We see the question a lot, and one of the only consistent answers we see is “it depends on a lot of factors.”
This is absolutely true. There’s a lot that goes into understanding Facebook Ads cost; everything from your audience to your bidding plan to ranking Facebook gives you directly affects and influences how much you’re going to pay.
While this is a fair answer, we’ve just analyzed over 100 million dollars of ad revenue in 2016 Q2 alone, showing us the trends, providing us with Facebook Ad cost averages to compare to the first quarter of this year (and all of 2015). It might not be able to tell you exactly how much your specific campaign is going to cost, but it’s going to give you a good reference point of the current costs of Facebook Advertising today.
Keep in mind that what you spend on Facebook Ads is up to you and how you set your budget; this post is all about how to affect the cost of Facebook Ads and how to lower the individual rates.
We’re going to take a look at the most relevant data of Facebook Ads cost averages from all of 2015, Q1 of 2016, and what you’ve been anxiously waiting for: Q2 of 2016!
We’ll cover cost per clicks, cost per likes, and cost per app installs. We’ll also cover differences based on gender, day of the weekly, hour of the day, and month-by-month breakdowns. We’ll explain what affects the cost of advertising with Facebook Ads — and also how we can reduce it.
If you’re short on time, you can watch this video! We cover the main points of Facebook Advertising cost, but don’t dive into 2016 Q2 data – you’ll have to read on for that!
If you’d like to skip ahead to the 2016 Q2 data, click here.
How Does the Bidding Process Work?
It’s important to note that Facebook works like an auction. This is important because it’s part of the reason that there’s no set answer to “how much does Facebook Ads cost?”
What this means is that you, as an advertiser, will say how much you’re willing to pay for an ad—you can actually manually adjust this in the pricing and bidding section. If you don’t, Facebook will automatically calculate a bid for you based on your budget and how long you choose to have your ad run.
Here’s the thing: Facebook Ads is a popular place, and you aren’t handing over a stack of cash and getting an ad. You are entering a bid. Plenty of other advertisers are trying to get that same ad space in a users’ Newsfeed, too, and Facebook limits the number of ads each user sees. This is only one reason why knowing how much Facebook Ads cost is so important.
What Factors Influence the Cost of Facebook Ads?
As we mentioned above, a lot of factors directly or indirectly affect the cost of Facebook Ads.
How much your ads will actually cost—and how much you’ll get for what you pay—will depend on a variety of different factors.
Here are some of the biggest factors that directly influence the cost of Facebook Ads.
The Audience You’re Targeting
The audience you choose will directly affect how much you’re paying for Facebook Ads. This, in part, will largely be affected by who else is targeting the audience you’re targeting.
We’ve discussed above that Facebook Ads works on a bidding system. It’s important to note that a common misconception of marketers is that they’ll only be in competition with those in their industry, like they typically are in sales. If, for example, I sold yoga equipment, I might think I’d only have to worry about other brands that sold yoga or fitness products. This isn’t true. You’re in direct competition with every other marketer who wants access to that particular customer.
That particular customer that I, as a yoga mat salesperson, am targeting is not going to have yoga as their only interest. This customer also loves fishing, scuba diving, skiing, fine dining, and has recently opened a small business. These are each traits that multiple brands will be targeting uniquely, and we’re all pitted against each other to place an ad on this one, very valuable, very diverse customer.
See where the chaos happens?
Fortunately, by increasing other factors and creating a high quality ad, you’ll be able to stand out amongst your competition when you’re trying to bid for an ad. Audience is an important part of the cost, but it’s not the only factor that matters. Thanks to a high quality ad, for example, you could pay significantly less than your competition is paying to advertise to the same exact user.
To a certain extent, the audience you’re targeting isn’t something you can necessarily control. While yes, you absolutely choose the audience, if your perfect audience is just more expensive, that’s just the way it goes. You don’t want to sacrifice the audience for cost.
