Digital Marketing

How Much Do Facebook Ads Cost in 2021

So how much do Facebook ads cost?

It’s a question that we get every single day as a Facebook ad agency.

And we’ll be honest, it’s a little tricky and different for everyone.

Primarily because Facebook lets its advertisers choose their own budget.

You can run an ad for as much money as you want and for as long as you want.

But still, how much money should you really spend on Facebook ads?

Today, you’re going to find out.

We’re going to fully explain Facebook advertising costs and help you determine what’s the best amount to invest into your Facebook advertising campaign.

There are campaigns that we’ve run where we’ve spent just $4,000 and generated over $130,000 in revenue for our clients.

facebook ads cost

Does that mean you need to spend $4,000 in Facebook ads?

Not exactly.

So let’s go ahead and break Facebook ad costs all the way down and then determine what works best for your business.

How Does Facebook Ad Costs Work?

Okay, first and foremost, how do Facebook ad costs work? Like how much do Facebook ads cost?

According to Facebook, you can buy Facebook ads on any budget.

facebook ads cost

Well, that was very helpful wasn’t it? (Not!)

When we tell our clients this, they’re kind of like…

“No but seriously, how much do I need to spend to make this work?”

If that’s you, don’t worry, we’ve got you covered here.

The first thing you need to understand is how Facebook advertising costs work.

Technically, Facebook charges you to reach people.

So if you spent $5, you might reach 500 people.

And if you spent $10, you might reach 1,000 people.

And so on…

This costing format is referred to as “Cost per Thousand Impressions,” or CPM. And Facebook CPM costs have been increasing over time as competition rises.

facebook ads cpm

Every time you run an ad on Facebook, there will be an associated CPM related to it.

running an ad on facebook

As you can see, these CPMs vary based on the advertisement.

Why Do Facebook CPM Costs Vary?

There are a few things that influence your Facebook ad costs. Let’s discuss this and then we’ll talk about how to set your monthly budget.

#1 Ad Relevance

The most significant factor is this little thing called Relevance.

Businesses that have the most relevant advertisements are rewarded with lower CPM costs. And businesses that have crappy ads will have higher CPM costs.

You see, Facebook measures every ad shown for quality, engagement, and conversions. Ultimately, they do this to help show their users the best advertisements.

facebook ads cost

This way, they can keep people on Facebook longer and continue to serve more advertisements to them.

For example, let’s say that Business A spends $1,000 in Facebook ads and earns a $20 CPM. Hypothetically, they would earn 50,000 impressions for $1,000.

And let’s say Business B spends $1000 in Facebook ads and earns a $10 CPM. This would mean that they would earn 100,000 impressions for $1,000.

That’s DOUBLE the amount of impressions for the exact same spend.

You’ll increase your chances of getting lower cost clicks to your website and most importantly, lower-cost conversions.

#2 Audience Size

Your audience size will also influence your Facebook ad costs.

In general, the broader the audience, the lower the cost. And the more narrow the audience is, the higher the costs.

Here’s a simple example to illustrate this.

Let’s say you have a niche business and you only want to target 1,000 people.

Because the audience is so small, you’ll probably be very limited in reaching them on a daily basis, if they even use Facebook every day.

And if they do, it might be for just a small period of time. But there’s likely hundreds, if not thousands, of advertisers who want to reach that same person for that period of time.

So why should they reward your business in reaching them? Because you’re paying for it in higher CPM costs.

On the other hand, an advertiser only targeting 1 million people will have no problem taking whoever becomes available within the broad audience they’ve selected. Because of this, they see lower CPM costs overall.

Across our agency, we’ve noticed that larger audience sizes tend to have lower costs. And more narrow audiences, like small towns or very niche markets, have higher costs.

psychology to consumer marketing#3 Ad Competition

Your Facebook advertising costs might also vary based on competition.

There are some audiences that are more competitive than others.

For example, it may cost more to reach an audience of C-Suite Executives than it would to reach the average person.

Different audiences have different levels of competition amongst advertisers, which may require some creativity on your part to determine the best way to reach your desired audience.

Alright, now let’s answer the magic question.

How Much Should You Spend on Facebook Ad Cost?

Before we say anything, let us give you a general rule.

In general, the more you spend in Facebook advertising, the more people you will reach, and ultimately – the better your chances are of increasing your business revenue.

So if you’re stuck in between spending just a little bit and a little bit more, we’d choose a little bit more every time, if it fits in your budget.

With that said, let’s try to nail down exactly how much you should expect to spend in Facebook advertising costs.

Here are the things you need to consider.

#1 Do people know your business exists?

If no one knows your business exists, you’re likely going to have to spend more money to see sales from Facebook advertising.

People buy from businesses they know and trust. And if they don’t already know and trust you, you’re going to have to make some deposits into them before you can expect a deposit from them.

One of the most effective ways to generate sales from Facebook ads is through Retargeting – which is advertising to people who recently visited your website or engaged with your business.

