With over three billion users scrolling its feed every day, Facebook is a major advertising opportunity for businesses big and small! But how much do Facebook Ads cost?
As with most things in digital marketing, there’s no one-size-fits-all answer. Your total spend depends on things like your industry, target audience and how well you leverage this powerful platform. To beat the competition, reach customers and minimise costs, you’ll need to plan ahead and optimise regularly.
Here, we explain how much Facebook Ads cost and the factors affecting these figures. Keep reading to get an accurate estimate of expenditure, plus how to curb campaign costs without compromising results!
How do Facebook Ad auctions work?
Facebook works on an ad auction, which chooses the most valuable ad to display to a user every time there’s a chance to advertise.
To work out which ad with the user’s target audience takes this coveted spot, Facebook considers three key factors:
- Bid: The bid an advertiser places for the ad i.e. how much the business is willing to pay to achieve its goal.
- Ad quality: The quality of an ad depends on factors like viewer feedback (for example, hiding the ad) and whether it has subpar attributes, such as hyperbolic messaging, clickbait and omitting key information.
- Estimated action rate: The likelihood that the user will engage with or convert from a certain ad i.e. whether showing this ad is expected to result in the advertiser’s target outcome.
Ad quality and estimated action rates both determine ad relevance. Ultimately, the more relevant the ad is to a given user, the more likely it will win the auction – even if other advertisers are bidding higher.
How much does a Facebook Ad cost?
The cost of Facebook ads depends on your industry’s competition levels, target audience, ad quality and placement, and general campaign objectives.
But before we go on, there’s one important consideration to take into account. That’s what we actually consider to be Facebook Ads ‘cost’, which could be defined as the total amount spent on advertising or the price of each desired outcome from an ad.
You can take charge of your overall expenditure by setting (and sticking to) a budget. Meanwhile, the cost per result can be controlled via your bid strategy.
Let’s take a look at the average Facebook Ads cost per bidding model.
Cost-per-click (CPC)
Facebook Ads CPC refers to any clicks on an ad, whether to react to a post, view its image or open a link. So, if your goal is to drive links to your website, this metric can be misleading.
The good news?
Facebook also offers another CPC metric known as ‘CPC (link click)’ that only considers link clicks. To calculate the Cost Per Link Click, simply divide your ad spend by the amount of link clicks it’s generated. For instance, if you spent AU$1,000 and the ad drove 400 link clicks, your Cost Per Link Click comes to AU$2.50.
Across the United States, the average Cost Per Link Click for Facebook ads was USD$0.56 in June 2024. But bear in mind that this number tends to be higher in Australia.
Cost Per Link Click also varies by industry and campaign objective.
Facebook’s traffic objective optimises your campaign to increase clicks on ads that lead to your website’s landing page, app, or event.
Here’s a summary of the Cost Per Link Click by industry for traffic objective campaigns worldwide in USD:
Facebook Ads with the leads objective are refined to generate leads via online forms, messages, and calls. Below, we’ve listed the average Cost Per Link Click for lead generation campaigns by sector:
Cost-per-thousand-impressions (CPM)
CPM tells you how much Facebook Ads cost to have your ad shown 1,000 times. It’s calculated by dividing your ad spend by the number of impressions, before multiplying that figure by 1,000.
For instance, say you’d like your ad to be displayed 150,000 times and your CPM is AU$12. You would need to pay about AU$1,250 for ads {(150,000 impressions / 1,000) x $12)}.
As of June 2024, the average CPM for Facebook Ads was US$9.40 in America. As with CPC, the average CPM in Australia is usually higher, ranging from AU$10 to over AU$20 for high-quality traffic.
CPM also differs significantly from niche to niche, as well as campaign type. For example, super competitive industries like skincare can face CPMs as high as AU$80. Moreover, CPMs tend to be lower for video view campaigns compared to lead generation campaigns.
Having an average CPM in mind can help you determine how many times an ad will appear before your campaign even goes live. That way, you’ll know how much you need to fork out to kick your goals!
Even better if you know your business’s average conversion rate. Let’s continue the example above.
If around 1% of viewers tend to click on your ads, and a further 1% will purchase your product for AU$1,000, you could earn about AU$15,000 (150,000*1%*1%*1,000). Not a bad ROI.
Cost-per-lead (CPL)
Lots of businesses use Facebook Ads to drive leads, like newsletter signups and form submissions. In this case, you’ll need to look at Cost Per Lead (CPL). The average CPL for Facebook Ads in June 2024 was US$12.38.
To calculate CPL, divide your spend by the number of leads gained.
If using the lead generation campaign objective, clicking on your ad’s call-to-action (CTA) will open a pop-up lead form on Facebook. Only these leads will appear in Ads Manager and be factored into the CPL.
On the other hand, if you’re using the conversion objective and feeding ad traffic to a lead form on your own landing page, then these leads will appear as conversions instead of leads in Ads Manager and won’t be factored into CPL.
Whichever way you gather data, a strong CPL depends on where your ad stands in the sales funnel. And as each business offers distinct products and services at different prices with various conversion rates, there’s no such thing as a standard “good” CPL.
But by tweaking your targeting to those most likely to take action, you can boost your ads’ conversion rate and ultimately reduce the CPL for your business.
Facebook Ads cost FAQs
According to Facebook, you’ll need to spend at least AU$1 per day on each ad if your campaign is being billed by impressions. But that’s the bare minimum.
Remember that the right amount of spending depends on competition levels, company offerings and campaign goals.
If your goal is to drive traffic, leads or sales, you should spend at least AU$20 per ad per day. That way, you can gather enough data to gain meaningful insights on performance and optimise your campaign for stronger results.
What’s considered a ‘good CPC’ on Facebook depends on your industry, offering, audience, and campaign strategy.
To work out whether your ads are performing well, compare the CPC with past and existing ads your business has run.
Also, bear in mind that bottom-of-funnel campaigns naturally tend to have higher CPCs than top-of-funnel campaigns, where users are more likely to take action.
Your ad spend should allow you to win the Facebook ad auction and reach your target audience while costing less than the value its engagement is expected to generate.
Benchmark ROIs vary according to a range of factors, from your industry to target audience. That said, try to strive for an ROI of at least 2:1. In other words, your business should earn AU$2 for every AU$1 you spend on ads.
Not sure how to boost performance?
Working with experienced Facebook Ads specialists like Redback is a great way to maximise ROI.
Setting the right budget is key to a successful ad strategy. Thankfully, you can tailor your spending to suit your needs.
In our experience, small businesses typically spend between AU$1,000 and AU$10,000+ per month on Facebook Ads.
Of course, your own budget will depend on various factors, like your industry, the number of campaigns you’re planning to run, and your overall goals.
Start things off with a conservative but practical budget. That’s because you want to spend enough to reach potential buyers, test different approaches, and optimise your ads.
As your Return on Ad Spend (ROAS) improves, you can increase the budget to boost results.
Moreover, working with digital marketing specialists like Redback can help you get the most out of your investment, structuring and refining campaigns to be as effective as possible.
Your full digital team for Facebook Ads
Facebook Ads costs vary depending on all kinds of factors, including your target audience, industry competition, campaign objectives, ad quality and placement, and creative content.
When you choose Redback, you can maximise your Facebook Ads ROI with minimal effort. As Australia’s largest regional digital agency, our reliable team draws on years of hands-on experience to help your business succeed on socials.
From campaign plans and implementation to data analysis and optimisation, we’ll help you reduce expenses without sacrificing results. That means targeting relevant users with accurate and impactful ads using well-defined goals.
For full-service support with Facebook Ads management, call us today at 02 4005 0180 or get in touch online.
