Facebook allows you to choose from a wide variety of ad formats. Each format has a different objective, such as driving traffic, increasing brand awareness, app installs or converting customers. You can also select a cost model, such as CPC (cost per click), CPM (cost per thousand impressions) or CPA (cost per action). Each model has different costs associated with it.

The ad cost on Facebook depends on your chosen objectives, targeting options, and the quality of your ads. The most important factor in determining the ad cost is your target audience. A more specific audience will generally have higher ad costs than a broad one. In addition, an ad that is more relevant to a user will typically have lower ad costs than one that is less relevant.

Deciphering Expenses: Understanding the Cost of FB Advertising

Which ads are shown on Facebook is determined in an auction that takes place in a fraction of a second. The advertisers with the highest bids are rewarded with space in the news feed or sidebar. Ads are ranked based on their relevance, value to the user and estimated action rate.

Effective advertising should yield a positive return on investment. A good way to measure ROI is through Customer Lifetime Value (CLV), which combines your revenue from each customer with the cost of the ads that convert them. This can be a helpful metric to use when deciding whether or not your FB advertising cost is worth the investment. You can calculate your CLV using tools like Google Analytics, Shopify or the new ad manager on Facebook, One-Click Report.