If you don’t already have an audience to retarget your Facebook ads to, you’re going to need to build that audience.

Aim for a retargeting audience of at least 10,000 people for optimal results. If you don’t have this, then you need to spend whatever it takes to build a retargeting audience.

If you’re starting from scratch, expect to spend at least $2 to $3 thousand dollars to build awareness for your business. This amount, of course, can be split-up over a period of months.

#2 What kind of media are you using?

facebook ad types

It’s no secret that Facebook favors video content in their newsfeed over other types of content.

And in general, video content has lower CPM and conversion costs than the alternatives.

With that said, a Facebook ad with video is more likely to reach more people at a lower cost, allowing you to spend less or get more for your money.

If you don’t have video, don’t worry. You can still develop effective ads with high-quality images or graphics that get your point across.

We run several campaigns that perform very well without video, but we’d be lying if we said video doesn’t help.

So aim to add video whenever possible to minimize your overall Facebook advertising costs.

#3 How much do your products or services costs?

The more expensive a product is, the more resistance people will have to buy it.

If you’re selling a product that cost $1,000.00, don’t expect to spend $500 and generate 25 sales.

That’s like a 12x return on ad spend, which we’ve seen before, but we wouldn’t count on it.

We’d rather set your goal to break even initially, and then work yourself up to the 2-3x return on ad spend range. And as time goes on, you continue to optimize your campaigns to see more results.

So in short, your ad spend should be correlated to the price of your solutions.

You can take your average sales price × the amount of sales you desire as a minimum ad budget.

#4 How much cash do you have available to invest?

The amount of cash you have available to invest into Facebook ads is very important.

As much as we’d love to sugarcoat this and give you a fairytale ending, we can’t. It’s very possible that your campaign will not perform the way you want it to.

You need to be prepared to lose the money you invest into a Facebook advertising campaign.

If we were you, we would not put our last dollar into a Facebook advertising campaign as the determining factor on whether our business survives or not.

So make sure that you can comfortably step your foot into Facebook advertising to determine if it will work for your business, and be prepared to pivot if it doesn’t.

How Much Should You Invest In Your Facebook Ads Cost To See If It Will Work For Your Business?

As stated, according to Facebook, you can use ANY budget.

But, setting any budget won’t change your business.

You need volume in order to win at Facebook ads. You need to reach a mass amount of people, make them aware of your business, and convince them to purchase.

social media ads resultTo do this, we recommend that you budget at least $5,000.00 to determine if Facebook advertisements will work for your business. And if you can get that amount up to around $7,000, that’ll be even better.

This should give you enough fuel in the tank to build necessary awareness for your business and begin using more advanced Facebook features like Retargeting and Lookalike audiences.

By the way, we don’t recommend spending this amount of money in 1 week or 1 month. Whatever your total budget is, divide it by 6.

It takes at least 6-months to build an effective Facebook advertising campaign. This is because you will rarely build a profitable campaign on day 1.

It takes weeks and months of reviewing performance data and making proper changes to your campaign to increase performance.

So if you have set a $5,000 budget, that equates to a monthly budget around $850. Or if you set a $7000 budget, that equates to close to $1200/month in Facebook ad Spend.

Facebook Ads Cost: Are There Any Extra Costs Associated With FB Ads?

Not necessarily, but there are things you may decide to buy to improve your results.

Like investing into a quality website or video to help you convert people into buying customers.

Or if you want the best hands to take care of you, you might decide to hire a Facebook ad agency like LYFE Marketing.

It all depends on where you are in your business. If you don’t have a lot of money in the tank, your only option might be to stab at this yourself.

But if you’re juggling managing your business and customers, it might be best to hire a partner to devote the necessary time for this.

If that’s you, we’ll be happy to help. If not, we hope this post helps you create a booming Facebook advertising campaign to grow your business.

With that said, let’s recap today’s post.

Quick Recap

Today, we discussed Facebook advertising costs.

Remember, at the end of the day, Facebook charges you to reach people. The more people you want to reach, the more money you need to spend.

Now with that spend, your Facebook advertising costs will vary based on a number of factors. Like your Ad Relevance, Audience Size, and Overall Competition.

Now while understanding Facebook costs are cool, you ultimately need to determine how much you’re going to spend on it.

When setting your budget, you need to think about your awareness in the market, the media you will use in your campaign, your pricing, and your cash reserves available to invest into a Facebook advertising campaign.

And as a general recommendation, we suggest you spend at least $5,000 over a period of time to determine if Facebook advertising is a good avenue for you.

But if you have very ambitious goals and the budget to match, the more, the merrier.

We hope this helps! If you want to work with an amazing agency to make the most of your Facebook advertising budget, get in touch with us today. We’d be happy to help!

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About EagleView Consulting

EagleView Consulting is a full-service consulting agency that helps brands, retailers, and manufacturers launch, grow, and scale on Amazon. We create beautiful brands and help Amazon Sellers to dominate on the Marketplace.

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