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Are you a business owner or marketer grappling with high costs per lead from your Facebook ads? You’re not alone. Many businesses, from marketing agencies to B2B and B2C companies, face the same challenge. They invest significantly in their ad campaigns, only to see a low return on their investment. This can be particularly frustrating when you understand the vast potential that Facebook has for reaching your target audience and generating leads.
Well, you’re not alone there. In a recent survey we conducted with 37 respondents, we found that this challenge is common across various sectors. Our respondents included Marketing, Digital or Media Agencies (40.54%), B2B Services (27.03%), B2B Products (5.41%), B2C Services (16.22%), and B2C Products (10.81%). Despite their diverse backgrounds, they all shared a common goal: to lower their Cost Per Lead (CPL) on Facebook.
The good news is that it doesn’t have to be this way. With the right knowledge and strategies, you can significantly lower your CPL on Facebook, making your ad spend go further and bringing in more leads for your business. This article is designed to help you do just that.
Whether you’re a small business owner, a marketing professional in a larger company, or a digital marketing consultant, this guide is for you.
We’ll examine CPL on Facebook, explain it, show you how to calculate it, and provide you with proven strategies to lower it. All insights here are based on recent research and expert opinions, giving you actionable advice that you can start implementing today.
So let’s dive in!
CPL, or Cost Per Lead, is a key performance indicator (KPI) that measures the cost-effectiveness of your advertising campaigns. In simple terms, it tells you how much you’re spending on Facebook ads to acquire a single lead.
It is a crucial metric because it directly relates to the return on investment (ROI) of your Facebook advertising efforts. If your CPL is high, it means you’re spending a lot of money to attract each potential customer, which could make your campaigns unsustainable in the long run. On the other hand, a low CPL indicates that you’re able to generate leads cost-effectively, maximizing the ROI of your ad spend.
Understanding CPL is also essential for budgeting and planning your Facebook advertising campaigns. By knowing how much each lead costs, you can better allocate your budget and set more accurate goals for your campaigns.
However, do keep in mind that CPL is just one piece of the puzzle. While it’s crucial to strive for a lower CPL, you should also focus on the quality of the leads you’re generating. After all, attracting a large number of low-quality leads that don’t convert into customers won’t benefit your business.
Calculating your CPL on Facebook is fairly straightforward. You simply divide the total amount spent on your Facebook ads by the total number of leads generated from those ads.
Here’s the formula:
Average CPL = Total Ad Spend / Total Number of Leads
That means that if you spend $500 and generate 25 leads, your cost per lead will be $20.
Understanding the average costs and benchmarks in Facebook advertising can help you set realistic goals and expectations for your campaigns.
That’s easier said than done, though. You need access to tons of data to get the full picture, and that data often isn’t readily available.
Or it wasn’t until Databox Benchmark Groups came into play.
Benchmark groups are designed to provide you with the data you need to make informed decisions about your advertising strategy.
So let’s take a look at some key metrics from Facebook Ads Benchmarks for All Companies:
According to Facebook Ads Benchmarks for All Companies, the estimated amount of money spent on campaigns, ad sets, or ads during June 2023 was $1,586.12 (median value, 2474 contributors).
This aligns with our survey data, where almost half of the respondents stated that their average business monthly Facebook ad budget is between $1,000 and $2,000. This suggests that a budget within this range is common and could be a good starting point for businesses new to Facebook advertising.
When it comes to the number of leads generated from Facebook ads, the median value for June 2023 was 38.5 (based on data from 804 contributors). Our survey data supports this, with about a third of respondents stating they usually have around 40 lead events attributed to their Facebook ads in one month. Interestingly, about 44% indicated they had more than 50 lead events in a month. This indicates that with the right strategies, it’s possible to generate a significant number of leads from Facebook ads.
Let’s delve into the financial commitment businesses are making to their Facebook advertising efforts.
Almost half of the businesses surveyed spend between $1,000 and $2,000 on their Facebook ads each month, indicating that this is a common budget range for many companies. This aligns closely with the benchmark data that shows that the median value spent on campaigns was $1,552.15.
However, a small but notable group of businesses invest significantly more, with budgets exceeding $50,000 per month. While the range of investments is clearly heavily clustered in the “$5,000 or less” range, there’s apparently some room for significantly heavier spending on Facebook ads.