The amount you’re paying for your audience (which won’t be obvious or stated anywhere) will vary even amongst your own campaigns, as your exact audience for different types of ads is likely to change. Your custom audience will include different members than an audience who isn’t yet connected to you, and vice versa.
Quality of Your Ad
The quality of your ad can send the cost of your ad skyrocketing or lower it dramatically. As if there wasn’t enough motivation to create a great ad so that users convert, we now have another incentive: it directly and obviously affects the cost of our ads.
There are two metrics you want to look at when evaluating the quality of your ad, which are the relevance score and the click through rate.
You’ll get a relevance score for each ad you run, which will be a number between 1 and 10, and it’s measuring (you guessed it!) how relevant your ad is to the audience you’re targeting. Keep in mind that a high relevance score won’t automatically mean high conversions—your copy might still need tweaking—but the ad itself will be considered relevant, and that will mean a lower cost.
Your relevance score will likely continually change as more users interact with your ad. If they react positively (such as interact with it or click it to a landing page), the score goes up; if they react negatively, by telling Facebook they don’t want to see the ad, the score goes down.
The higher your relevance score is, the less you’ll pay on ads; Facebook directly confirmed this. In an experiment we did, we also confirmed this. We ran the same ad twice, once with strong targeting (relevance score of 8) and once with poor targeting (relevance score of 2.9). The ad with the relevance score of 8 got 4 times more clicks on the same budget, where we emphasized cost per click.
Your click-through rate is the number of clicks on your ad divided by the number of impressions. A higher click-through rate will indicate a higher relevance, and thus more value to your audience. Facebook will see this and lower your overall cost, though if you’re optimizing for CPC, the more clicks you get the more you’ll spend in that sense. Still, aiming for a high CTR can help the cost of your ads and its performance.
The Time of Year
There are peak times in the year when advertisers are flocking to Facebook Ads in droves—even more than normal. During these peak times, there will be more competition for ads, and you’ll pay more as a result.
Think about how much ads are during the super bowl—now imagine every marketer trying to use Facebook Ads for Black Friday and holiday sales, because that’s pretty much what happens. Big brands spend a lot, raising the cost of Facebook Ads for everyone (thanks, Walmart).
Black Friday and winter holiday sales times will be among the busiest times of the year, but there are other busy seasons and holidays to watch out for; Labor day often comes with a lot of sales and marketers wanting to advertise them, for example.
Busy times of the year can still be worthwhile, even with the extra cost—but you should definitely keep in mind that it will almost certainly cost more.
The Importance of CPA & ROI
While looking at ad cost and ad spend is important, what’s even more important is the CPA and the ROI you’re getting. This is how you can determine whether what you’re paying—and what your ad is costing you—is worth it. Does your ROI (return on investment) have a higher value than your CPA?
Let’s look at another example. Let’s say you’re paying $1.00 per mobile app install. The customer will pay $1.99 to actually install the app. You’re also able to determine that one out of three users that came from your Facebook Ad will make an additional in-app purchase of $3.00.
Let’s say you get 100 downloads. You spend $100, but you make $199.00 from those downloads, and an additional $90 from later in-app purchase. You’ve spent $100, but you’ve made $290.
Your landing page and offer play huge factors in actually getting those conversions, and this is how they’ll affect the cost of your Facebook Ads.
The conversion rate, cost per action, and ROI rates are the most important things to keep an eye on. Make sure that your ad cost isn’t outweighing the ROI (which can be social ROI, too). The more you lower the cost of Facebook Ads, the larger your ROI—financial or otherwise—will be.
How do Bidding Options Affect Cost?
Bidding options allow you to choose how you want to pay for Facebook Ads. You can pay depending on how many people click on your ad, or you can pay for the number of people who see your ad, for example.
There are different types of bidding options, or ways you can pay for ads. These include:
- Cost per click (CPC): You are paying only for each user that clicks on your ad. They do not have to complete the conversion and purchase on your site or sign up on your landing page; they just have to click. That being said, you aren’t paying for users who viewed your ad and didn’t convert.
