Are Facebook ads getting more expensive? (+How to defeat rising CPMs)

The average cost-per-click (CPC) of Facebook ads in 2022 is $0.974. Over 120 million automated ad campaigns later, we’ve gathered powerful insights that can help you run profitable Facebook ad campaigns, and now we want to share them with you.

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Facebook may be a goldmine of information for marketers, but is it making your company's marketing budget too expensive?

In July 2021, 5 major social media platforms showed a dramatic increase in advertising costs year-over-year.

  • Google and YouTube’s CPM up by 108%
  • Facebook ad cost had an 89% increase, while the average CPM was $11
  • TikTok's CPM went up by 92% increase and
  • Snapchat had “the lowest” 64% increase in CPM

This year, despite the IOS updates, Facebook stays a lucrative platform for engaging with the audience and the cheapest social media advertising channel.

Also, the average CPM is  $7.19, while CPL is $1.07, and CPA is $5.47.But why are Facebook ads getting more expensive?

  • Supply is going up while demand is pretty much the same with Facebook ads. The cost per 1000 impressions (CPM) is increasing dramatically.
  • The COVID-19 pandemic is also a factor in the rising FB ad costs. It changed the game of the way retail companies acquire customers forever.
  • Unless you’re a big brand like Apple, it’s highly unlikely that you will have huge lines of people waiting in front of your brick-and-mortar doors.
  • More retailers have shifted their focus to eCommerce. But the problem is, with an accelerated increase in online competition, Facebook marketing is becoming more expensive.

In 2020, with $20.000 spent on your Facebook ads, you might have been able to reach around 10.000.000 users.

Quite an impressive number.

But right now, the same budget will barely help you reach 7,500,000 users.

We need to tackle two main problems:

  • How can marketers survive the dramatic CPM increase?
  • How can brands switch to eCommerce without draining their ad budget

By the end of this article, you’ll have the answer to these questions. But first, let’s knock out some basics.

Skip to the section that you’d like to read first:

How much do Facebook ads cost in 2022?

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This year's analysis doesn't show drastic changes when it comes to average Facebook cost in regard to November 2021. 

Here’s the average Facebook ad cost* in 2022: 

Average Facebook ad cost

Facebook Ads cost calculator: Find out how much your ads are going to cost you

facebook-ads-cost-asset2Using a calculator only gives you an estimate based on the average costs, but it’s a handy way to prep for your Facebook ad budget.

Here are 3 free calculators you can use:

How are Facebook ad costs calculated?

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We’ve looked at the average costs of Facebook ads, but how are the costs determined?

There are two ways to define the cost:

  • Overall amount spent on FB ads
  • Cost of each result

In theory, if you only have $5 to spend per week, you could still run Facebook ads. But it’s not guaranteed to give you the right results without a strategy.

Also, some advanced ad types require a minimum spend.

Minimum ad spend on Facebook

If your currency is set to USD, AUD, CAD, SGD, JPY, NZD, TWD, EUR, CHF, SEK, HKD, GBP, ILS, NOK, KRW, DKK, you’ll need to shell out:

  • $1/day minimum for ad sets charged for impressions.
  • $5/day for ads charged for video views, likes, post-engagement or clicks
  • $40/day for low-frequency events like app installs or offer claims

The minimum ad spend is slightly lower if you use a currency other than the ones listed above.

  • $0.5/day for impressions.
  • $2.50/day for clicks, likes, video views or post-engagement 
  • $20/day for low-frequency events like app installs and offer claims

What is a good cost per result for Facebook ads?

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With Facebook ads becoming more expensive, it’s only natural to wonder if your results match up to the industry standard.

Although we recommend measuring slightly different metrics, for the sake of transparency, here’s some data from Wordstream that can help you benchmark your results against industry averages.

Average CTR for Facebook ads by industry table

Average CPC for Facebook ads by industry

Average Conversion Rate for Facebook ads by industry

Average cost-per-action (CPA) for Facebook ads by industry

Why is the cost of Facebook ads becoming more expensive?

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Typically, e-commerce businesses invest in Facebook ads because they drive great results initially and report a good cost-per-acquisition (CPA).

And then the following problem hits them:

CPAs start rising – but since their main customer acquisition strategies were pretty much based on Facebook, they have no other option but to continue with their campaign and spend more money.

Also, many other retailers and even small businesses went online due to the pandemic and continue to advertise on Facebook, increasing the competition.

Facebook adds more than 1 million new advertisers each year.

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But retailers looking to make online sales aren’t the only problem.

eCommerce is the hottest new thing. With widespread access to fast internet, no-code tools, dropshipping, the barrier to entry is lower than it’s ever been.

These new businesses are going to fight to acquire customers mainly through hard-core paid Facebook ads.

That will result in a higher cost per 1000 impressions, putting even more pressure on performance marketing KPIs.

All of this leads us to one conclusion:

The Facebook marketplace is becoming oversaturated.

Since Facebook and Instagram aren’t “demand-first” marketplaces like Google, advertisers are battling for the same people’s attention.

This is a clear indicator that supply will definitely beat demand.

Facebook ads are also under pressure to deliver a better experience with the new privacy updates like Apple’s ATT and Google’s anti-cookie rollout.

Facebook can be picky. They penalize advertisers that don’t offer a good ad delivery experience.

And it’s not Facebook’s fault. If you had to provide the best user experience and optimal results to advertisers, would you pick generic ads?

