What Determines the Facebook Ad Cost

Many people find the Facebook ads pricing system quite complicated. It’s understandable as there’s no single price and the cost depends on various factors altogether. In this article, we’re going to examine these factors and how they influence the cost of ads. 

 

Ad budget

Let’s start with the most obvious one. Facebook gives you an option to set the budget for your ad campaign or ad set.

 

Ad budget is a cost control tool that is used to set the amount of money you want to spend to show your ads. The budget you set influences your bid, ad performance in general, and the results of your ad campaign.

 

Facebook will never charge you more than the budget you’ve set but it doesn’t mean that you should set it as low as possible. A low budget will limit ad delivery and will totally lead to fewer conversions. On the other hand, a large budget provides Facebook with flexibility. Still, it is only up to you, your marketing team, and your business to decide how much you’re ready to spend on Facebook ads.

 

Ad bid

All Facebook ads participate in a giant ad auction. Thousands of advertisers compete against each other for getting their ads displayed to users.

 

As in every auction, you’ll need to place a bid. If you are the winner, your ad will be shown to the public.

 

Facebook provides 3 types of bidding that will help you keep your budget under control:

 

Spend-based bidding will spend your whole budget to get the most results or value possible. It’s divided into:

• Highest volume will maximize your delivery and conversions by getting your ads in the most placements possible at the lowest possible cost.
• Highest value focuses on getting the highest value purchases and reaching the highest value customers.

 

Goal-based bidding is used to set a cost or value you’d like to achieve. It consists of 2 strategies:

• Cost per result goal will keep costs around a specific amount regardless of market conditions.
• ROAS goal aims to keep your ROAS around average during your whole ad campaign.

 

Manual bidding allows you to manually control your bid in a Facebook ad auction. It is an advanced option that’s recommended to be used by experienced marketers. It includes only one strategy:

• Bid cap lets you set the maximum bid yourself without allowing Facebook to bid automatically based on your cost and value goals.

 

Depending on the strategy and the bid amount you set, your ad cost will be higher or lower.

 

To make the right decision on what strategy to choose, get acquainted with our guide to Facebook ad bidding optimization.

 

Ad relevance

Facebook does its best to make the advertising experience profitable for marketers and users, that is why it collects both positive and negative feedback, pays attention to whether your ad is hidden or reported, and checks what kind of comments it gets.

 

The better the opinion people have about your ad, the higher its relevance. Ads with high relevance ranking tend to cost less as they really cater to what people need. It makes this ranking crucial speaking of Facebook advertising cost.

 

Ad relevance is a combination of 3 factors:

• Quality is measured using the ad’s feedback and the post-click experience.
• Engagement rate includes all clicks, likes, comments, and shares. 
• Conversion rate is the ad’s expected percentage of users completing the desired action.

 

To see these metrics, enable them in the Customize column section of your Ads Manager.

 

 

Ad objective

At the very beginning of setting up an ad campaign, you need to select an objective, i.e. what you want to achieve. 

 

 

It’s true that some objectives, e.g. conversion-related ones, lead to higher Facebook ad costs. Nevertheless, it’s important to choose the objective according to what you want to reach with your ad campaign. This approach will bring the best value for money.

 

Sure, you can select the least expensive objective but you’ll risk showing your ads to irrelevant people who may leave negative comments or even dislike them thus lowering your ad quality and rising the ad costs. Moreover, in such a case, your ad may not get delivered at all. So, our main recommendation is to be honest and set the objective according to your goals.

 

Target audience

As ads participate in an ad auction to be shown to a specific user, the audience influences the ad price significantly. The more marketers want to target some audience, the more expensive it is to reach it.

 

Moreover, apart from your competitors, the people you want to reach are at the same time targeted by other businesses outside your industry. It increases the Facebook ad price even more.

 

The best solution is to look for untapped audiences that are not targeted by many others. You can do it with the help of ConvertBomb’s Interests Explorer feature which will help you reveal hidden interests not used by your competitors.

 

Ad placement

Using Meta Business Manager, you can place your ads on Facebook, Instagram, Audience Network, and Messenger. You are also able to choose the exact section where the ad will be shown, e.g. news feed, stories, and so on.

 

Each placement has its own price as some of them may be more popular than others. Still, you shouldn’t just choose the one that is cheaper since it is likely to lead to getting fewer conversions. It would be better to analyze where your audience is and then choose the option that will bring the best results.

 

There is also a possibility to use automatic placements. With it, you’ll let Facebook allocate your budget across various placements where the ads are likely to perform best. 

 

 

 

Apart from Facebook settings, some more general conditions influence the price of ads.

 

Season

The time of the year has a great influence on the whole marketing sphere, including Facebook ads as well.

 

The market becomes much more competitive in some specific time periods, e.g. before Christmas, Thanksgiving, or Black Friday. It definitely influences advertising, too. As people are more likely to go shopping, more advertisers are launching ad campaigns. It leads to higher competition and, subsequently, higher advertising costs.

 

So, if you want to spend less, avoid running ads during peak shopping dates. However, you should keep in mind that these days may be a good chance to raise your sales thanks to the increased demand.

 

Industry

Ads promoting businesses in some industries are more expensive than others. Again, it depends on the competition in a specific area. Or else, some businesses are likely to spend more because their service is expensive which makes the customer value much higher. 

 

According to WordStream’s research, the average cost per click across all industries is $1.72. Among the spheres with the highest CPC are finance & insurance ($3.77) and customer services ($3.08). On the other hand, the cheapest clicks belong to apparel ($0.45) and travel & hospitality ($0.63).

 

 

The more specific your industry is, the more expensive it is to advertise on Facebook. Still, if you sell something more general, e,g. clothes, keep in mind that the market is quite competitive which will also influence Facebook ads cost.

 

Country

Depending on the country you’re providing business in, the ad price will differ. It is caused by economic and social reasons, such as limited Internet usage, the popularity of local social media websites, and so on.

 

As you can see in Statista’s bar graph, in 2021, countries with the highest CPC include South Korea, Japan, and Hong Kong. The lowest CPC of $0.1 belongs to Pakistan and India. 

 

 

For sure, location has always been an essential factor in marketing and economics, so it’s pretty obvious that the Facebook ad price varies from country to country. Still, this factor should always be considered while calculating your advertising budget.

 

Conclusion

How much does it cost to use Facebook ads? We believe that now you understand that the price depends on various factors. By paying attention to all the points we’ve mentioned, you’ll be able to calculate the budget properly and improve your ROI and ROAS significantly.