Solved: Facebook Ads Cost 600% Higher Than Similar Business

Hi there,

Thanks for reaching out!

That's a really common and frustrating question, especially when you're just starting out. Honestly, you're chasing a bit of a ghost with that 'cost per result compared to similar business' metric. It’s a feature Meta has tested on and off, and it's often buggy, unreliable, or just disappears completely from the dashboard, which is probably why you can't find it now.

But here's the brutally honest truth: it doesn't matter. That metric is a distraction. The real question isn't why you can't find the benchmark, but why your costs were 600% higher in the first place. That's the problem we need to fix. Forget the comparison game; let’s focus on your own numbers and build a strategy that actually works and brings those costs down dramatically.

That 'Similar Business' Metric is a Red Herring...

Let's get this out of the way first. That comparison tool is, frankly, pretty useless. The categories Meta uses for "similar businesses" are incredibly broad. It could be lumping your handcrafted jewellery store in with a multi-million-pound fast-fashion brand, or your B2B SaaS product with a local IT repair shop. Their situations, margins, and audiences are completely different, so the comparison is meaningless.

Relying on external benchmarks like this is a trap that keeps you focused on the wrong things. Your success doesn't depend on being slightly better than some anonymous average. It depends on building a system where you put £1 into the machine and get £3, £5, or even £10 back out. Your own Return on Ad Spend (ROAS) and Cost Per Acquisition (CPA) are the only numbers that truly matter.

Just to illustrate how varied these costs can be, have a look at some typical cost per lead ranges we see across different sectors. It becomes obvious pretty quickly that a single benchmark is not helpful at all.

So, let's stop chasing that metric and start digging into the real reasons your costs are high. It almost always boils down to two things: your targeting and your offer.

We'll need to look at your ICP, which is a Nightmare, Not a Demographic...

The number one reason new advertisers burn through cash is because they target people based on sterile demographics. "Women aged 25-45 who live in London and are interested in fashion" is not a target audience. It's a lazy guess that speaks to nobody in particular.

Your ad cost being 600% higher tells me you are probably showing your ads to a huge number of people who will never, ever buy from you. To fix this, you have to stop thinking about *who* your customer is and start thinking about *what their nightmare is*. Your Ideal Customer Profile (ICP) isn't a person; it's a problem state.

What is the specific, urgent, expensive, career-threatening problem that keeps your ideal customer awake at 3 AM? Your ad's job is to show up in that moment and offer a lifeline.

• -> For a service business: Your client isn't just "looking for a fractional CFO". Their nightmare is staring at a cash flow projection that feels like a total guess, terrified they're one bad month away from not making payroll. Your ad needs to speak to that fear directly.
• -> For a B2B SaaS product: The user doesn't "need a FinOps platform". Their nightmare is getting a surprise AWS bill that's 30% higher than last month and having zero idea why. Your ad should reflect that feeling of panic and then offer immediate relief.
• -> For an eCommerce store: The customer isn't just "interested in handcrafted jewellery". Their frustration is trying to find a unique, meaningful gift that doesn't look like it came from a mass-market factory, and they're running out of time before a special occasion.

Once you've identified that nightmare, your targeting becomes laser-focused. Where do people in this state of pain go for information? What podcasts do they listen to (e.g., 'Acquired')? What industry newsletters do they actually read ('Stratechery')? What software do they already use (HubSpot, Shopify)? Are they members of specific Facebook Groups ('SaaS Growth Hacks')? This is the intelligence that allows you to build audiences that are pre-qualified and desperate for your solution. This is the work you must do before you spend another pound on ads.

I'd say you need to fix your offer so they can't ignore it...

Once you're targeting the right nightmare, you need an offer that acts as the perfect solution. A weak, generic offer to a well-targeted audience will still fail. Your ad and landing page need to present a message they simply can't ignore.

You need to frame your product or service not by its features, but by the transformation it provides. A great way to structure this is the Before-After-Bridge framework.

• Before: Describe their current nightmare in vivid detail. Twist the knife a little. "Your cloud bill just arrived. It’s 30% higher than last month, and your engineers have no idea why. Another fire to put out."
• After: Paint a picture of the dream state. "Imagine opening your cloud bill and smiling. You see where every dollar is going and waste is automatically eliminated."
• Bridge: Position your product as the simple, obvious bridge to get them there. "Our platform is the bridge that gets you there. Start a free trial and find your first £1,000 in savings today."

This brings us to the most common failure point in advertising: the call to action. The 'Request a Demo' or 'Contact Us' button is arrogant. It asks a busy, high-value prospect to give up their time to be sold to. It's a high-friction, low-value request that screams "I'm just another vendor".

You must delete it. Your offer's only job is to deliver a moment of undeniable value—an "aha!" moment—for free. This builds trust and makes them sell themselves on your solution.

