalike audiences allow you to identify and target potential customers with pinpoint accuracy. Think of it as expanding your customer base with users who are pre-qualified based on their similarities to your most valuable audience segments.

This powerful tool empowers you to reach a wider audience with laser-focused precision, maximizing your campaign reach and engagement potential.

So, if you’re looking to grow your customer base with users who are already primed for conversion, lookalike audiences are the key to unlocking success.

The reality is a little harsh. The Facebook pixel was the game changer a few years ago when it was released. Facebook ads started performing like nothing (marketing related) before. We got used to that. In my opinion the downfall is due to:

• iOS and lawmakers (especially in the EU) push hard towards less and less tracking. Crippling the pixel and algorithm.
• The recession due COVID whichs finally going in full force. If you track the inflation, shit’s getting ridiculous.
• The Ukrainian war is scaring people. The “NUCLEAR WAR” statement gets thrown around a little too much for comfort.
• Global logistics are still too expensive. The big logistics companies took the speculation with COVID to astronomical scale.
• Energy crisis.
• EU parliament forces Meta to track everything regarding Europe on European servers, which Zuck is currently resisting.
• Too many cataclysms rocking the boat.

Experiment with the creative

Low cost and high results – that’s the dream for any advertising campaign. To achieve this, continuous testing and refinement are key. Start with at least three variations of your ad concept within each ad group. This allows you to experiment with both visuals and copy, uncovering what resonates best with your target audience.

Once you identify a strong performing ad, don’t stop there. Use it as your benchmark, your “control,” while simultaneously testing new variations. This ongoing approach helps ensure you’re always getting the most out of your advertising budget and prevents ad fatigue from setting in.

Match The Creative With The Ad Placement

Facebook offers a variety of ad placements, each with its own unique dimensions and user interface. This means you need to tailor your ad creative to each specific placement to ensure maximum effectiveness.

For instance, an Instagram story ad, displayed vertically and consumed quickly on a mobile device, should look completely different from a Facebook newsfeed ad, which is seen in a horizontal format and may require more text and detail.

Here are some key considerations when creating ads for different Facebook placements:

• Dimensions: Each placement has specific image and video size requirements. Make sure your ad creative meets these requirements to avoid pixelation or distortion.
• Format: Some placements, like Instagram stories, are best suited for short-form video content, while others, like Facebook newsfeed, can accommodate longer videos or static images. Choose the format that best aligns with your message and target audience.
• User interface: Consider how users will interact with your ad in each placement. For example, Instagram story ads often rely on text overlays and interactive elements, while Facebook newsfeed ads may benefit from a more descriptive caption.
• Target audience: Tailor your ad creative to the specific interests and demographics of the users who will see it in each placement.

Use retargeting

In many industries, converting “cold traffic” — those unfamiliar with your brand — presents a significant challenge. Retargeting, also known as remarketing, on Facebook cleverly navigates this obstacle by showcasing your ads to individuals who have previously engaged with your brand.

This allows you to target existing subscribers, page likers, and past customers with tailored promotions, increasing conversion potential.

Test Different Bidding Strategies

Continuous testing and adaptation are critical for Facebook advertising success. When a specific bidding strategy fails to deliver, despite adjustments to creatives and target audience, exploring alternative bidding options could unlock significant improvements.

Always use a strong call-to-action (CTA)

One common pitfall in Facebook advertising is neglecting clear calls to action (CTAs). While creative freedom is encouraged, aligning ad messaging with your landing page is crucial. Otherwise, you risk poor ad relevance scores and dwindling conversion rates.

Integrate a direct CTA, such as “Get free shipping on orders before December 17th!” Scarcity and sales urgency can further incentivize users and bolster your ad’s effectiveness.

Don’t be afraid to break the rules

Don’t dismiss unconventional ad ideas before testing them. Even if they break some established rules, they can sometimes be the most impactful and surprising performers. Unexpected angles and designs can lead to breakthroughs in marketing and advertising.

5 Reasons Your Facebook Ads Are Not Performing

1. Complicated account structure

I recently audited an account with

• 314 campaigns in 6 months
• 15-20 Ad sets in one campaign
• 5-10 Ads in each Ad set

This is what I call a perfect recipe for failure with Facebook Ads. Complicated Account structures make It harder for Fb to optimize and give you desired results.

Meta has stressed more on simplified account structure in performance 5 tactics, I follow the rule of 3-5.

• 3-5 campaigns
• 3-5 Ad set in 1 campaign
• 3-5 Ads in 1 ad set

2. Complicated account structure

Many accounts I have audited just stick to the default attribution setting. Leaving a lot of money on the table.

Test

• 1 day click
• 7 day click

3. Not Testing Ad Formats

Facebook Ads are all about talking about the same thing differently. The one whose way is entertaining, engaging and unique wins. Keep yourself updated with Industry trends and keep testing winning angles in new formats.

Some Ad formats you can test:

• Post It notes
• Negative Marketing
• Founder’s story
• ChatGPT answer
• Us vs Them
• Feature/Benefits point out

4. Narrowing Interests Targeting

I have seen accounts that have narrowed down interest by 3 filters and then they complain about results.

Here’s a recent example I came across:

• Business owners That are also interested in 
• Digital marketing And
• Saas Products

If you’re calling this interest targeting then you my friend are doomed. Keep things simple.

Either go with a single interest targeting approach OR stack different interests together until the audience size is big enough. Just don’t narrow it down to multiple levels.

5. Using The Wrong Campaign Objective

This mistake has two-parts

i) If you are still running traffic & engagement campaigns and expecting conversion then you my friend are living in 2018.

To Add to this:

No

You don’t need data to warm up your pixel. You need people who are interested in buying from you and the conversion objective will get them for you.

ii)

• Objective: Conversion
• Optimize for: Add to carts

I cannot tell how many times I have seen this

FB will get you the people who are more interested in events you optimize for

If you are optimizing for Add to carts with a conversion objective. Then yes you will get tons of ATCs.

Your cost per ATC will be low.

But the question is:

Is that your goal?

If you want conversion, optimize for purchase, don’t try to over-smart Facebook.

Final Thoughts

When you get right down to it, advertising on Facebook isn’t about cost—it’s about profitability.

That being said, for most businesses, running a Facebook campaign makes a ton of sense. You can get high-quality clicks, conversions and sales without paying through the nose for them.

By the way, if you’re considering Facebook advertising, let me know here or in the comments! I’d be happy to review your business needs and help you decide whether or not Facebook is a good fit for you.

What do you think of Facebook ads? Are they a good investment or a waste of money?