Facebook advertising can be a great way to reach potential customers, but many small businesses and startups wonder how much it really costs. The price of Facebook ads depends on several factors, including your goals, target audience, and campaign setup. With some strategic planning, you can make Facebook ads work for any budget.
Factors That Impact Facebook Ad Costs
There are a few key factors that determine how much you’ll pay for Facebook advertising:
- Your target audience – Ads aimed at larger, more general audiences tend to be less expensive per click/impression.
- Location – It costs more to reach people in more competitive locations.
- Ad placement – Where you choose to place ads (News Feed, Messenger, etc.) impacts costs.
- Ad format – Video ads and carousel ads generally cost more than simple image/text ads.
- Bidding – The bidding method and bid amounts you choose for your campaign.
- Landing page quality – Better quality landing pages decrease your cost per conversion.
Average Costs for Key Ad Types
Here are some average costs for common Facebook ad types:
News Feed Ads
One of the most popular Facebook ad placements. Appear in mobile and desktop News Feeds.
- CPM: $5-$10 per 1,000 impressions
- CPC: $0.50-$1.00 per click
- Cost per result: Varies, but often $10-$30+
Messenger Ads
Ads that appear within the Facebook Messenger app.
- CPM: $20-$30+ per 1,000 impressions
- CPC: $1-$3+ per click
- Cost per result: $5-$15+ per conversion
Instagram Stories Ads
Full screen, immersive ads shown between Instagram Stories.
- CPM: $6-$8 per 1,000 impressions
- CPC: $0.40-$0.80 per click
- Cost per result: $5-$15+ per conversion
Right Column Ads
Ads displayed in the right column of Facebook’s desktop version.
- CPM: $1-$5 per 1,000 impressions
- CPC: $0.05-$0.30 per click
- Cost per result: $2-$8+ per conversion
How Bidding Works
When setting up a Facebook ad campaign, you choose between manually bidding or letting Facebook automatically bid for you:
Manual Bidding
You set specific bid amounts for actions like clicks, impressions, or conversions. Gives you more control but requires close monitoring.
Automatic Bidding
Facebook’s AI automatically sets bids to get the most conversions within your budget. Easier to manage but less customization.
Most experts recommend starting with automatic bidding and optimizing for conversions. Facebook will then automatically adjust bids to maximize results.
How Budgets Impact Costs
Naturally, the daily or lifetime budget you set for your campaign also impacts costs. With a larger budget, you can often decrease average costs per result by:
- Testing multiple ads
- Scaling the best performers
- Using automatic bidding optimized for conversions
Very low budgets may increase costs, as Facebook’s AI won’t have enough data to properly optimize.
Ad Creation Options
Facebook offers do-it-yourself ad creation tools within Ads Manager, or you can use a Facebook Marketing Partner:
DIY with Ads Manager
The free, built-in ad creator helps you setup, launch, and monitor ads on Facebook, Instagram, Messenger, and Audience Network.
Work with a Marketing Partner
Certified professionals who can create and manage campaigns for you. Fees vary based on services provided.
How Optimization Decreases Costs
Properly optimizing your ad campaigns over time decreases costs by:
- Removing underperforming ads
- Improving ad relevance
- Finding your ideal audience and placement
- Refining landing pages
- Making use of re-marketing
Continuous optimization ensures each dollar spent and each conversion achieved is more cost effective.
Consider Lifetime Value
It’s important to consider a customer’s lifetime value, not just the cost to acquire them initially. This means spent on acquisition should be in line with long-term earnings from that customer relationship. Calculate LTV as follows:
Average Order Value x Average Orders Per Year x Average Customer Lifespan
For example, if your customers spend $100 per order on average, complete 2 orders per year, and remain customers for 3 years on average, the LTV would be $600 per acquired customer ($100 x 2 x 3).
Conclusion
In summary, Facebook ad costs vary based on ad type, audience, placement, bidding strategy, optimization tactics, and more. By starting with automatic bidding optimized for conversions and properly managing campaigns long-term, you can achieve great results with any budget.
Focus on the lifetime value of acquired customers, not just cost per conversion. And don’t be afraid to experiment with different options to find the best formula for your unique business goals.