• -> For SaaS: A free trial or a freemium plan (no credit card required) is the gold standard. Let the product do the selling.
• -> For an agency/consultancy: A free, automated audit tool (e.g., an SEO audit that finds their top 3 keyword opportunities). For us, it's a free 20-minute strategy session where we audit failing ad campaigns. We solve a small problem for free to earn the right to solve the big one.
• -> For a high-ticket service: A free guide, webinar, or a short interactive video module that teaches them something valuable. Give away your expertise.

A powerful offer makes the sale a formality. A weak offer makes every click a wasted opportunity, driving your costs sky-high.

You probably should stop paying Facebook to find non-customers...

This might be the most important technical change you can make. When you set up a new campaign, Facebook asks for your "Campaign Objective." Many new advertisers choose "Reach" or "Brand Awareness," thinking they need to "warm up" the audience first. This is a catastrophic mistake.

When you select "Brand Awareness," you give the algorithm a very specific command: "Find me the largest number of people inside my targeting for the lowest possible price."

The algorithm, being a ruthlessly efficient machine, does exactly what you asked. It actively seeks out the users who are least likely to click, least likely to engage, and absolutely, positively least likely to ever buy anything. Why? Because those people's attention is cheap. Nobody else is bidding for them. You are literally paying the world's most powerful advertising platform to find you the worst possible audience for your product.

Awareness is a byproduct of making sales to happy customers, not a prerequisite for making a sale. You must trust the algorithm. If you want sales, choose the "Sales" objective. If you want leads, choose the "Leads" objective. This tells Facebook's AI to ignore the cheap, passive users and go hunt for people who have a history of doing the thing you want them to do (e.g., filling out forms, making online purchases).

This single change can have a more profound impact on your cost per result than any other tweak you make in the Ads Manager. Its a simple fix but a really powerful one.

You'll need to understand the maths of profitable advertising...

Okay, so if we're ignoring the "similar businesses" benchmark, what should you be focused on? The real question isn't "How low can my Cost Per Lead go?" but "How high a Cost Per Lead can I *afford* to acquire a great customer?"

To answer that, you need to know your Customer Lifetime Value (LTV). This is the total profit you can expect to make from a single customer over the entire time they do business with you. Once you know this number, advertising becomes a simple maths problem, not a guessing game.

Here are the components:

• Average Revenue Per Account (ARPA): What do you make per customer, per month/year?
• Gross Margin %: What's your profit margin on that revenue after costs of goods sold?
• Monthly Churn Rate %: What percentage of customers do you lose each month?

The calculation is: LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

Use the calculator below to figure out your own LTV. Play with the numbers to see how small changes can drastically affect what a customer is worth to you.

Suddenly, a £50 lead doesn't seem so expensive when you know each customer is worth £10,000, does it? This maths frees you from the tyranny of chasing cheap, low-quality leads and allows you to confidently invest in acquiring high-value customers. This is the metric you should be obsessed with, not some vague comparison score.

This is the campaign structure you'll need...

So how do you put this all together in Ads Manager? You need a logical structure that targets customers at every stage of their buying journey. We typically think of this as a funnel: Top of Funnel (ToFu), Middle of Funnel (MoFu), and Bottom of Funnel (BoFu).

Here’s how I would prioritise testing audiences within this structure. The higher up the list, the more likely they are to convert:

Retargeting (BoFu/MoFu):

1. Added payment info / Initiated Checkout (BoFu)
2. Added to Cart (BoFu)
3. Website visitors who viewed specific product/service pages (MoFu)
4. All website visitors in the last 30-90 days (MoFu)
5. People who watched 50%+ of your video ads (MoFu)

Prospecting (ToFu):

1. Lookalike audience of your highest-value customers (1%)
2. Lookalike audience of all previous customers (1%)
3. Lookalike audience of people who added to cart (1%)
4. Detailed targeting audiences built around your ICP's nightmare (specific software, influencers, publications, etc.)

You should have separate campaigns for Prospecting and Retargeting. Always start with a conversion objective. Set them up and let them run. Your job is to test new creatives and audiences within this structure, turning off what doesn't work and scaling up what does. This systematic approach is how you bring that 600% cost down and build a predictable, profitable advertising machine.

I've detailed my main recommendations for you below:

This is a lot to take in, I know. But if you focus on these fundamentals instead of chasing vanity metrics, you will see a massive improvement. Here is a simple, actionable plan to get you started.

Navigating all of this can be overwhelming, especially when you're also trying to run a business. The principles are simple, but the execution requires experience, constant testing, and a deep understanding of the platform's nuances. Getting it wrong can mean thousands of pounds wasted with little to show for it.

This is where expert help can make a huge difference. An experienced paid ads specialist can help you implement this entire framework—from defining your ICP and crafting your offer to building and optimising the campaigns—in a fraction of the time it would take to learn on your own, saving you from costly mistakes along the way.

If you'd like to get a second pair of of eyes on your account and discuss a tailored strategy for your business, we offer a completely free, no-obligation 20-minute consultation. We can walk through your current setup and give you some actionable advice you can start using straight away.

Hope this helps!

Regards,

Team @ Lukas Holschuh