Next, we’ll explore the volume of potential customers businesses are attracting through their Facebook ads.
The survey data reveals that a large portion of businesses are successfully generating a substantial number of leads from their Facebook ads each month, with the largest share (43.75%) attributing more than 50 lead events to their ads. Another third has around 40 lead events per month. Our benchmark data isn’t far off, with the median number of leads being 46.
It appears that with effective strategies, it’s possible to generate a high volume of leads from Facebook ads.
Finally, we’ll examine the efficiency of these advertising efforts by looking at the average cost per lead on Facebook.
For about a third of the respondents, the average CPL is between $5 and $7. Interestingly, a significant number of respondents stated that their average CPL is more than $25. indicating that while Facebook can be a cost-effective platform for lead generation, costs can vary significantly depending on factors such as industry, target audience, and ad quality.
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Determining a “good” cost per lead (CPL) on Facebook can be a complex task, as it largely depends on the specific goals, industry, and profit margins of each business. However, insights and varied perspectives from industry professionals can provide valuable guidance.
Tom Greenspan from VS Mattress considers a CPL below $2-$3 to be good, as it strikes a balance between reach and cost efficiency. “We have determined this to be acceptable through our experience in running campaigns on the platform and by comparing our performance against industry benchmarks,” Greenspan concludes.
On the other hand, Alex Mastin from Home Grounds finds an average CPL of $6 acceptable for their business. “This falls in between the well-known average and falls well below extreme CPL,” says Mastin.
Explainerd’s Andre Oentoro goes higher.
“The amount of $8 – $10 is considered as a good CPL. This was determined based on several factors, including our profit margins, advertising goals, and the lifetime value of our customers. We also calculate our break-even point and set a CPL that is lower than that to ensure profitability.”
Andre Oentoro
Founder at Explainerd
However, a good CPL isn’t always a low one. VEM Group’s David Reid bucks the trend and believes a CPL is good if it supports the goals of their campaign, produces high-quality leads, and yields a favorable return on investment. For VEM Group, a CPL between $45 and $50 is considered good.
Improving your Facebook CPL is a multifaceted task that requires a combination of strategic planning, continuous optimization, and creative thinking. Let’s explore some expert strategies that have proven effective in lowering Facebook CPL.
Our survey respondents indicated that leveraging retargeting and narrowing the target audience had the greatest impact on lowering their Facebook CPL. A significant portion also stated that a combination of all the options presented had helped them to lower their Facebook CPL in equal measure.
Carefully defining your target audience is a crucial factor in lowering CPL. According to Jeremy Dawes from JezWeb, refining your target audience can decrease irrelevant clicks and conversions and, thus, reduce CPL. “We refined our audience targeting and ensured that our targeting is specific and relevant to our target audience.” Dawes further suggests that this precise targeting helped lead to a lower CPL.
Ameet Khabra also advises utilizing Facebook’s data to exclude demographics that don’t perform well.
“Facebook is a treasure trove of data, and we want to utilize it! We’ll look at what demographics are performing best with our ads and exclude the demographics that don’t perform well, which helps us from wasting our client’s ad spend; this demographic has proven that they don’t want your product so there’s no point in continuing to target them.”
Retargeting ads play a key role in reducing CPL by increasing brand recognition and improving the chances of conversion. Jonathan Aufray from Growth Hackers suggests running retargeting ads to target individuals who have interacted with previous ads or engaged with the website. “For example, only showing your ads to people who interacted with a previous ad or who stayed more than 1 minute on your website in the past 15 days. This way, people know your brand and have more chance to convert.”
Jamie Anderson goes one step further and says that “Every single lead gen campaign you run on Facebook should have a retargeting campaign set up to follow up with additional ads after the initial exposure.”
When done properly, retargeting allows you to generate leads much more cheaply.
Want to make sure your Facebook ads are performing and trending in the right direction? There are several types of metrics you should track, from costs to campaign engagement to ad-level engagement, and so on.
Here are a few we’d recommend focusing on.
Tracking these metrics in Facebook Ads Manager can be overwhelming since the tool is not easy to navigate and the visualizations are quite limiting. It’s also a bit time-consuming to combine all the metrics you need in one view.
We’ve made this easier by building a plug-and-play Facebook Ads dashboard that takes your data and automatically visualizes the right metrics to give you an in-depth analysis of your ad performance.
