When running Facebook (Meta) Ads, the most important KPI (key performance indicator) is customer acquisition cost (CAC). However, many advertisers are unsure how their CAC compares to their competitors. This information is critical in evaluating the success of the campaign.
In this piece, we have broken down the average Facebook CAC by:
- Industry
- Price Point of Product
- Product Type (Physical, SAAS, App, Etc.)
- Offer Type (Free + Shipping, Lead Magnet, Etc.)
- Ad Placement
Additionally, each of these is sorted into organic and paid. For those unsure of the difference between organic and paid:
- Paid Facebook Advertising: Marketing dollars are paid to Meta in exchange for impressions on the ad platform. Users do not choose to see your ads.
- Organic Facebook Advertising: Marketing dollars are spent in creating content to post for free for followers and those exploring Facebook to find. Generally, users must actively search for your posts, see them in explore sections, or follow your page to find them.
Calculating CAC
To calculate CAC, we use the following formula:
Customer Acquisition Cost (CAC) = Total Amount Spent on Marketing / Number of New Customer Acquired
Now, we will begin the analysis.
Facebook CAC by Industry
In this table, we’ve analyzed the average CAC from Facebook by industry.
| Industry | Organic CAC | Paid CAC |
|---|---|---|
| Fashion and Apparel | $16.79 | $50.04 |
| Health and Wellness | $14.14 | $42.14 |
| Beauty and Personal Care | $22.22 | $66.22 |
| Home Decor | $10.73 | $31.98 |
| Electronics and Gadgets | $4.09 | $12.19 |
| Sports Equipment and Gym Equipment | $15.60 | $46.50 |
| Pet Products and Pet Care | $36.49 | $108.74 |
| Subscription Services | $30.30 | $90.30 |
| Online Courses and Educational Content | $20.20 | $60.20 |
| Jewelry | $37.42 | $111.52 |
| Recommerce | $26.26 | $78.26 |
| CBD Products | $42.42 | $126.42 |
| Kitchenware | $10.42 | $31.04 |
| Earth-Friendly Products | $22.22 | $66.22 |
| Home Office Equipment | $16.67 | $49.67 |
Two factors heavily influence the CAC in an industry. Firstly, the average cost of a product in that industry. If the average cost of the product is $100,000, then the advertiser will spend much more to acquire the customer. Secondly, the number of advertisers will heavily affect the CPM (cost per 1,000 impressions). If impressions are expensive, it will amplify the cost needed for customers to make their way through the funnel.
Facebook CAC by Price Point
Below, you will see how CAC changes on Facebook based on the product’s price point.
| Price Point | Organic CAC | Paid CAC |
|---|---|---|
| Under $10 | $5.05 | $9.03 |
| $10 to $25 | $7.07 | $10.54 |
| $25 to $50 | $11.36 | $22.58 |
| $50 to $100 | $15.15 | $45.15 |
| $100 to $200 | $30.30 | $90.30 |
| $200 to $500 | $70.70 | $210.70 |
| $500 + | $151.50 | $451.50 |
It is a principle of advertising that, generally, if a product is more expensive, an advertiser must spend more money to acquire a customer for that product given normal levels of competition and supply/demand.
Facebook CAC by Product Type
Next, many people found it helpful to have a breakdown of the CAC by product type.
| Product Type | Organic CAC | Paid CAC |
|---|---|---|
| Physical Goods | $10.10 | $30.10 |
| Digital Products | $10.61 | $31.61 |
| Software as a Service (SaaS) | $12.63 | $37.63 |
| Applications (Apps) | $2.00 | $5.96 |
| Subscriptions | $16.67 | $49.67 |
| Tickets for Events | $40.40 | $120.40 |
| Online Courses | $23.23 | $69.23 |
| E-books | $2.58 | $7.68 |
| Membership Access | $26.51 | $79.01 |
| Services (e.g., consulting, design services) | $277.75 | $827.75 |
The difference in CAC by product type stems from the psychology of buying a product. Many people view downloading an app as inconsequential but may view ordering a physical product as a greater risk, especially if they have no prior brand relationship. Each product type will take a place in the consumer’s mind as either less likely or more likely to achieve what the consumer wishes to achieve by obtaining the product, which determines the average CAC by product type.
