Are Facebook Ads Worth It in 2024?

There’s a place where you can find over 2 billion potential customers.

A place that works equally well if you’re selling to businesses or directly to consumers.

Plus, you can get started with as little as $5 a week (or scale up to massive ad spends).

That place is Facebook; it’s the king of social media for advertisers. We don’t make this comment lightly. 

Let’s look at some stats.

• Facebook’s market share for digital advertising is close to 20%, making it one, if not the single largest option for advertising, behind only Google. 
• Second, the average conversion rate for Facebook ads (or CVR) is 9-10%, higher than Google Ads. 
• Then, 41% of marketers rated Facebook as giving the best return on ad spend

This explains why Facebook’s ad earnings have been going up 25% year over year. Advertisers get great results and hence, keep on spending more on Facebook.

However, you might still find yourself skeptical. And you’re not alone. Many marketers ask:

1. What if my target audience doesn’t engage with ads on Facebook?
2. How much will it actually cost me to see real results?
3. Can I achieve a positive return on investment given my specific business model?
4. What about ad fatigue? Will my ads lose their effectiveness over time?
5. How complex is it to manage and optimize Facebook campaigns effectively?

These are all genuine questions and, frankly, the right ones to ask.

The thing is, hearing about average results or benchmarks doesn’t quite cut it when what really matters is whether Facebook ads are worth it for you.

Fortunately, you’re not left to figure this out in the dark. Our guide is here to help you determine if Facebook ads are worth it specifically for you and your business. .In this guide, we will cover:

• What are Facebook Ads?
• Facebook Ad Types
• The Cost of Facebook Ads
• How Facebook Ads Costing Works
• How to budget for Facebook Ads?
• Typical Facebook Ads KPI benchmarks across different industries
• How RetainIQ boosts your Facebook Ads ROI
• Are Facebook Ads worth it?
• Case studies that highlight how Facebook ads are work so well
• Benefits of Facebook Ads

Let’s start from the basics.

What are Facebook Ads?

Facebook ads are exactly what they sound like: advertisements you place on Facebook. These ads get shown to Facebook’s massive user base of over two billion people.

You might wonder about the complexity of advertising on such a massive platform. The good news is, you don’t need to be a marketing guru to get started.

Facebook has designed its advertising tools to be user-friendly. You can easily create, run, and monitor campaigns using their self-serve tools. This simplicity extends to their reporting as well; you’ll receive clear, easy-to-understand reports that track the performance of your ads.

To understand Facebook Ads better, let’s unpack its layers. The very first layer here is the types of ad. So let’s find out more about them.

Facebook Ad Types

Let me walk you through the main types of Facebook ads:

Photo Ads

These ads feature a single image or illustration along with text. They’re great for conveying your brand’s identity and offering in a clean, visually appealing way.

Video Ads

Video ads let you tell your brand’s story through sight, sound, and motion. They come in various lengths—from short, snackable videos to longer, more immersive ones.

Stories Ads

These are full-screen, vertical ads that appear in the Stories section of Facebook and Instagram. They work particularly well to capture people’s attention and inspire them to take action on their mobile devices.

Messenger Ads

With these ads, you can start personal conversations with current or potential customers right within the Messenger app. You can even add interactive or automated features.

Carousel Ads

These allow you to showcase up to 10 images or videos in a single ad, each with its own link. You can use them to highlight different products or tell a brand story that unfolds across multiple panels.

Catalog Ads

Technically known as Meta Advantage+ catalog ads (formerly known as dynamic ads) are a powerful ad format for e-retailers. This ad format is great because it automatically identifies suitable products (from a catalog that you create) and shows them to people most likely to be interested in those products. 

Slideshow Ads

Think of these as lightweight video-like ads made up of motion, sound, and text. They can deliver your message beautifully across devices and connection speeds.

Collection Ads

These ads let people discover, browse, and even purchase your products within a fast-loading, immersive experience, without leaving Facebook.

Playable Ads

If you have an app, playable ads offer users an interactive preview before they download it—a “try-before-you-buy” experience that can help you find higher-intent users.

Instant Experience Ads

Formerly known as Canvas, these are full-screen, fast-loading destinations designed for mobile that you can add to almost any ad format.

With so many types of Facebook ads, you will always have a type that’s ideal for your campaign. Also, you can split your ad budget over multiple ad formats. So, now is a good time to understand what sort of cost you can expect to spend on Facebook ads.

The Cost of Facebook Ads

Let’s find some numbers published by reputed websites around the costs of Facebook ads. Sometimes these numbers differ from one study to another, but they give you a good sense of the typical Facebook ads cost.

