In this article, I’m going to go over the average ad costs across various industries, campaign types, and regions for Facebook ads. I’m also going to give my opinion on the minimum ad budget you need to get started with Facebook ads from our experience as an ad agency.
I’ll also briefly cover the different areas that affect your Facebook ad cost, and how you can try to reduce your average spend.
What Determines Your Facebook Ads Costs?
Ultimately, there are countless different things that can impact your Facebook ads cost, but below I’ve covered the main ones that we see affecting the ad accounts we manage…
If you’re bidding on goals that are higher in your sales funnel like video views or just clicks, then often the cost for your ads drops off.
This is naturally going to be a lower quality audience you’re targeting, as you’re asking Facebook just to focus on getting the simplest of engagements of a like or a video view.
They are less qualified leads/customers.
But, if you set your Facebook ads campaign objective as ‘conversions’, you’re likely going to spend more per click as these actions are harder to achieve generally speaking.
It’s much easier for Facebook to get your ad a like than it is for Facebook to find the right people that will click on the ad and buy your product/service. So naturally, this campaign objective will usually mean a higher cost per click.
This higher spend is balanced by the value you get back though, as it’s higher quality traffic.
The larger the audience size, the cheaper the ads.
For example, some of the campaigns we’ve run that have been best performing have actually been targeting an entire country!
Some of the more recent privacy measures Facebook has brought in mean audience sizes are shrinking. So, by targeting more ‘cold’ audiences, you will see lower costs compared to smaller re-marketing, lower-funnel audiences.
To put it simply, the more you invest the smarter Facebook gets and the more testing we can do which all leads to cheaper ads.
If your budget is quite low, Facebook’s algorithm is going to have a much harder time improving your campaign and getting out of the ‘learning phase’.
This often means your costs for new ads are higher initially until Facebook learns how your target audience behaves.
The bidding strategies you choose can have a big impact on how much your Facebook ads cost. I go over the 3 main options further down in this article ⬇️.
Industries where you have a higher average value conversion value will normally have a higher cost per click (CPC).
For example, a £5m sale conversion will of course be more valuable to you as a business, so you’re able to spend more on getting those conversions. This in turn means the market ends up with a higher average CPC.
But if your average conversion value is just £5, then it’s not worth spending more than say 50p, so the market balances at a lower average cost per click.
You also want to consider your customer’s lifetime value for your industry. If your customer keeps coming back and purchasing multiple times a year, then the value of that initial conversion from your ads is actually much higher, so maybe you’d be happy to spend more on a Facebook ad.
Your Click-Through Rate
In short, the better quality your ads are, the higher your click-through rate (CTR). The higher your CTR, the more traffic/conversions you can achieve with the same budget.
So improving your CTR is a really effective way to reduce your Facebook ads cost.
If your click-through rate is low, Facebook might determine there is a disconnect between your ad messaging and what your target audience is looking for.
What Bidding Strategy Should You Use?
Cost Per Click (CPC)
Cost per click pricing means you only pay Facebook when someone clicks on your ads.
This is usually a good option if you’re trying to get as many clicks to your website/landing page as possible. Facebook will try to get you as many clicks as it can with your selected budget.
This is the pricing option the majority of people use when running Facebook ads for their business because it’s guaranteed that when they pay Facebook, someone has gone to their website or clicked their CTA (Call-to-action) in their ad.
Cost Per Thousand Impressions (CPM)
Cost per Mille (CPM), stands for cost per thousand impressions. It’s how much you pay for 1000 impressions on your ad.
If your main aim is getting as many people as possible in your target audience to see your ad or video, then this is the option for you.
Maybe right now you aren’t focused on conversions, but rather on building your brand awareness, in which case average CPM is what you want to choose.
Cost Per Engagement (CPE)
Cost Per Engagement = Total Ad Spend / Total number of Engagement
Facebook wants to keep users on its own platform. When users spend more time on Facebook, they can monetize their attention which leads to more profit.
CPE campaigns make sure that advertisers don’t use all their budget on ads that never get any traction with their target audiences.
How Much Do Facebook Ads Cost In 2022 - What Does The Data Say?
Average Cost Per Click (CPC) Across The Board
There are over 3.7 million businesses running Facebook ads in 2022.