With this Facebook Ads dashboard, you can quickly discover your most popular ads and see which campaigns have the highest ROI, including details such as:
And more…
You can easily set it up in just a few clicks – no coding required.
To set up the dashboard, follow these 3 simple steps:
Step 1: Get the template
Step 2: Connect your Facebook Ads account with Databox.
Step 3: Watch your dashboard populate in seconds.
Constant testing and monitoring is key to any advertising campaign. Matt Holmes from Handshaking.com highlights the impact of identifying the specific audience most likely to be interested in the services.
“Overall, reducing Facebook Cost per Lead requires a combination of targeting the right audience, using engaging ad creative and messaging, and continuously testing and optimizing ad performance.”
Matthew Martinez of Diamond Real Estate Group follows a similar principle. “By tailoring the message and call-to-action to the intended audience, I can increase the relevance and effectiveness of the ad, which can ultimately lower the cost per lead.”
Both heavily rely on testing and monitoring every aspect of the ad campaigns.
“Another strategy is to constantly monitor and optimize the ad campaigns. This involves reviewing the performance metrics such as the click-through rate, conversion rate, cost per lead, and return on investment. Based on these metrics, I can adjust the ad targeting, ad creative, bidding strategy, and landing page design to improve the overall campaign performance,” Martinez says.
Building on the previous point, A/B testing can be a veritable gold mine of information.
Carsten Pleiser of Design Buffs recommends running multiple ads concurrently with the same budget and making little tweaks to your ad creative. “Facebook allows you to run multiple ads concurrently with the same budget and these tweaks can make a difference in conversion and click-through rate whilst lowering costs.”
That’s why, according to Katherine Hunter-Blyden of KHB Marketing Group, “the best way to lower your CPL for Facebook Ads is to continually run an A/B test to optimize your ad.”
“With an A/B test, you will vary just one thing in the ad (the ad copy, ad headline, image, etc.) or one thing in the target market (age, location, gender, interests, etc.).”
“Once you have a control ad (the one that works best), continue to optimize through testing as a number of elements (including competitor ads) can alter the results of your control piece.”
Fernando Fonseca from White Shark Media suggests creating new audiences to lower Facebook CPL. This involves including lookalike audiences to reach new potential clients and conducting remarketing campaigns targeting individuals who have visited the website or engaged with ads.
According to Alejandro Rioja, “A good trick is to make a lookalike audience instead of using old leads database. Since you receive leads exclusively from Facebook, a lookalike audience derived from the lead ads will be higher quality.”
Contrary to what might be expected, removing some strict demographic targeting constraints can lead to a dramatic drop in CPL
“This seems crazy, but it worked — we met with our Facebook rep who encouraged us to remove some of the strict targeting (demographic, mostly) for our location-based ads (folks within 3 mile radius of a local business). By removing the demographic constraints, we were forced to lean more on the ad creatives to do the heavy lifting. By running a mix of UGC ads and highly targeted, clear offer ads, we saw our CPL drop dramatically in the last 30 days.”
Casey Stanton
Founder at CMOx
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Facebook advertising is a powerful tool for businesses looking to generate leads and increase their online presence. The cost per lead on Facebook can vary widely, but with the right strategies and understanding of your target audience, you can achieve a lower CPL and maximize your return on investment.
However, navigating the world of Facebook advertising can be complex. From understanding the intricacies of CPL to optimizing your ad strategies, there’s a lot to consider. That’s where Databox comes in.
Databox is a comprehensive data management and analytics platform that can help you make sense of your Facebook advertising data. With Databox, you can track your Facebook ad performance, understand your CPL, and gain insights into how to optimize your ads for better results.
Whether you’re spending $1,000 or $50,000 on Facebook ads each month, Databox can provide you with the tools and insights you need to make the most of your investment. By understanding your current performance and identifying areas for improvement, you can work towards reducing your CPL and generating more leads for your business.
Ready to take your Facebook advertising to the next level? Start your journey with Databox today and discover how data-driven insights can transform your advertising strategy.
Davor is an English literature graduate and an avid reader with a passion for languages. Working as a translator, editor, and writer has allowed him to learn about a wide range of topics — making him something of a jack-of-all-trades when it comes to content. In his spare time, he reads, plays video games and boardgames, and runs/plays tabletop RPGs.