The copious amount of candy in my local grocery store can only mean one thing. Halloween is here. So in the spirit of all things scary, we thought we’d tackle one of the more mysterious topics of digital marketing—Facebook advertising. More specifically, how much Facebook ads cost, and why the uncertainty around budgeting for Facebook ads spooks many business owners out of doing it in the first place.
The biggest question small business owners have about Facebook advertising is, “For every $1 I spend, what can I expect to get in return?” Or more specifically, “How many clicks will I get for every dollar I spend on Facebook advertising?”
I hate to do this to you, but the answer is…well, it’s complicated.
And because it’s complicated, many business owners choose to pass up targeted Facebook ads in favor of more straightforward boosted posts. Or, they choose to forgo paying to promote on Facebook altogether.
How much does Facebook advertising cost, anyway?
As Facebook advertising grows in popularity, the cost of Facebook ads is growing right along with it. Good ol’ supply and demand (another hair-raising, scary topic). It makes sense, though, that with more competition for those ad views and clicks would come an increase in the price of those views and clicks.
But how much do Facebook ads cost? How much should you pay per click? And how much has that cost grown in recent years?*
*Note: For the purpose of this post, and for the sake of simplicity, let’s talk cost per click (CPC). Facebook advertising has more than one way to structure your budget and bids, including bidding on views, impressions, page likes and more. But to keep this topic from getting any more horrifying, let’s focus on CPC.
In the U.S., the average Facebook ad cost around $.58 (58 cents) per click in 2016. By 2018, that cost per click (CPC) nearly doubled to around $1.10.
Unfortunately, averages are just that. The chances your ad costs align perfectly with the median are slim to none.
That said, how much should you pay for Facebook ads?
While you already know your Facebook advertising costs can vary for a variety of reasons, did you know one of the biggest factors influencing the cost of your Facebook ads isn’t your ads themselves, or even how you target them? It’s what you sell to begin with.
How Facebook Ad Costs Vary by Industry
That’s right. Your industry and the type of product or service you sell have a larger impact on your Facebook advertising budget than you might have originally thought.
Though U.S. average rates for CPC shouldn’t be too shocking, the average cost per small business type varies pretty drastically. While the most common types of businesses who use Facebook ads pay around $1.72 per click, business like yours could pay as much as a couple dollars more or even a dollar less per click.
The Highest Costs (per Click)
Curious which small businesses suffer from the most expensive ad costs on Facebook? That title goes to insurance, loan and mortgage providers. They weigh in at an intimidating $3.77 CPC. If you own a business like one of these, you may feel you’ve gotten the short end of the stick, since your Google Ads costs are similarly high.
But here’s the good news.
Terms like “loans,” “insurance” and “mortgage” are some of the most expensive keywords you can bid on with search engine marketing platforms like Google Ads. They can run about $50 per click for top placement. Suddenly that $3.77 Facebook CPC is looking a lot less ghoulish.
The Lowest Costs (per Click)
Which businesses reap the rewards of having the lowest costs for advertising on Facebook? That prize goes to retailers, apparel brands and boutiques, and travel and hospitality businesses. Their CPCs range from around $.45 (45 cents) to $.70 (cents), which sound pretty great at under a dollar.
The Rest
Does your business not fit into any of those categories? Here are the average Facebook CPCs for popular types of small businesses buying ads with the social media giant.
- Automotive services – $2.24
- Business services (B2B) – $2.52
- Beauty (salons and spas) – $1.81
- Customer service – $3.08
- Education – $1.06
- Employment and job training – $2.72
- Fitness – $1.90
- Home improvement – $2.93
- Healthcare – $1.32
- Industrial services – $2.14
- Legal services – $1.32
- Real estate – $1.81
- Technology – $1.27
Pro tip: Do these industries look familiar? They happen to be the same types of businesses that use small business software to supplement their digital advertising strategies and run their businesses. See which types of businesses use Thryv.
Why Your Industry’s CPC Matters
Like I said earlier, all of these industry averages are just that—averages. And whether your business falls on the lower or higher end of the spectrum for CPC has more to do with the strategy you should put in place, and less to do with your all-in advertising budget.
High CPCs Don’t Have to Break the Bank
If your business falls into the highest averages for CPC, don’t throw in the towel just yet. For some businesses in this bucket, those costly clicks are more expensive for a couple, very valid, reasons:
The target audience has a higher buying intent (more ready to become a customer of yours)
The target audience is expected to convert (by way of clicking your ad) at higher rates
Translation? You may not have to pony up for nearly as many ads as others to get the results you’re looking for. So these higher-priced ads may be worth every penny.
Low CPCs Don’t Necessarily Mean Cheaper Advertising
Let’s say you fall on the low end of the spectrum, coming in at less than a dollar per click. This usually happens for businesses with the largest target audiences and greatest number of advertisers. Because of that (and the steep competition), these audiences can tend to convert at a lower rate overall.
Translation? Competing for their attention probably means showing more ads to more people, more often. Even though your CPC is low, you may want to cap your budget a little higher to get the clicks you need to meet your conversion goals.