- Impressions (CPM): You’re paying for cost per 1,000 impressions. The cost per impressions is much lower than a cost per click, and when you want to get a lot of eyes on your ad, this can be a good way to go.
- Cost per action/conversion (CPA): You’re paying and bidding on a specific action being taken. This is where you pay for that conversion. These conversions may cost more than clicks, but this bidding option is designed to get you more conversions, providing a much higher ROI.
- Cost per like: Used in campaigns where the objective is to gain likes on your Page, this will allow you to pay for each like you get from your ad.
Facebook also offers different optimization options, each of which will optimize the ad delivery to users likely to take the requested action. These include:
- Conversions: Facebook will deliver your ad to people who are most likely to complete the designated action you’ve chosen (such as purchase from your site). They evaluate this based on past user history, and you’re paying for impressions (CPM).
- Impressions: Facebook will deliver your ad to as many people as possible, getting as many views on your ad that they can. You’re paying for impressions (CPM).
- Clicks on your ad/to your site: Facebook will deliver your ad to the people who are most likely to click to your site. You’re paying for cost per click, or CPC.
- Daily Unique Reach: Facebook focuses on delivering your ads to people up to once a day, affecting frequently. You’re paying for impressions (CPM).
Facebook will automatically choose a bidding option based on your objective. If your objective is to send clicks to your website, Facebook will set the bidding strategy to optimize your ad to accomplish that objective. You can manually change it.
Similarly, Facebook will automatically have the bid set to get you the most conversions/clicks/impressions for the best price; this means they will bid for you based on how much your budget is and how long the ad will run. You can, if you choose, enter your own specific bid and add in how much you’re willing to pay specifically. You can also change your budget and ad schedule at any point, increasing or decreasing the amount.
Bidding options affect cost a great deal, because you are choosing what you want to pay for. A cost per conversion may be more expensive than the cost per impression, but if you want to send users to your site and only a few of your impressions actually clicked, it makes more sense to choose a CPC style of bidding.
You also have to consider what’s more expensive per click/impression/etc, and what’s more expensive to run as a campaign.
Now that we’ve got a clear idea of how the bidding system works and what factors currently are most heavily affecting the cost of our Facebook Ads, let’s take a look at the data.
This data was pulled from all AdEspresso users from the end of 2015, the first + second quarter of 2016! Over 100 million dollars in ad spend has been imported and analyzed by us. All currencies have been converted to USD in this data.
While all the data and numbers in this post are coming off real campaigns, you should be using these numbers only as a reference or a guideline.
There are so many factors influencing Facebook Ads cost that there’s no way to know exactly what the cost will be for you until you run a few campaigns. Still, this data can provide a powerful point of reference and more concretely give a rough answer to the question “How much do Facebook Ads cost?” that doesn’t involve a shrug of the shoulders.
When breaking down the numbers in our research, we looked at how different factors like the age and country users were from affected how much they were spending and what the results of the campaigns were.
Here’s what we found…
CPC Costs & Results
This data reflects the average cost per click, amount spent, and numbers of linked clicks based on different variables for all of 2015 and Q1 of 2016. This information is limited to campaigns with website clicks or website conversions as the objectives. The currency is in dollars.
2016 Q2 averages:
In just the USA, the cost per click (CPC) of Facebook ads in Q2 of 2016 was 27.35 cents (almost identical to the Q1 2016 cost of 27.4 cents). The cost per 1000 impressions (CPM) based on Q2 2016 data in the USA was $5.95 – a slight increase from the CPM of $5.45 in Q1 of 2016.
CPC by Age Range:
CPC by Gender:
Both genders showed a proportional decrease from Q1 to Q2, and females still, on average, have a cost per click that’s 25% more than males!
CPC by Placement:
Increases in Desktop, Right Column, and a 50% drop in Audience network! And WHOA- Instagram with over a 100% increase as a cost per placement!
