Facebook is a free social media platform that allows users to connect with friends, share photos and videos, and discover entertaining or informative content. While the basic use of Facebook is free, the company does show ads to its users as a way to generate revenue. So are ads completely free on Facebook or is there some cost associated with them? Let’s take a closer look.
What are the different types of ads on Facebook?
There are several different formats that ads can take on Facebook:
- News Feed ads – These ads appear in the middle of your News Feed mixed in with regular posts from friends and pages you follow.
- Right column ads – These ads appear in the right hand column next to your News Feed.
- Marketplace ads – Ads promoting items for sale on Facebook Marketplace.
- Instagram ads – Ads that appear in Instagram feeds and stories (owned by Facebook).
- Messenger ads – Text, image and video ads that can appear within the Facebook Messenger app.
The majority of Facebook ads are News Feed ads since they garner a high amount of user attention. Marketers can choose to display their ads on either the Facebook app/website or within Instagram as well.
Are users charged to see ads?
Users are not directly charged to see ads on Facebook. The ad views are considered part of the free experience of using the social network. Facebook attracts billions of users every day, which makes it very appealing for marketers looking to promote their products and services. Facebook in turn makes money by charging these marketers each time their ad is displayed. So while users don’t pay a fee directly, the ad views are generating revenue for Facebook.
How does Facebook charge marketers for ads?
Facebook has an auction-based advertising system where marketers bid against each other for the placement of ads. There are two ways marketers are charged:
- Cost per impression (CPM) – The marketer pays each time their ad is displayed, regardless of if it gets clicked/tapped or not. Impressions refer to the number of times the ad appears on a user’s screen.
- Cost per action (CPA) – The marketer pays each time a user performs a specific action after seeing the ad, such as clicking the ad, installing an app, or making a purchase. This pricing model depends on the action the marketer wants the user to take.
For CPM ads, marketers choose a maximum bid amount that they’re willing to pay for 1000 impressions. For CPA ads, they select a bid amount for each action. Facebook runs an auction each time there is an opportunity to show an ad, and the marketer with the highest bid wins the placement. However, they only pay slightly higher than the next highest bidder, which helps maximize their ad budget.
What factors affect the cost per impression (CPM)?
Several factors play a role in determining the CPM rates for Facebook ads:
- Targeting – Narrowly targeted ads focused on specific demographics, interests and behaviors cost more than broadly targeted, untargeted ads.
- Ad quality – Ads with high-quality creative (images, video, copy) tend to have higher CPMs.
- Competition – Ads for industries/products with more competitors bidding for ads will be more expensive.
- Placement – Ads appearing on Instagram generally have higher CPMs than Facebook.
- Time of year – Major holidays and shopping periods drive up demand and pricing for ads.
CPMs can range from a few cents to $20+ depending on these targeting and competition factors. Advertisers with larger budgets and compelling products/offers tend to pay towards the higher end.
What are some typical CPM rates?
As a benchmark, here are some average CPM rates advertisers see on Facebook and Instagram:
| Ad Placement | Average CPM |
|---|---|
| Facebook News Feed | $5-15 |
| Facebook Right Column | $1-3 |
| Instagram Feed | $10-20 |
| Instagram Stories | $20-35 |
Keep in mind rates vary significantly based on targeting, competition, and budgets. But this gives an idea of the range advertisers may see for top placements.
How much do marketers pay for ad clicks?
For ads bid on a cost per click (CPC) basis, marketers generally pay between $0.35 to $2 per click on Facebook and between $0.80 to $5 per click on Instagram. However, the average cost per click ranges based on several factors:
- Landing page quality – Ads leading to high-quality, relevant landing pages have higher CPCs.
- Ad relevance – Highly relevant ads drive more clicks at higher rates.
- Offer – Strong discounts/promotions/incentives result in more frequent clicks.
- Device – Mobile clicks are often more expensive than desktop clicks.
For direct-response advertisers selling products/services directly from their website, CPCs tend to fall on the higher end of these ranges when bidding competitively for their product keywords.
How much do other actions like app installs cost?
For marketing objectives beyond website clicks, average costs fall within these ranges:
| Action | Average Cost |
|---|---|
| App Install | $2 – $8 |
| Lead Generation | $15 – $40 |
| Catalog Sales | $15 – $25 |
| Store Visits | $15 – $30 |
App advertisers bidding for installs and retailers bidding for store visits and catalog sales (purchases on Facebook/Instagram) tend to be on the higher end. Lead generation spans a wide range depending on the type of leads and landing pages.
Does Facebook offer any free advertising?
Facebook does offer some opportunities for free advertising/promotion, although the reach is typically much lower than paid ads.
- Sharing content – Brands can create content that users organically share with their networks, generating free impressions.
- Likes Campaigns – Brands can run campaigns asking users to Like their Page for free, spreading brand impressions.
- Click-to-Messenger ads – Simple text-based ads that click through to Facebook Messenger rather than an external site.
- Dynamic Ads – Automated ads for existing customers generated from a product catalog.
However, if you want to reach a broad, new audience on Facebook/Instagram with video views, link clicks, and conversions, investing in paid ads is necessary. Free reach is very limited.
Conclusion
While users don’t directly pay to see ads on Facebook, marketers pay for impressions and clicks/actions generated by their ads. Since Facebook’s gigantic user base is highly valuable to marketers, advertising costs are driven up through auctions and competitive bidding. While rates vary considerably based on targeting, objectives, and seasonality, typical CPMs range from $5-$20 and CPCs from $0.50-$2 on Facebook and up to $5 on Instagram. Other actions like app installs, catalog sales, and store visits cost marketers even more when bidding competitively. There are some free promotional opportunities on Facebook, but paid advertising is necessary for brands wanting to reach a large, targeted audience with their messages and offers.