Cost is another complexity of FB ad campaigns because there are numerous variables involved in the price of Facebook advertising. The initial step is planning an advertising budget around a time frame, for example, the amount available to be used over the lifetime of the campaign then a breakdown into weekly and/or daily spend targets. In most scenarios, Facebook will then bill against that budget at cost per click (CPC) and cost per mille (CPM—cost per 1,000 impressions) rates.
Similar to the way Google Ads operates, basic Facebook advertising cost is determined by a multi-factor formula based around a blind auction system. In any given market sector, hundreds or thousands of marketers bid for desktop and mobile ad placements. Facebook can handle the bidding automatically based on parameters you set, or you can bid manually by setting a bid cap, or maximum bid across auctions, an option is generally used by highly-experienced advertisers.
An algorithm comes up with an ad quality rating—Total Value—for each ad based on bid, estimated action rates, and user value (relevance to search, previous feedback, previous CT rates etc.). In short, Total Value is how much the audience is predicted to like or engage with the ad combined with the price a marketer is willing to pay for placement.
Facebook Ads Major Cost Factors:
Bid price level
Ad search relevance score
Algorithm-driven engagement estimates
Facebook Ad costs fluctuate widely according to industry sector and the number of marketers competing, seasonality, location, and other market aspects. There is also a nearly infinite set of finer variables like ad format, campaign objectives, intended audience, bidding model, display frequency, the Facebook quality scores and more at play when trying to determine average CPM or CPC on Facebook.
Average costs can change daily, and it seems that everywhere you look, different numbers are being posted. Here is a look at CPC numbers broken down by industry and published in early 2023. Note that the all-industry average benchmark is $1.86.
Location also plays an important role in FB ad costs. Check out this take on average CPC by location:
The bottom line on cost is that you can probably ballpark a CPC number for your situation, but you are not really going to know until your campaign has been up and running for a while. Then it is time to look into ROAS, or return on ad spend, a whole different ball game.