CPC Monthly Breakdown:
CPC by month was relatively stable in 2016, with a dip after May. June had an average cost at about a third of what it was a year ago! We’re really interested to see how this will pan it over the rest of summer (Q3!).
CPC by Day of Week:
As of 2016 Q2, Monday has taken the crown as the “cheapest” day based on cost-per-click!
CPC by Hour of Day:
**Changes all ads to only run between 1:00 am – 2:00 am EST**…Just kidding.
CPC by Campaign Objective:
Cost Per Like for Page Like Campaigns
Running a campaign for page likes can be valuable; it enables you to get more followers quickly, who will then get plenty of your information in their News Feeds without you having to pay for it. This data shows the findings of all campaigns created with the objective to gain more page likes in the second quarter. We have limited countries as we set the minimum spend to 50K or more, but I kept the 2015 averages for those in countries not listed in our Q2 2016 update.
Cost Per Like by Country:
2015 (our cut off is 50K of ad spend per country, so 2015 + Q1 2016 allowed us to have a broader view):
Cost per Like by Age Range:
Cost per Like by Gender:
The cost to get a female to “Like” your page has dramatically dropped in Q2 (as has males, although less dramatically).
Cost per like campaigns seem to be taking a summer time dip, we’ll see where they turn to in Q3 2016.
Cost Per Like – Day of the Week :
Sunday and Monday are still on even ground.
Cost Per Like – Hourly:
Cost per App Install
Driving mobile app installs is a great reason to use Facebook Ads. This data is limited to campaigns that used the objectives “mobile app installs” and “canvas app installs” from 2015.
Cost Per App Install by Country:
For a broader view, the 2015 averages :
Cost Per App Install by Age:
Cost per App Install by Gender:
Females had a huge drop here, averaging out to just slightly more expensive than males. This is a big change from the Facebook Ad app installs of Q1 2016!
Cost Per App Install by Placement:
Cost Per App Install by Month:
Cost Per App Install by Day of Week:
Cost Per App Install by Time of Day:
Cost Per App Install by Device:
Summary of the Data (Overall)
In Q2 of 2016, we saw a dramatic rise in the cost Instagram placement. However, CPC – on average – declined from Q1 to Q2 based on the ad spend we analyzed. That much more of a reason to be getting onto Facebook advertising!
For a quick summary, and to help us all notice a few interesting trends, we found (on average) that:
- It consistently cost less per click/like/install to target younger users. However, keep in mind that you also want to track your revenue rate per conversion; younger users may be excited or willing to engage with your ad or product, but how much will/can they buy or spend?
- CPC cost less for link clicks than any other objective. This makes a great deal of sense; Facebook has been working hard to improve their optimization algorithms, and this is proof that it’s working. If your goal is to generate general traffic, optimizing for clicks is hands down the way to go.
- The amount businesses spend on ads increases at the end of the year, just in time for holiday season (I know, such a surprise). This not only causes a surge in costs, but also creates a problem of deliverability. This past November and December, the Facebook Ads community was flooded with complaints from small businesses unable to even spend their budget.
- The CPC/CPA on Instagram is usually higher than other placements. This does not mean that you shouldn’t advertise on Instagram, because it’s an incredibly valuable platform. Instagram gives us the opportunity to extend our reach to a new audience– particularly a younger audience– and to grow your brand awareness.
- The CPC/CPA is higher when targeting Apple users than when targeting Android users. It’s also good to note, however, that the profitability of Apple’s app store is typically much higher than that of other devices.
- Gender CPC/CPA shows dramatic differences! Females cost per click, like, and app installs are a higher cost than males for the same objective! It’s hard to say why this is, although it may be as a result of many B2C companies flocking to Facebook and marketing to females. Why do you think the gender averages are so different?
