Last updated Dec 3rd, 2021
The average cost-per-click (CPC) of Facebook ads is $0.974 as of November 2021, and it’s rising. 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.
Facebook may be a goldmine of information for marketers, but is it making your company's marketing budget too expensive?
As of July 2021, 5 major social media platforms are showing a dramatic increase in advertising costs year-over-year.
Recently published data from BusinessInsider and MediaPost show how much ad costs are rising across major platforms, as measured by average CPM, focusing on Amazon having a 20% increase in CPM costs between Q1 and Q2.
Also, the average CPMs rose from $3.60 in February to $8.60 in May and June, according to WPromote, a performance ad agency.
According to a survey by Liveintent, 85% of marketers are worried about the rising cost of Facebook ads, and 47% believe they will be “priced out” if the ads continue to become more expensive.
But why are Facebook ads getting more expensive?
A year ago, 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:
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:
Adespresso’s in-depth analysis of $636 million in ad spend found that on average, Facebook advertising costs companies $0.97 per click and $7.19 per 1000 impressions. And the average cost for ad campaigns to get more likes or app downloads is $1.07 per like and $5.47 per download.
New research from Revealbot shows the average Facebook ads cost per click is now between $0.5-$3.5.
Here’s the average Facebook ad cost* in November 2021:
The data only takes campaigns targeting audiences in the US into account.
And if you look at the average Facebook ads CPC from January 2021- November 2021, you’ll notice a steady rise.
Using 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:
We’ve looked at the average costs of Facebook ads, but how are the costs determined?
There are two ways to define the cost:
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.
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:
The minimum ad spend is slightly lower if you use a currency other than the ones listed above.
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.
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.
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 roll out.
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.
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!)
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
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!)
According to Adespresso’s research:
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.
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.
When it comes to location, you can create different campaigns by using the weather as your personalization factor:
Or different cities:
Multi-language campaigns attract more customers than “generic” ads written only in English:
Customer 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, up-sell, and offer early access to sales.
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.
Combine Brand + Performance with Slideshow Video Ads
At the moment, many of our clients are reporting slightly cheaper customer acquisition costs (CAC) on Instagram than on Facebook.
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.
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.
We encourage you to focus on these 4 initial steps since you’ll have limited access to user data.
Read our detailed guide on the iOS 14.5 tracking update and the 4 step strategy for more context.
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.
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.
Only for Paid Social marketers