AdEspresso

The Complete Resource to Understanding Facebook Ads Cost – 2016 Benchmarks!

It’s a question we hear all the time, and see plastered everywhere: How much do Facebook Ads cost?

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.

We’ve just analyzed well over 100 million dollars of ad spend during this past year!  This provides us with Facebook Ad cost averages for the entire 2016 year to compare across the quarters. 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 2016 (with an emphasis on Q4).

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 data – you’ll have to read on for that!

If you’d like  to skip ahead to the 2016 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.

Your potential reach for this targeting could be 187,000,000 users– all who have other brands and pages trying to connect with them, too.

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.

Our experiment with relevance scores showed how much a high relevance score can affect the cost of your ads.

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:

Facebook also offers different optimization options, each of which will optimize the ad delivery to users likely to take the requested action. These include:

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.

Facebook allows you to enter in a manual bid price, which will determine how much you’re willing to pay per result. They will still recommend a suggested bid so you’re not flying blind.

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.

Facebook Ads Cost: 2016 Data (Q1, Q2, Q3, & Q4)

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, Q1, Q2, and Q3 of 2016! Over 150 million dollars in ad spend has been imported and analyzed by us in Q4 alone. 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 for multiple variables for all of 2015 and Q1, Q2, and Q3 of 2016. This information is limited to campaigns with website clicks or website conversions as the objectives. The currency is in dollars.

2016 averages:

2016 Q4 averages:

In just the USA, the average cost per click (CPC) of Facebook Ads in Q3 2016 was 27.29 cents (and 27.40 cents for ALL objectives). The cost per 1000 impressions (CPM) based on Q3 was $7.19 (and $7.34 CPM for ALL objectives).

CPC by Age Range:

CPC went up for the 18-34 age but still didn’t surpass Q1’s cost. 65+ showed the most continuous trend of lower CPC costs over time.

CPC by Gender:


CPC by Placement:

The Instagram placement had a nice drop!

CPC Monthly Breakdown:

CPC by month was relatively stable in 2016 with an increase towards the end of the year!

CPC by Day of Week:

As of 2016 Q3, Sunday and Monday has taken the crown as the “cheapest” day based on cost-per-click! This graph also shows that OVERALL, on average, CPC was lower in Q3.

CPC by Hour of Day:

CPC by Campaign Objective:

The reach objective is by far the most expensive.

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.

Cost Per Like by Country:

2016:

Cost per Like by Age Range:

44 and under showed overall decline in cost per like, while the older ages are costing more to get those “Likes!” On the very upper end, Mom and Dad (or Grandma and Grandpa?) are still cheap.

Cost per Like by Gender:

The cost to get a female to “Like” your page dramatically dropped in Q2, and it continued downward in Q3, but peaked back up in the last quarter of 2016. Males became cheaper as the year progressed.

Cost per Like by Placement:

Cost Per Like Monthly Breakdown:

Q2 had higher average costs, and Q3, on average, was lower cost per likes on average, but notice that the trend seems to be going upward again!

Cost Per Like – Day of the Week :

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 2016.

Cost Per App Install by Country:

Cost Per App Install by Age:

Cost per App Install by Gender:

Females and males both had a huge jump in cost – the highest it’s been all year.

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)

For a quick 2016 summary, and to help us all notice a few interesting trends, we found (on average) that:

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.

These two ads are a great example of keeping an ad the same but changing the image and seeing what changes. One got significantly more likes and shares, while the second got more comments.

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 of 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:

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 an 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.

By changing how the ad looks, you can continue to create new campaigns that will keep users interested– and converting. Even if you’re really saying the same thing.

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.

Remarketing often boasts higher conversion rates because you’re appealing to a warmer audience.

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.

This ad features a ton of different images, many of which don’t seem to be connected. Because it’s so disjointed, it’s unlikely they’ve got a specific target audience in mind. They could be better of targeting each audience niche– with each product– uniquely.

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.

Carousel ads allow you to feature more images.

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.

This picture looks engaging, uses warm colors, and features smiling people.

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.

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Final Thoughts

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 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!