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Facebook Ads probably seems like a good choice to start generating leads and sales for your business. You’ve probably heard the many success stories and you’re ready to become one of them yourself. However, while the success stories are tempting, you might be a little hesitant. After all, how much do Facebook Ads cost and what sort of results can you expect?
Here are some common questions our clients ask us at RedPandas before working together:
- How much do Facebook ads cost?
- Will the returns justify the investment?
- Is there a way to test whether ads will work for me before I make a big investment?
In this article, you’ll learn exactly what sort of results you can expect on Facebook Ads and how much it costs to advertise. We’ll give you a clear idea of exactly how much you can expect to spend.
How Much Do Facebook Ads Cost?
To understand how much Facebook Ads cost, we will explore:
- Average Cost Per Clicks (CPC)
- Average Cost Per Thousand Impressions (CPM)
- Average Cost Per Action (CPA)
Average Cost Per Click
It’s important to look at CPC because this tells you how much you need to spend per click. For example, if your CPC is $2 and you want to drive 1000 users to your website, you can expect to pay at least $2000 ($2 per click x 1000 users). This therefore gives you an estimate of how much you need to spend to get a particular result. In this way, you can predict spending based on your objectives.
The average cost per click (CPC) for Facebook ads across all industries is $1.72. The average CPC in Australia is a bit higher, at $2.10. Here’s a breakdown of Average CPC across different countries:
CPC also differs by industry. Here’s a breakdown of CPC by industry (this is worldwide, not Australian based):
| Industry | Average CPC (AUD) |
| Apparel | $0.45 |
| Auto | $2.24 |
| B2B | $2.52 |
| Beauty | $1.81 |
| Consumer Services | $3.08 |
| Education | $1.06 |
| Employment & Job Training | $2.72 |
| Finance & Insurance | $3.77 |
| Fitness | $1.90 |
| Home Improvement | $2.93 |
| Healthcare | $1.32 |
| Industrial Services | $2.14 |
| Legal | $1.32 |
| Real Estate | $1.81 |
| Retail | $0.70 |
| Technology | $1.27 |
| Travel & Hospitality | $0.63 |
Also, the average CPC may change depending on the campaign objective you choose. The average cost per click by campaign objective is as follows:
- Brand awareness: $2.32
- Lead gen: $1.74
- Traffic: $0.43
- Conversions: $1.33
Average CPM
CPM refers to how much it costs to get your ad seen 1000 times. It’s important to measure when looking at Facebook Ads cost because it determines how much you’re going to spend.
For example, if you wanted your ad to be shown 100,000 times and your CPM was $20, you could expect to pay $2000 for ads {(100,000 impressions / 1000) x $20). Understanding this and having an average CPM to work with can help you determine exactly how many times your ad will be shown before you even start spending.
This can be especially useful if you have an idea of the average conversion rate your business experiences. For example, if you know that 1% of people will click on your ad, and another 1% will buy your $2000 service, then following on from the previous example, you will generate $20,000 (100,000*1%*1%*2000), which is a 10x return. Understanding the costs can help you gain insight into potential levels of ROI.
As you can see, CPM is extremely important because it’ll give you a clear picture of exactly how much you need to spend to reach your goals.
According to Revealbot, the average CPM on Facebook across all industries worldwide is $9.29.
When you break the averages out by campaign, you see CPMs ranging from $0.68 (Video views campaigns in March 2023) all the way up to $24.51 (lead generation campaigns in October 2023).
Keep in mind that these metrics are averages worldwide and are not country-specific. CPMs will be lower in some countries, which ultimately may bring down the averages. In Australia, the average CPM for FB Ads can range from A$10-A$20+ for quality traffic (Megaphone Marketing, 2023).
Average Cost Per Action
An action is any conversion action a user takes in relation to your ad, such as making a purchase, registering for a webinar, or filling out a contact form.
This is probably the most important metric to look at when deciphering Facebook Ad costs because it can help you determine ROI before you even start advertising.
Let’s look at an example. Let’s say you know that your sales conversion rate is 15%, and every sale you make brings in an average of $1000. If it costs $50 to generate a lead, and you generate 100 leads, you’re paying Facebook $5000 (100 leads x $50 per lead). Since you have a 15% sales close rate, you’ll get around 15 customers from your 100 leads, which equates to $15,000 (15 customers x $1000 per customer). In this scenario, you make positive ROI.
As you can see, looking at the average CPA can help you determine the potential ROI of your campaigns.
The average CPA worldwide, is $25.90, and as you can see below, the CPA differs per industry.
The CPA may also differ depending on the country, audience and product offering you are providing. At RedPandas, we’ve seen CPAs between $10 and $100.
So, what’s next?
Embarking on a Facebook advertising journey can initially feel like navigating through a dense forest, especially when it comes to deciphering the costs involved. If you aren’t aware of the costs from the get-go, how can you be sure you’ll get a return on your investment?
That’s why this article covered the average costs so that you can get a clear indication on how much you can expect to spend. Remember, it’s impossible to give you an exact number on how much you’ll pay, because there are many factors that influence the end outcome, such as the country you’re advertising in, the audience you’re advertising to, the content you’re using, the campaign objective, and your industry, are just a few of these factors.
However, you now have a clear idea of the range you can expect to pay, which will help you calculate how much you need to spend to achieve your goals, and whether you’re likely to generate a return from your efforts.
Next, find out whether you should be focusing your advertising on Facebook or Instagram.
