Facebook Advertising Cost 2021 The Don’t Lose Your Shirt Guide

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How much does Facebook Ads cost is a common question?

The answer depends on so many factors. Mainly because it is an auction system.

The ad costs rise and fall based on simple supply and demand, the time of year and competition for audiences.

The long answer is the cost *depends*. The short answer is between €1 and the sky!

See here for the TL;DR

Facebook Advertising Cost 2021 depends upon 12+ different factors. The factors vary from one advertiser to another and influence the price you’ll pay.

Let’s dive in, get wet, enjoy the swim in tropical blue waters and then we’ll set the record straight on how much you need budgeting for Facebook Ads you need to set aside.

The Actual and Real Facebook Advertising Cost

Below are actual Facebook advertising cost numbers. Use and note these numbers as a starting point and as always your mileage will vary.

• In the USA the average CPM (across all industries) is $4 (from Wordstream)
• The average CPA (across all industries) is $18.68
• The average CTR (across all industries) is 0.9%
• The average CPC (across all industries) is $1.72
• The average Conversion Rate (across all industries) is $9.21

Your actual cost will vary.

Facebook Advertising Cost Depends on the Funnel Steps

Awareness adverts are at the top of the funnel; consideration is in the middle; and conversions at the bottom. The funnel stages are confirmed as Facebook ‘buckets’ along with the same three ACC steps:

The audiences size gets smaller as you move down the funnel. Because of this, the advertising cost increase.

and is represented like this:

Facebook Funnel stages: Awareness, Consideration, Conversion

The ACC funnel stages match the cold, warm, hot traffic temperature scale (image below). And overlaps with the Why, How, and What 3X3 Video Grid and the ‘know you, like you, and trust you before they buy from you. Right?

To keep costs from skyrocketing the content at each stage of the funnel must sync with peoples expectations. Follow Eugene Swartz 5-Stage custom journey.

Continuing – the audience decrease in size from the top to the bottom of the funnel.

The consideration and conversion audiences buckets use Facebook custom or engagement audiences — built from the Facebook pixel fires or video views.

NEW!! -> Predict your Facebook Advertising cost using this Facebook Ads Spend Calculator. <-

Retargeting Website Visitors ‘Funds the Machine’

As part of Facebook, advertising cost is setting up a funnel helping people move from stage to stage. This will reduce the cost of your ads and spend.

The €1 / 100 visitor is the retargeting budget. The use of it is to ‘fund your Facebook ads machine’ and to bootstrap more spending.

Remarket to hot audiences. Hot audiences are people who visited your add to cart, but not your checkout page; visited your product pages, but not your add to cart; people who visited your offer pages, but did not land on thank you page.

As a smart marketeer, you noticed we began the budget calculations at the bottom of the funnel and not the top. This is because hot audiences are cash in hand buyers and we want to convert them first!

Consider if your product pages or landing pages are converting at high numbers, if not then you must fix that first. Otherwise, you are wasting money. Am I right? Yes, I am.

Fix your offer, product pages, and funnels – before you turn on Facebook Ads.

Right? Right!

Recap: set retargeting budgets first and use €1 / 100 visitors to begin.

Now multiple the €1 / 100 visitors by 3 for your engagement (consideration) audience budget.

• One-third of this engagement budget is for lookalike audiences development. Did you install the Facebook Pixel mentioned earlier? Good, from the pixeled audiences Facebook allows us to create clone audience. Clone audience is based on seed audience. E.g. if you have an audience of customers, Facebook can find groups of people (100k’s – millions!) with the exact same characteristics as your customers. You’d run these audiences in through the top of your funnel as if they were cold audience – which they are.
• One-third of the engagement budget for further interest/behaviour targeting. Segmenting by-products they like, or life stage events, competitors pages, and other targeting criteria.
• Last of the one third is for remarketing for further engagement or nurturing. Suggest the €1 / 100 visitors level to further educate, not to sell. Use customer stories, educate on issues they care about, show how active you are in the community. Think nurturing.

So if we are at €30 for retargeting then 3x = €90 for engagement audience. This is layering budgets and results, €30 for retargeting and €90 for engagement. Total €120.

However, this is only a starting number! Adjust the numbers up or down based on profitability, relevance score and your available content assets.

Awareness in the market

Moving up the funnel to the awareness stage. This is getting cold audience aware of your brand.

Video, at the moment, is the lowest cost method of building audiences. Dirt cheap.

3-second video views are sub €0.01. Meaning for €10 you can get 1000 video views. And for €100 you can get 10,000 video views. These audiences are then ripe for retargeting with nurturing content or offers.

The more you spend on awareness the bigger audiences you have for consideration, conversion.

If you’ve set up your funnel correctly then your engagement remarketing flows into your conversions campaigns.

This way you can link all stages of your campaign together and assess the profitability and drop-offs and adjust budgets accordingly.

With a funnel and remarketing setup you can then easily set up budgets.

Where exactly do you set up and control your ad spend:

Budget & Control your Facebook advertising Cost per Month this Way

Facebook advertising cost vary greatly and expensive when not done properly…

I did say it depends on how much ‘Facebook advertising cost’ and ‘it depends’ was my stupid answer.

