Are you wondering how to set your Facebook Ads budget? Determining the budget for your Facebook ad campaigns is one of the top questions I get from clients.
Unfortunately, this is an impossible question to answer in a one-size-fits-all way because it’s going to depend on a lot of factors, including what the cost of your product is, or how much you can bear to spend on a lead, link click or video view, or whatever your objective is.
The cost of your Facebook Ads will also depend on how you’re optimizing your ad.
You might have a video ad that is optimized for Purchases and you can’t compare that to the results of a video ad that is optimized for Video Views because they will be wildly different.
I’m going to give you a couple of things to think about when determining your Facebook Ads budget. This information will help you if you’ve been running Facebook Ads for a while or if you’ve never run Facebook Ads before.
Factors to Consider in Facebook Ads Budgets
- Cost of your Product
- Conversion Rate of your Sales Page or Lead Magnet Page
- Optimization of your ads
Factor 1: Cost of your Product and What you are willing to spend per lead or purchase
The first thing to consider is what you can bear to spend on a lead or a purchase, things like that.
For example, if you give a free webinar where you deliver some great content, and at the end of the webinar, you sell your product that costs $1,000.
If you know that, in general, approximately 10% of the people convert into sales and you have 100 people register with Facebook ads, you’ll convert 10 of those people into sales which would earn you $10,000.
Now you have to decide what percentage of that $10,000 you are willing to spend on those leads. You may have different costs involved for delivering that product or you may have a “cost of goods sold” that has to be factored into your return.
In general, sales conversion rates can typically be anywhere from 2% to 10% but again that depends on the price point, the effectiveness of the sales page or the sales process, and other factors.
Sometimes, your product is new and you may not know what your conversion rate is.
You can see in some of these examples that different conversion rates and different price points make a big difference in the Net Revenue you’ll see after ad costs.
Factor 2: What you are optimizing your ad for
The second piece that you need to realize is that different types of ads are going to convert at different costs per result based on the type of optimization you have.
For example, if you’re advertising a Facebook video, you might get $0.03 per ThruPlay which means that you can be pretty effective in $5 or $10 a day in getting lots of video views versus something you’re advertising as a lead generator which might be $4 or $6 or $2 per lead, which will then lead to your goals further down with purchases.
Or you might be advertising something that is a high-ticket item that costs $3,000, for example, maybe you’re doing a retargeting ad, and you might be okay with spending $300 per purchase.
Typically, it’s best to optimize your Facebook ad for your true goal such as a Lead or a Purchase.
Factor 3: Who is your target audience is
The next thing to think about is making sure that your targeting fits the budget as well.
If you are targeting a local audience, you can’t spend $6,000 a day on your advertising because you have a smaller audience.
In the video in this post, I walk through the example of targeting a local audience with some keywords and I end up with an audience size of 144K – 170K. If I were to set my budget to $6,000 a day, my daily reach could be between 41K – 118K, which is a high percentage of the actual number of people who are in this audience.
You don’t want to overspend for that audience because that means they will see your ad several times a day and be annoyed.
Make sure your overall budget and your daily budget, are in line with the actual size of your audience and watch the frequency to make sure you’re not overspending on your ad.
General Tips: Facebook Ads Budget
There are a lot of things to think about when setting up an ads budget.
If you don’t know some of the baseline numbers and this is a new campaign that you’re not quite sure about, a good rule of thumb is to budget anywhere from $10 to $25 a day per ad, run the ad for maybe three to five days.
Then take a look at cost per result, as well as things like click-through rate to determine if people are interested in your ad, and that will give you some idea of success for those particular ads.
The way to get better results in all cases is to split test (check out my video on beginner split testing strategies) and keep running the ads that are doing well and turn off the ads that aren’t.
Set up your Facebook Ad Reports so that you are looking at the best stats along the way to make sure people are clicking on the link, adding products to the cart, and then purchasing (as an example of a purchase flow).
- Budget $10-25/day per ad
- Run the ad for 3-5 days
- Cost per Result
- Click thru Rate (link CTR better than 1%)
- Other critical stats that may affect the final outcome such as Cost per Add to Cart, etc.
- Split Test your Ads
- Continue running the ads that are getting results and turn off the ads that aren’t
If you are looking to get better results from your Facebook ads check out my e-book 50 Inspiring Examples of Facebook Ads That Work: https://www.andreavahl.com/50ads