Generic ads lead to ad fatigue.

You may not achieve a good return on investment.

Your conversion rates will stall.

At some point, you might even think of remarketing campaigns.

Bad experience from all these factors has one significant result.

High CPM.

Because of that, we can only expect rising Facebook CPMs costs (unless something worse than COVID-19 hits us, but let’s hope that won’t be the case!)

Are Facebook ads worth it in 2022?

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With rising costs, privacy updates making targeting difficult and no indication of when costs will decrease if at all, are Facebook ads even worth it?

Is it worth the effort and time to set up ads only to watch them get less than desirable results

Surprisingly, yes.

Facebook is the #1 platform when it comes to delivering ads. Despite the proliferation of social networks like TikTok, Facebook dominates the 25-54 age category, the age demographic with the most purchasing power.

26% of Facebook users purchase after clicking on a Facebook ad. So it still makes sense for advertisers to run Facebook ads.

The numbers are even more impressive when you account for Mega Sale Days like Black Friday and Christmas. With the holiday season round the corner, Facebook should be an integral part of your strategy.

Grab these 4 data-backed festive playbooks to help you win on paid social (Don’t worry, you don’t have to give up your email!)

How to survive and produce better results with expensive and rising CPMs

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According to Adespresso’s research:

  • The average cost per 1000 impressions in 2019 was $5.12.
  • The average cost per 1000 impressions in May 2020 was $7.19.

That’s almost a 40% increase in one year.

Investing a larger amount of money seems like a logical move, but not necessarily the best one you can make.

Bigger CPMs don’t necessarily require a bigger budget. You just need the right strategy.

The answer lies in focusing on the buyer itself. Now more than ever before, buyers are in control.

Buyers are like judges on The Voice. They decide whether your ad is worthy of their attention or not.

To beat Facebook’s rising costs without investing more money, advertisers need to invest more time, knowledge, and effort into creating seamless Facebook ad campaigns and creatives that will improve our retention, customer experience, and customer lifetime value.

1. Create personalized creative campaigns that resonate with your audience

Despite wanting data privacy, users don’t want to give up on personalized ads. But with the newest privacy updates, personalization doesn’t seem like an easy thing to achieve.

A good workaround that’s easy and time-effective is to create great geotargeting ads and personalizing them for different languages (if you’re going after multiple markets).

image-fashion-crocs

When it comes to location, you can create different campaigns by using the weather as your personalization factor:

HubSpot Video

Or different cities:

HubSpot Video

Multi-language campaigns attract more customers than “generic” ads written only in English:

image-retail-aldi

2. Focus on retention, not just acquisition

image-fashion-dynamic-ad-variables-sneakersCustomer acquisition cost (CAC) isn’t just more expensive when it comes to Facebook ads. It also grows in other marketing activities.

According to Allan E. Webber, acquiring a new customer costs 5x more than retaining an existing one.

And, Marketing Metrics reports that if a customer bought from you once, there is a 60% chance that they will make another purchase.

So instead of focusing on acquiring new customers, shift your focus on retaining the existing ones (or up-selling them).

Create loyalty programs or discounts for your exclusive customers, upsell, and offer early access to sales.

3. Create high-quality eye-catching creatives

In the absence of cold-hard data, creative is the lever you need to pull.

In the attention economy, poorly designed or “generic” ads don’t work anymore. With only 1.7 seconds to grab your audience’s attention, you can’t expect outdated templates to do the trick.

And it’s not just your revenue at stake. It’s also your brand.

High-quality creatives don’t just help you acquire, retain, or up-sell more customers. They also improve your brand awareness and recall.

Facebook-PaprcutsCombine brand + performance with slideshow video ads.

Get free Retail Paid Social Playbook

4. More room to grow on Instagram

At the moment, many of our clients are reporting slightly cheaper customer acquisition costs (CAC) on Instagram than on Facebook.

HubSpot Video

This is primarily because the ‘gram is still less saturated than Facebook, and CPM for story placements is inexpensive. And with immersive shopping experiences like Live Shopping and the ability to target different audiences, Instagram ads are hard to ignore.

Dealing with the Apple iOS 14 privacy update

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In April 2020, Apple revealed their plan to release the Identifier For Advertisers (IDFA), or in short, iOS 14, the company’s latest mobile operating system update.

It was a huge setback for Facebook advertisers. Many are still dealing with the fallout of the iOS 14 Facebook tracking update, and with Google’s plan to phase out cookies, advertisers may continue to feel backed into a corner.

If you’re feeling the heat, check out how to adapt to privacy measures like ATT without giving up personalization.

Hunch’s 4-step strategy to deal with the iOS 14.5 impact:

We encourage you to focus on these 4 initial steps since you’ll have limited access to user data.

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Read our detailed guide on the iOS 14.5 tracking update and the 4-step strategy for more context.

The bottom line: Play by the new rules

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Acquisition channels like Facebook are fundamental to every eCommerce brand. But rising costs and privacy updates have made Facebook ads feel pretty much like Squid Game.

squid game advertising

One wrong move can cost you your entire ad budget. Play by the new rules, and you have access to a thriving user base and ad network.

Advertisers need to adopt a growth mindset and constantly test and improve ad campaigns to remain profitable.

Facebook can still bring in new customers and revenue, but only to those who understand how the new Facebook game works and prove their sustainable unit economics.

Investing in conversions instead of impressions and reach is more important for brands now than it ever was before.