Facebook CAC by Offer Type
Some offers convert customers cheaper than other offer types. However, only some offer types are reasonable for some businesses.
| Offer Type | Organic CAC | Paid CAC |
|---|---|---|
| Free Plus Shipping | $9.57 | $28.51 |
| Lead Magnet | $12.30 | $36.67 |
| Coupon Codes | $36.94 | $110.10 |
| Free Shipping | $34.21 | $101.94 |
| Buy One, Get One Free (BOGO) | $17.78 | $52.99 |
| Flash Sale | $15.04 | $44.83 |
| Exclusive Access | $39.68 | $118.26 |
| Giveaways | $6.83 | $20.35 |
| Loyalty Points | $42.42 | $126.42 |
| Early Bird Discounts | $28.73 | $85.62 |
| Seasonal Offers | $20.52 | $61.15 |
| Trial Offers | $31.47 | $93.78 |
| Upsell Discounts | $25.99 | $77.46 |
| Payment Plan Offers | $23.26 | $69.31 |
Some offers are more convincing to consumers than other offers. Combinations of urgency and scarcity are often what push people over the edge, and many companies create urgency and scarcity in different ways.
Facebook CAC by Ad Placement
Depending on the prominence of the ad placement, CAC may be higher or lower than the baseline.
| Facebook Ad Placements | Organic CAC | Paid CAC |
|---|---|---|
| Feed | $6.83 | $20.35 |
| Right Column | $39.68 | $118.26 |
| Instant Articles | $42.42 | $126.42 |
| Marketplace | $36.94 | $110.10 |
| Video Feeds | $23.26 | $69.31 |
| Stories | $12.30 | $36.67 |
| Search Results | $31.47 | $93.78 |
| In-Stream Videos | $28.73 | $85.62 |
| Suggested Videos | $34.21 | $101.94 |
| Reels | $20.52 | $61.15 |
| Instagram Ad Placements | Organic CAC | Paid CAC |
|---|---|---|
| Feed | $9.57 | $28.51 |
| Stories | $15.04 | $44.83 |
| Explore | $25.99 | $77.46 |
| Reels | $17.78 | $52.99 |
| Messenger Ad Placements | Organic CAC | Paid CAC |
|---|---|---|
| Inbox | $50.63 | $150.90 |
| Sponsored Messages | $53.37 | $159.06 |
| Stories | $56.11 | $167.22 |
| Audience Network Placements | Organic CAC | Paid CAC |
|---|---|---|
| Native, Banner and Interstitial | $31.47 | $93.78 |
| Rewarded Videos | $47.90 | $142.74 |
| In-Stream Videos | $45.16 | $134.58 |
There are a multitude of ad placements available, but some perform far better than others. Why? Because ads sell based on their ability to break patterns and grab attention. If an ad is located in a placement where it cannot easily grab attention, then the CAC will be greater.
Next Steps: Reducing Your Facebook CAC
If your campaigns are underperforming relative to the average, we recommend trying some of these best practices to reduce Facebook CAC.
Single Variable Iterative Testing
The key to lowering CAC with Facebook ads is single-variable iterative testing. Instead of continually creating new campaigns, ad sets, and ads, companies should build on current campaigns.
For example, if an ad is working well within one audience, one may consider duplicating it and changing just the audience for each of the duplicates. It is possible that for some of the duplicates, the CAC will be lower than it was in the original ad set as a better audience-ad resonance has been achieved.
On the ad side, one may consider testing multiple versions of the ad within the same audience. The headline, body text, image, or landing page could be altered and tested. Below is a list of potential testing opportunities, and each should be tested individually.
Facebook Ad Primary Testing Variables
| Interest Audience | Custom Audience |
| Ad Image/Video | Demographics (Age, Gender, etc.) |
| Ad Headline | Ad Placement |
| Landing Page Headline | Landing Page Images |
| Product Price | Landing Page Copy |
| Checkout Page Layout | Shipping Cost |
**This is not a comprehensive list, but a good place to begin testing.
Segmenting Campaigns into TOF, MOF, and BOF
How often do you purchase a product on impulse after seeing it once? Perhaps for cheap products, but most people want to see various pieces of information and benefits of the product before purchasing. For this reason, we advocate a multi-level Facebook ad structure.
Top of Funnel
Ads in this stage are meant to illicit attention and separate potentially interested buyers from the general Facebook population. Conversion objectives such as video views or reach will work best here. The idea is to reach as many people as possible so people interested can metaphorically raise their hand and say “I am not ready to buy, but show me more!”
Middle of Funnel
In the MOF, we place all people who have interacted with one of our TOF ads. This can be through watching the video, engaging with the post, or checking out the profile. If they do, we recommend placing them in a four-week retargeting cycle where you show a wide variety of ads highlighting many different features of the product. For this stage, our goal is to get them to the website. So, we will use traffic or view content conversion objectives.
Bottom of Funnel
Lastly, the BOF is where we give our most engaged audiences (high % of video views or website visits) a direct, clear call to action to buy the product. This may be in the form of a coupon, free shipping, or other offer. For this stage, we use add-to-cart or purchase conversion objectives.
If you have any questions on this report or would like help lowering your CAC, please reach out to us on the Contact Us page.
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