We did work through the budgeting method above.

Here’s the thing though:

The short answer is Facebook advertising costs exactly what you want to pay and not one red cent more.

Yep! You decide your daily and lifetime budget. Facebook will not spend over that amount.

The Budget and Scheduling section of the Ad set is where you input the ‘daily’ or ‘lifetime’ budget.

• Daily is how much you want to spend per day.
• Lifetime budget is the weekly or monthly budget for your campaign.

E.g. select a daily budget and enter €100 / day and set an end date and Facebook will only spend the 100 a day.

So, the ads platform is smarter than both you and me combined … consider this qualifier from Facebook:

when your ads have more opportunities to get results, Facebook may spend more money… (to get the results you’ve asked for)

If you are boosting posts from your Facebook page set the budget here:

From your Facebook page suggest Facebook Ad cost 2021

From your Facebook Page choose budget via the blue boost button and set a daily amount: Remember you are biding on impression, CPM, not CPA.

Recap: choose to buy ads on impressions, CPM or actions on, CPA basis.

Set your budgets in the Budget and Scheduling section, or Budget and Duration during a boost via your Facebook page.

Have you installed the Facebook Pixel?

Yes! Good, do a happy dance! No! Oh my. Job #1, do it now!!

The Facebook Pixel is a small amount of software code given to us for free, from Facebook, to install on our websites. This small bit of magic code tracks every website visitor arriving on our websites and puts them anonymously into a virtual ‘bucket’ for us to retarget with ads.

The pixel is important because 99% of website visitors leave without buying, converting or doing anything more than having a little look-see.

Retargeting allows us to make offers to that 99% of people. 99% of people leaving = lost money.

What do Facebook ads cost in the real world?

Our friends at Wordstream, Buffer and AdEspresso have collated massive amounts of data on the cost people are actually paying on the Facebook Ads Platform.

Past is Prologue – Facebook Advertising Cost 2021 by the numbers

Facebook Ads are popular! 7 million advertisers use Facebook Ads in 2021. The more advertiser the more competition the higher Facebook ad cost get. People are queuing to advertise on Facebook! Yet, one does not simply hand over a stack of cash to the Facebook bank and expect a 5x return in 2 weeks!

Don’t expect to simply buy a slot in the news feed, or make a sale, for that matter either, Kemosabe. Oh no.

Not only that, but convincing a cold audience to see your adverts, click through to your landing page, and hand over their credit card details and pay €2999 for your exclusive weekend retreat is not gonna happen – well not at first.

The gates to business success and Facebook ads mastery is found from inside the ads manager. Success requires more effort than ponying up some cash to open the doors. Facebook advertising is not that simple.

First, how does the Facebook advertising platform work?

Facebook Advertising is an Auction

The ads auction is designed to maximize value both for advertisers and for the people who use Facebook. – Facebook

Yep, a virtual hammer and gavel and all that. However, the highest bidder is not guaranteed to win the auction. Because the platform is an auction is part of the reason there is not a set answer to “how much does Facebook Advertising cost?”

Yes, we enter a bid, along with plenty of other advertisers, but you are not guaranteed to win at that bid number.

How does Facebook Define user value?

“Every time there is an opportunity to show a person an ad we run an auction to determine how we can deliver the most value for both parties. Why is it important to optimize for consumers? We know that showing people high quality, relevant ads contribute to their willingness to engage with advertisers in the future.“

Facebook optimize for the consumer experience

“If an advertiser knows their audience well and produces strong targeting and creative, they are more likely to have a higher user value because people will want to see their ads. If the user value is a large, positive number, the total bid the ad brings to the auction will be higher than an ad with the same advertiser value and a lower user value.”

Keep in mind that all other factors being equal, a higher user value will lead to more delivery and lower prices. Lower user value will lead to less delivery and higher prices.

The Factors Influencing Facebook Advertising Cost 2021

The biggest factors directly influence the cost of Facebook Ads are:

Target Audience

If both of us target the same audience then one of us wins. If you, me and 3 others bid to access the same audience, one of the three-win (gross simplification of the ads auction).

However, competition for anyone audience group is broader than any one vertical. The common misconception for beginner advertisers is “I’m only in competition with my direct competitors”. This is false on many levels.

If, for example, you sold dog food/equipment. You would normally think your main competition for ad space is the other brands that sell dog food/equipment. This isn’t true. Yes, I am a customer of dog food/equipment as I love dogs. I also like people food, home improvement, GOT, computers, and photography. So yes you are in direct competition with dog food/equipment brands but, also multiple other marketers who want access to me. Makes sense?

Bidding in the auction puts you in competition with every brand that wants to reach similar audiences.

By increasing other factors (see below) and creating high-quality ads (more later) you’ll be able to stand out in the auction and news feed. Yes, the audience group is an important part of the cost, but not the only factor.

The amount you pay for your audience (which won’t be obvious or stated anywhere) will vary even between your own campaigns, as your audience for different ad types will change.

The base rule to follow is to test audiences for cost and conversions.

Quality of The Advert

The quality of your ad and relevancy score can skyrocket or drop – bigly :).