6 Tips to Reduce Facebook Ads Cost
We now know roughly what we can expect our Facebook Advertising to cost, give or take different varying factors. Some users will find these numbers to match their own; others will find that they’re spending more. Either way, wouldn’t it be great to lower your Facebook Ads cost, no matter what you’re spending now?
Believe it or not, it is possible to reduce the amount you’re spending on Facebook Ads. Even better: it’s possible to do so without sacrificing the quality or success of your ads and campaigns.
Here’s 6 tips to reduce Facebook Ads cost and save you money…
1. Split Testing
Split testing is so important; it can help you to determine what’s working on your ad and what isn’t; it can increase your ROI and your conversion rates; and, yes, it can help reduce your Facebook Ads cost.
Plenty of advertisers make the mistake of crafting the absolute perfect Facebook Ad and leaving it at that; if they were to split test, they’d be surprised to see that in many cases, the perfect ad (A) is for some reason not performing as well as another similar ad they’re split testing (B).
Sometimes we won’t know exactly what will work best until we test out a few different ideas.
Until relatively recently, when you ran multiple ads under an adset, the budget wasn’t divided evenly among them. Facebook would prioritize one or two ads, and most of the budget would got to them. They changed this halfway through last year; the budget is now divided equally amongst an ad set, so you’re actually getting a true split testing.
When split testing, you want to test everything, but starting with your image and your text is a good way to go. Our ad creation software makes it easier; you can upload two different blocks of text and two different images, making 4 variations to test. You can also split test your offer and your landing page.
As you monitor your campaigns, you’ll quickly see which are performing better than others. By dividing up our ad spend to test out campaigns for effectiveness and not blowing the whole budget on one just-ok ad, we’ll ultimately find what works best, helping us to lower our score and focusing more of the spend towards the successful, lower costing ads.
2. Keep an Eye on Frequency
A high frequency on your Facebook Ads can be silent but deadly.
Frequency is the metric that tells you how often the same user has seen your ad. If the same people keep seeing your ad over and over, it means two things:
- You aren’t reaching a new audience
- The audience you are reaching keeps seeing the ad but might not be converting
While sometimes a user will see an ad once or twice before they click and convert (Plated finally got me with the third campaign), in general, if they’re interested, they’ll click the first time.
The higher your frequency gets, the less interaction, CTRs, and conversions you’ll see on your ads. This will start to increase the cost of your ads, and you won’t be getting any results.
Ideally, keep your frequency under 3. If it starts getting higher, it’s time to stop the campaign and either adjust it, or terminate it.
By making sure users are only seeing the same ad a few times, you’ll keep engagement and interactions with your ads higher in number,
3. Keep Your Ads New and Fresh
Partly in attempt to combat frequency and definitely just because you should, you always want to make sure that you are constantly updating your ads. If you run even the most successful campaign for six months straight, it’ll run out of steam eventually.
While you can recycle parts of an ad, you want to keep your ads new and fresh; once one campaign ends, create a new one. Add new images to the same offer; switch up the way you phrase the offer but target the same audience.
Sure, it would be nice if we could run the same ad over and over again, but trust me, when it comes to Facebook Ads, you want to be like Geico’s commercials—there seems to be a new one on, with a new character or gimmick or joke, every time you turn on the TV.
Split testing can help with this; by creating different images and text and offers, you can combine them and create a large variety of different ads quickly and efficiently.
4. Choose Your Audience for Each Specific Campaign
You should be choosing an audience specifically for each campaign you run (or create a campaign specifically for that audience). You don’t need to include your entire target audience in every campaign; by doing so, you can drive up your costs a lot. Instead, focusing on sections and subsections within your audience and sending them highly targeted messages will be more effective.
Different audiences will cost less than others; we discussed this above. Sometimes, an audience will cost less not because of who you’re targeting, but what your relationship with them is.
Remarketing to an audience who is familiar with you (whether you’re using a custom audience from your email mailing list or a custom audience from your website) is likely to get you more clicks, especially when combined with highly targeted messaging designed specifically for them. The more clicks, the more conversions, and more interaction you get, the less you’ll pay and the more ROI you’ll be likely to see.