First, it’s important to understand the different pricing models Facebook uses:

• Cost per thousand impressions (CPM) is used for brand awareness campaigns (where views are more important than conversions).
• Cost per click (CPC) is used for traffic campaigns targeting the middle of the funnel (where clicks are most important)
• Cost per lead (CPL) is used for conversion campaigns at the bottom of the funnel (where lead gen is most important)

Now, let’s look at some average costs based on a study that analyzed over $300 million in Facebook ad spend:

• The average CPM for Facebook ads is $7.19 per thousand impressions (as of May 2023). Your industry, audience, and ad quality can affect this number.
• The average CPC is $0.97 per click. Factors like ad format, copy, creative, and offer can influence your CPC.
• The average CPL is $9.57 per lead.

Another data point from the same study: On average, a Facebook ad costs $1.07 to get a like and $5.47 to drive an app download.

Now, these are just averages and should be used as rough references. The actual cost of your Facebook ads will depend on multiple factors like your industry, target audience, ad creative, bidding strategy, and more.

So, you need more information to help you find out what Facebook ads costs will be for your campaigns.

How Facebook Ads Costing Works

First, there are two ways to define cost:

1. The overall amount you spend on your campaign.
2. The cost for each desired result you get (like a click, lead, or sale).

You control the overall spend through your ad budget. But how do you control the cost per result?

That’s where your bid strategy comes in. You can either manually set your bid amounts or use Facebook’s automated bid strategies. These strategies help you spread your budget evenly on your goals.

Facebook also offers spending limits to ensure you never spend more than you want to. You can set a maximum spend limit for:

• Each individual ad campaign,
• Across all your running campaigns.

Now, what exactly do you get from your Facebook ads investment? Two main things:

1. You can reach a specific number and type of people matching your targeting.
2. You can get as many desired results (based on your campaign objective) as possible from those reached.

As for how you actually “buy” ad placements, there are three buying types:

1. Auction — Bid to reach your audience for the lowest cost (recommended for most).
2. Reservation — Pay a fixed price to predictably reach a larger audience (requires higher budgets).
3. Target rating points — Plan video ad buys using Nielsen metrics (not available to all).

Before you launch an ad, Facebook will estimate the potential reach and results you can get. This helps you decide if the projected returns are worth it for you.

Still, you need to budget for Facebook Ads. How do you do that?

How to budget for Facebook Ads?

Among the biggest concerns we hear from businesses looking to invest in Facebook ads are:

“How much should I budget?”

“How do I know if I’m spending that money wisely?”

The truth is, there’s no one-size-fits-all number we can give you. But what we can do is walk you through how to budget for Facebook ads.

Here are the five things you need to know.

1. First thing’s first – your Facebook ads budget shouldn’t exist in a vacuum. It has to be part of your overall marketing mix.
   
2. The marketing mix has to include things like email marketing, content creation, maybe even some offline channels too.
   

For example, let’s say you have $1,000 per month for marketing. You could put $600 towards Facebook ads to drive conversions, $250 into email nurturing sequences, and the remaining $150 into creating educational content. Just a rough example, but you get the idea.

3. Now, that initial budget is really just your starting point. The key is to continuously measure and re-allocate the budget based on performance.
   
   Ask yourself: “How much profit did we make from the sales I’m getting through Facebook ads after deducting my ad spend?”
   
4. You’ll also want to look at key metrics like cost per click, click-through rates, conversion rates, return on ad spend.
   
   Now, we can rattle off some “best practice” benchmark numbers all day. But at the end of the day, those are just general guidelines. What really matters is how those metrics stack up for YOUR specific business goals.
   
   Maybe a 2% conversion rate sounds low to some, but if that’s generating a 300% return on ad spend for you, then…
   
5. The point is, budgeting for Facebook ads is a constant cycle where you allocate budget, launch campaigns, analyze performance, adjust budgets, and repeat that process.
   

It takes work, but we can tell you from experience, it’s well worth the effort.

Now let’s talk about some industry-standard KPI benchmarks to refer to as you analyze your Facebook ads performance.

Typical Facebook Ads KPI benchmarks across different industries

We’ll be upfront – don’t get too hung up on trying to hit these exact figures. They’re just rough guidelines. What’s more important is to know how your numbers stack up for your particular goals and profit margins. That said, let’s take a look at some typical numbers.

Industries with the Highest Facebook Click-Through-Rate (CTR)

• Legal: 1.61%
• Retail: 1.59%
• Apparel: 1.24%
• Beauty: 1.16%
• Fitness: 1.01%

So for example, if you’re in retail, a CTR around 1.5% could be considered pretty solid. But if you’re selling fitness products or services, you’d want to aim higher since that industry tends to see stronger engagement.