Low relevancy score and low click-through rates tell Facebook people don’t like your ad – and Facebook obliges appropriately by throttling delivery of your ad.

Mark Z stated goal is to keep the news feed a positive and happy place. If that is done then people will return and stay for longer…if your ad has low relevancy and low click-through rate then the news feed is not a happy place and your costs rise.

Facebook Adverts Relevancy Score. The relevancy score is depreciated in March 2019

Further and importantly Facebook: ads relevance diagnostics are not factored into an ad’s performance in the auction.’

Facebook Advertising Cost Click-Through Rate

Click-through rate is the number of clicks on your ad divided by the number of impressions. E.g. 20 clicks, 1000 impressions = 0.02CTR or 2%.

A high CTR mean the ad copy, text and hook are getting attention and people are wanting to ‘learn more’ or whatever the CTA on your ads suggests.

Facebook will use the high CTR as an affirmation of a ‘good ad’ and will serve your ads to more people for less money. Remember, if you’ve optimized for CPC then you will spend more money – because your ad is working!! You’ll only spend up to your daily or lifetime budget that we set earlier.

The relevancy score is your audience finding your ad not offensive.

High CRT is your audience captivated enough to want to learn more.

The Time of Year

The time of year as a factor is not crazy if you think about it. The peak times of the year for advertisers are the sports finals days/weeks like the Super Bowl, World Series, and shopping events like Black Friday, November, December. Big brands often push massive volumes of money into Facebook ads.  The upshot for you and me is prices go up.

If you are not in retail then best to schedule your campaigns before and after these events. Or factor in the increased advertising costs during those periods.

Demographics

Yes, age, gender, marital status and more all affect your ad costs. Testing is the only way to find the best converting demo for your audience.

Ad Placement – where do you want people to see your ad

Facebook has improved the ad placement option in the last year. In theory, more supply should reduce the costs.

Recall the 4 million advertisers from above. And Facebook stated publicly that by Q4, 2017 the news-feed placements will be at maximum load. This is code for no free space available.

The opposite has happened. As the number of advertisers increased inventory reduced and more options have been created to a) satisfy the demand of advertisers and b) help Facebook revenue grow at the level stock market and investors demand.

The mobile and desktop news feed is the most in-demand placements – because that is where most eyeballs are, but there are many other placement options: Instagram, video, audience network and Messenger.

Facebook Advertising Campaign Objective

Yes, costs are different for the different campaign objectives.

Does the Bidding Options Affect Cost?

Now the best part: the cost per result will depend on audience size or as Facebook say, it will be the ads that provide:

” …positive, relevant experiences for people”

these ads will see the best cost per result. Provide a positive, relevant experience and your ads will be a success.

Let me state from the get-go the Facebook platform is confusing. Not on purpose but, because of the huge variety of options available. When you set up campaigns, Facebook defaults to the bidding option based on your objective.

What?

E.g. if your objective is to click to website, then the recommended bidding is pay per impression – which is the best way to accomplish the clicks to website objective.

We have four choices:

• clicks to website and pay per impression
• Daily unique reach
• clicks to website and pay per link click
• Impression

The default is the recommended choice.

CPA and ROAS (& ROI) are the only numbers that matter

Here is why CPA is the most important number when budgeting for Facebook Ads.

If you sell a product for €100 with a 25% margin. Then somewhere between €1-25 is an acceptable acquisition cost for an email address or customer.

Yes, a silly simple example but, still valid.

In your travels around the internet and FB groups, you will hear people quote different costs to acquire email addresses. These numbers range from not believable low €1-2, to a realistic €5-10, or €20.

Take all these numbers with a grain of salt as their business is not your business, their strategy and execution are not yours.

Your goal is not to reduce your CPA to €1-2. Your goal should be to pay as much as possible, still below your max CPA, to acquire email addresses and clients.

Item #1 is to determine your CPA. Then hold firm with this number and buy clients at that price point.

The business that can spend the most to acquire a customer wins. Every time! Every. Single. Time.

Think about it!

If I spend €19 to acquire a customer and you can only bid €11 then I win all the customers at that price point. Every time! Every. Single. Time.

Right? Right. Sobering. And. Reality.

ROI and ROAS

ROI optimizes a business strategy. ROAS optimizes to a tactic. Related but different.

ROI = (profits-costs / costs) x 100

ROAS = revenue from ad campaign / cost of ad campaign

ROI measures the profit generated by ads relative to the cost of those ads. ROI is a business-centrist metric most effective at measuring how ads contribute to an organization’s bottom line.

ROAS measures gross revenue generated for every dollar spent on advertising. It is an advertiser-centrist metric that gauges the effectiveness of online advertising campaigns.

How much does Facebook Advertising Cost 2021?

It depends is the unapologetic tongue in cheek answer. Yet there lies the truth in *it depends* and the costs of Facebook ads does depend upon many variables.

Even more precise answer was the retargeting €1 / 100 website visitors number. We then tripled, 3X, the €1 /100 for our consideration audiences and suggested a 3-4X the €1 / 100 number for the awareness audiences.

Your turn. Any questions?

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