Choosing your audience is so important, and sectioning off different niches within your target audience will ultimately lower your cost and increase your success.
Why, for example, would you want to run a campaign designed to help you connect with new users and want to include the people already following you within that audience? To prevent this, all you’d have to do is exclude users who are already connected to your Facebook page. With one tweak, you’re already in front of a much more relevant audience. You can even use a lookalike audience created off your current high value customers to increase the likelihood of profitability.
There are a ton of different audience targeting options on Facebook, and you can use them in any combination that you see fit.
By focusing on one particular segment in your audience at a time and hitting them with highly targeted, relevant ads, you’ll see your ad cost and your ad spend go down quickly.
5. Focus on One Specific Objective
Facebook makes advertisers pick an objective as the very first step when creating Facebook Ads.
Still, I see a lot of campaigns run on Facebook Ads that don’t seem to have much of a focus, trying to get users to like their page, leave their lead information, purchase, and also check out their mobile app all at once. Even if this seems like a slight exaggeration, I actually saw this combination on an actual ad once. It felt chaotic, disorganized, and like it was just plain too much work.
Trying to get more bang for your buck by throwing every single objective into one ad just isn’t going to work. Instead, create multiple different campaigns—and ads within those ad sets and campaigns—that each have a specific focus.
By focusing on one specific objective within each individual ad, you’ll be able to make your call to action clear, as well as to get that ad to the right audience who will convert on it.
You would, for example, focus one set of ads on lead generation. You would focus the next set of ads on social engagement. The third set would focus on remarketing products to your custom audience to drive purchases. Another set of ads would focus on connecting with new users, which you would accomplish by targeting users who you aren’t yet connected to.
Each of these has unique focuses, and a unique audience. The copy, image, and offers should all be created and targeted for that goal and that audience.
Ultimately, this will drive down your costs, putting your ads in front of the people who are interested, and keeping you from paying for empty clicks that don’t amount to much.
6. Choose the Right Image
The picture you choose for your ad is going to be what jumps out at a user and ultimately will decide whether or not they even bother to read the text, let alone click or convert. The picture is one of the most important parts of your ad, and choosing the right image will help you lower the cost of your ads by increasing click through rates and your relevance score.
Plenty of businesses are using carousel ads, giving them the chance to feature more images in a stand-out format; as a result of both having more images and standing out in the Facebook Newsfeed, carousel ads are known for having higher conversion rates, which raises your relevance score and lowers the cost per ad.
You’ll want to choose an image specifically for each campaign that relates to the targeted messaging and its related audience. Just like with copy and targeting, images you use for Facebook Ads aren’t a one-size-fits-all.
There are some basic starting points you can use to create a stronger image. Ads with pictures (particularly of attractive women) tend to perform better than illustrations, for example. Color contrast– and color choice— can help draw a user’s eye (though you want to be careful it doesn’t come across as spam-like). And you must always, always choose an image that at least makes sense with your text and copy, though this is more for making sure it makes it past the ad approval team.
No matter what, you always want to test multiple designs and images. Split testing can help you find the right image, which can lower the cost of your ads and increase its success. Win-win.
There are plenty of factors that can affect how much you’ll be paying for Facebook Ads, including your audience, relevance scores, and bidding strategies. Our data that we’ve shared here, however, covers a large span of of usage and demonstrates a starting point of what you can use as a reference point to get a realistic, number-based view on how much Facebook Ads actually cost.
Your costs will likely be slightly (or, in some cases, very) different, but knowing what affects the cost of Facebook Ads and how to lower them, you can go in knowing what you’ll be paying, and armed with tools to hopefully pay less.
What do you think? How does our data line up with what you’re paying for Facebook Ads? Have you used any of these strategies to lower the cost of Facebook Ads? Leave us a comment and let us know what you think!