Next, let’s look at industry standard numbers for conversion rate.

Industries with the Highest Facebook Conversion Rate (CVR)

• Fitness: 14.29%
• Education: 13.58%
• Employment & job training: 11.73%
• Healthcare: 11.00%
• Real Estate: 10.68%
• B2B: 10.63%

Note that the overall average CVR on Facebook is around 9.21%. But as you can see, some industries like fitness and education tend to convert at much higher rates.

Next, let’s learn about Facebook Ads ROAS

Facebook Ads ROAS (return on ad spend).

Simply put, ROAS measures the revenue generated for every dollar spent on advertising. An ROAS of 3:1, or 300%, means that for every dollar you invest in Facebook ads, you’re generating three dollars in revenue.

Note: A seemingly “good” ROAS doesn’t automatically indicate profitability. The actual benefit depends heavily on the profit margins of your products.

Let’s assume we have 2 products. Both are priced at $100. One has a 50% profit margin and the other has a 20% profit margin. Let’s assume a single day ads campaign got us 3 sales.

• For the 50% Profit Margin:
  • Revenue Generated: 3 sales at $100 each = $300
  • Gross Profit from Sales: $300 * 50% = $150
  • Cost of Advertising: $100
  • Net Profit: $150 (Gross Profit) – $100 (Advertising Cost) = $50
• For the 20% Profit Margin:
  • Revenue Generated: 3 sales at $100 each = $300
  • Gross Profit from Sales: $300 * 20% = $60
  • Cost of Advertising: $100
  • Net Profit: $60 (Gross Profit) – $100 (Advertising Cost) = -$40 (which means a loss!)

So, while we have a good ROAS in both cases, the profit depends on the margins of the product being sold. 

That’s why it’s so important to have an expert in Facebook Ads on board.

How RetainIQ boosts your Facebook Ads RoI

At RetainIQ, we do three things that not many Facebook Ads agencies are known to do.

Ensure zero waste of ad budget

This means being selective about where and how your ads appear. Here’s how we do it:

• We handpick the locations within Facebook, Instagram, Messenger, and Audience Network where your ads will show. This prevents your ads from appearing in less effective placements.
• We use block lists to avoid your ads appearing on certain URLs and inventory filters to ensure they don’t show next to sensitive content.
• In Facebook in-stream videos, we exclude categories that may not resonate with your brand, such as politics or gaming.
  

Put AI to work for you

Let’s consider an example. Our proprietary tool converts your plain-looking product creatives to engaging, high-converting ad variations. This is one of the many ways we put AI technology to work for your Facebook Ads.

See the difference this makes. 

We also deploy reliable machine-learning algorithms to automate how you perform A/B testing for your campaigns. This can take away the guesswork from your ad campaigns. This alone can boost your ROAS from something like 3:1 to 4:1. With more data, the potential improvements soar even further.

Make none of the common mistakes that flatten out Facebook Ads RoI

Of course, AI smarts alone isn’t enough. We couple that with a laser-focus on avoiding those all-too-common Facebook ads mistakes that can silently bleed your budget dry:

• Your ads aren’t reaching the people who are most likely to care.
• You’re sticking with what’s not working, instead of finding what does.
• Your ads look terrible on the screen where people spend most of their time.
• You’re not connecting how your ads perform with other marketing efforts
• You’re excited about clicks, but not paying attention to actual sales.
• You’re not using the smartest ways to bid and set your ad budgets.

None of these mistakes will bleed your budget out when you partner with us.

Replace ‘costly experiments’ with ‘value-for-money campaigns’

At RetainIQ, we don’t like to burn money to experiment. We’ve managed $3 mn+ ad-spend, and every penny has told us what works in the world of Facebook ads and what doesn’t. So, when you work with us, you learn what we know. Rely on us to develop ads that look good, but more than that, are done such that they talk to the people that matter, in a voice that they trust, and with an offer they can’t refuse. 

Make it easy for you to keep your ads looking fresh

Stale ads are money down the drain, and at RetainIQ, wasting resources isn’t our style. We keep your campaigns fresh and engaging by continuously monitoring and updating your ad creatives before they wear out their welcome. This proactive approach ensures that your advertising remains as dynamic and vibrant as the market itself. So, trust us to deliver not just visually appealing ads but compelling content that looks fresh. That’s how we’ve boosted client ROAS on Facebook Ads by 45%. 

So, let’s go back to our main question. Is Facebook advertising worth it for your business? That depends on the typical value you get from each lead.

Are Facebook Ads worth it?