Research shows that as of May 2022, the average cost per click is £0.97 on Facebook.
Cost Per Click By Location
According to the most recent reports showing data from 2020 to 2021, here are the average CPCs by region:
North America: $0.40-£0.65
Eastern Asia: $0.18-$0.20
Western Europe: $0.30-$0.50
Southern Europe: $0.11-$0.21
South America: $0.05-$0.10
Cost Per Click By Campaign Type
Typically, campaign types like ‘conversions’ are more expensive compared to the video or traffic objectives. Below you can see the different options Facebook gives you for objective types.
Looking at reports for 2021 to 2022, here are the average CPCs by campaign objective:
Brand Awareness: $2.44
Lead Generation: $1.74
Cost Per Click By Industry
WordStream collected some data around CPC per industry back in 2019 which you can see below.
The food & beverage industry appears to be the cheapest overall, and the finance industry the most expensive. You can expect to pay $3.89 on average in the finance industry, and $0.42 for F&B businesses.
This confirms what I mentioned earlier about higher product/service value businesses tend to have a higher Facebook ads cost.
How Can You Lower Your Facebook Advertising Costs?
When we work with a client we’re essentially building out a massive A/B testing machine!! Often testing 20-500 separate variations of an ad/audience/copy etc.
This process delivers massive amounts of learning that in turn helps to reduce the average cost of Facebook ads.
Obviously, you have to give your tests time to gather sufficient data to make informed choices, but this is a tried and tested way to consistently improve your performance and lower your costs over time.
Set Up Your Campaign Funnels Correctly
A well-optimised funnel with a story that is logical from top to middle to bottom will help take a user through a logical journey and deliver the best returns for cost.
A common structure for Facebook ads is a 3 level funnel. The top of the funnel is all about getting engagement and introducing your audience to your brand.
Middle of the funnel is usually a kind of stack, where you go a bit more in-depth with educational or trust-building content to anyone who interacted with your first ad in the last 0-14 days. Then the bottom of the funnel is where you combine those first two audiences and re-market with a direct call to action (buy now or sign up to our mailing list for example).
Set A Maximum Bid Cap
Using a cost cap for your ads is part of the manual bidding strategies on Facebook. So you can manually set your bid cap instead of allowing Facebook to dynamically bid based on your ad goals.
But, this only really ever needs to be used if you have a good knowledge of your business’s conversion rate and profit margins, and it requires re-evaluating regularly. If you set your cap too low Facebook might not be able to even spend all of your daily budget anyway.
Use Facebook Pixel AND External Tracking Software
Tracking data is the backbone of any effective marketing. Without conversion tracking in place, you won’t know what’s working and what isn’t. It helps you decide where to invest your ad spend.
If your number of conversions and sales increase, then the profitability of your ads increases! If you’re making decisions around your Facebook ads with guesswork or just trying to analyse data yourself, you’re likely going to end up making some wrong turns and increasing your ads cost.
Are Facebook Ads Worth The Investment?
Yes!! They’re amazing.
It is however important to use third-party tracking on top of Facebook ads after their privacy updates to be able to have a clear picture of performance. But it still stands as one of the major giants of the paid advertising world.
In our experience running Facebook ads, the minimum you should be spending in order to give yourself enough data flowing through the ads to run tests, and so give yourself enough scope to quickly improve your return on ad spend, is around £1000 per month.
Obviously, you can start smaller than this and work yourself up, but if your goal is to scale your revenue reasonably quickly, then you want to invest as much as can, with a smart strategy in place to avoid paying high Facebook ad costs.
Ultimately getting good at running Facebook ads is not easy and it takes time to become a master at it. So, if you’re looking to fast track your company’s growth through Facebook ads, you might want to look into getting some outsourced help from paid ads experts like us!
Shoot us an email if you’re keen to have a chat and learn a bit more about what we would do with your ad account to ‘Snowball’ your sales and optimise your Facebook ad campaign!!
You can also learn loads of really helpful tips and tricks about nailing Facebook ads on our YouTube channel.
We also wrote a blog all about what the minimum ad cost is for Facebook and Google ads which goes into a lot more detail here.
I hope this blog was useful!