What I've found is that when I target one author who has 250k followers, then narrow it to 50 miles around a location that is related to the book the clicks jump from about .20 to $1.50 or more. The audience is narrowed to 10k people. I've done the same thing with an audience that is 3 million and the clicks end up in the .50 range. Still too high because the audience only grew to about 25k people.
My theory is that FB looks for the low hanging fruit first. They target the people who are most likely to click out of the target audience. So odds are an audience of 250k has a much larger number interested people than a small one.
One caveat, I have done ads with a small audience of about 15k directed at one author who is a love him or hate him target. I had a review quote that mentioned the book I was advertising was similar so I used it in the ad. I got clicks at .08 for about 3 weeks then they slowly climbed to about .30 over the next few months (at which point I increased the audience size by adding in more authors, which brought the CPC back down).
So, it's not necessarily the audience size. Rather, it's how targeted is ad to the specific audience in relation to any other ad FB could be showing them instead (how much low hanging fruit in the audience).