Let’s take a look at some compelling data.

Source: Statista

It’s clear; advertisers across the globe prefer Facebook over other social media channels for their ad-spend.

But it’s one thing to be popular; it’s another to be cost-effective. how does Facebook stack up in terms of costs compared to other social platforms?

Let’s compare the Cost Per Click (CPC) and Cost Per Thousand Impressions (CPM) across top social platforms.

Platform	Avg. Cost Per Click (CPC)	Avg. Cost Per Mille (CPM)
Facebook	$0.44	$14.40
Instagram	$2.60	$6.70
TikTok	$1.00	$10.00
Pinterest	$1.50	$5.00
Twitter	$4.00	$6.60
LinkedIn	$5.26	$6.59
YouTube	$0.30 (this is the average CPV, not the average CPC)	$20

Again, it’s why Facebook ads are a go-to for many businesses.

Reminder: We’re not saying you need to hit these exact percentages. If a 3% CVR allows you to profitably grow your business based on your margins, then that’s fantastic.

So, use these benchmarks as rough guides. More important is to circle back to your own numbers and goals.

Now, as you prepare to launch your own Facebook ad campaigns, why not learn from those who’ve already seen success?

Case studies that highlight how Facebook ads are work so well

We’ll look at two real-world examples of businesses that achieved awesome results with Facebook ads.

RIMOVA

RIMOWA, a luxury luggage brand, wanted to boost both online sales and brand recognition. They did a campaign using a mix of video, image, and product catalog ads. This was an improvement over their previous campaigns which used only one ad format.

The results:

• 2.2X return on their ad spend
• 13-point increase in ad recall (people remembering their ads!)
• 7.1-point lift in brand awareness

LiveMore

Many businesses use something called Dynamic Product Ads. It’s great because they pull directly from your product catalog, but let’s be honest – they’re often visually… boring. Here’s where things get really exciting with RetainIQ.io

See what happens when RetainIQ.io revamps those DPAs for LiveMore, a D2C brand in the nutritional supplements space:

• On average, evergreen design campaigns saw an increase of 10-15%
• Promotional design campaigns saw a boost of around 25-30%
• Dynamic Product Ad performance boomed by 127%.
• The client doubled their revenue without increasing ad spend, in 4 months.
• Promo-focused ad designs increased results by 25-30%.

What’s the takeaway?

The key ingredient is strategy. You need well-designed, well-targeted ads that speak to the right audience. You do this, and results will follow.

Next, let’s learn about some of the benefits of Facebook Ads.

Benefits of Facebook Ads

Let’s zoom in on three major benefits of Facebook Ads.

Precise Targeting and Retargeting Capabilities

The ability to target your audience precisely is a key strength of Facebook Ads. These ads allow you to zero in on specific groups based on various criteria such as age, gender, interests, and location. This targeting ensures that your marketing efforts reach the right people.

Additionally, the retargeting feature helps maintain visibility among users who have already shown interest in your brand.

Reach Your Ideal Customer Profile

Facebook Ads let you engage with specific customer profiles. If you have detailed personas or access to first-party data, you can use interest-based targeting. For those less inclined to manually segment audiences, Facebook’s Ads Manager offers Advantage+ Audience to automatically create high-performing audience segments. These are done based on your ads’ data and brand interactions.

Granular Control Over Campaigns

With Facebook Ads, you’re in the driver’s seat. You can adjust your campaigns based on:

You can adjust your campaigns based on:

• Business size: From small businesses to large enterprises
• Objective: Including brand awareness, app installs, lead generation, and conversions
• Industry: Catering to sectors like automotive, e-commerce, education, and many more
• Platform: Across Facebook, Instagram, Messenger, WhatsApp, and Audience Network

This level of control ensures that your campaigns are as effective as possible.

Let’s break down how those awesome benefits of Facebook Ads actually get the results you need.

• You can target your ads to a specific geographic area, and to users with relevant interests or behaviors.
• You can find people interested in your industry, or even target those already interacting with competitors.
• You can design ads showcasing your products/services, with a clear call-to-action.
• You can reach people based on job title, location, demographics – whatever aligns with your ideal customer.
• You can use lead ads that allow interested prospects to submit their info directly within Facebook.

A word of advice

If all this sounds promising, we know. But chances are that you’re still wondering how it all really comes together for your specific needs. Then why not have a chat with us? 

We offer a no-obligation call where we can discuss your marketing challenges. It’s a great opportunity to see how Facebook Ads could work for you, with no pressure to commit. Just a straightforward conversation to help you make informed decisions. 

Feel free to reach out and schedule a time that suits you.