What to Know About Facebook Ad Budgets

What to Know About Facebook Ad Budgets

If you’re planning in the coming yew year to use Facebook ad campaigns and you have a small budget, or you just want the best possible ROI, then there’s a lot you need to know. 

Generally, there is a required Facebook minimum ad spend set based on the type of ad you’re using. 

A lot of factors influence the required ad spend, like not only the type of ad but also the currency used and even the season. For example, the holiday season is going to mean your advertising campaign is likely to be more expensive. 

The following are important things to know about Facebook ad budgets and spending, so you can go into 2023 prepared with a plan for strategic social media ad spending. 

Understanding Budgets

In the most basic term, a budget is how much you want to spend to show people your ads. It’s a form of cost control. 

Types of Ad Budgets

Any Facebook ad budget can be a campaign or ad set budget, and then both types can be further categorized as a daily or lifetime budget. 

Campaign budgets apply to your entire ad campaign, so Facebook will distribute your budget across your whole campaign based on the ads it finds the best opportunities for. If you have flexibility, this option works well. Campaign budgets are also known as Advantage campaign budgets. 

You are setting one overall campaign budget that, in real-time, will continue to distribute to ad sets that have the best opportunities. Campaign budgets can make it simpler to set up a campaign and can reduce the manual management of budgets you have to deal with. You can get the most results from the lowest cost budget. If you have at least two ad sets, you might opt for an advantage campaign budget. 

The benefits include increased automation and delivery and better overall performance. 

Ad set budgets let you choose a particular group of ads for a budget to apply to, giving you more control over the ads that are getting the biggest share of your budget. If you have different optimizations or bid strategies for different ads in a campaign, you might go with this option. 

Rather than setting a campaign budget, you are setting a budget, as mentioned, for an individual ad set, and the benefit is more control in delivery. 

Daily budgets are a simple, set amount of money you’ll spend each day. Every day, Facebook spends whatever that amount of money is to promote your ads. After that amount is spent, your ads aren’t shown anymore until the next day. With that in mind, Facebook might spend up to 125% of its budget on optimization. 

Lifetime budgets go throughout the entire lifespan of your ad campaign, and that will maximize your results because it gives Facebook control over how to spend your budget based on opportunities that may arise at any time during a campaign. 

How to Create a Successful Campaign

Even if you fund your campaign well, it might not be successful if you don’t do certain other things. 

For example, you need to keep optimization goals in mind when you’re designing and implementing ad campaigns on Facebook. Your ad optimization lets Facebook know what you hope the outcome is for your campaign. The system can then bid accordingly during ad auctions. 

Your ad’s total value is important as well. Facebook will look at the total value of an ad by assessing three metrics—your bid, the estimated action rates for the ad, and the ad quality. If an ad has the highest bid, it usually gets the opportunity. If the ERA or quality is too low, the space goes to the next bid. 

Your ad might be high quality and have a high bid, but you won’t get conversions if it’s not in front of the right people. You have to carefully identify your target audience to ensure the effectiveness of your ads. 

How Much Should You Spend?

Before you can decide the specific ways you want to allocate your ad budget, you need to know what you’re going to spend overall. 

A marketing budget for any business might be 5-12% of revenue, but newer companies might want to spend on the high end of that for brand awareness and aggressive growth. For an established company, the right amount might be closer to 5%.

Numbers to consider as you’re determining your overall Facebook ad budget include cost per lead and cost per core event, as well as cost per customer acquisition. 

Cost per lead isn’t a sale, but it’s what you need to make a sale. 

The second metric we listed is the cost per core event. If you need a conversation to happen before a sale can be made, you should put a figure on what you can reasonably spend for this event to happen. 

You’ll also have to figure out your cost per customer acquisition or how much it costs you to acquire a new customer. 

After you decide on monthly ad spend, you can work more towards figuring out how you’re going to distribute it across your Facebook ads. 

For example, you might want to put 20% of your Facebook ad budget toward education and engagement. Then, maybe you put 60% of your budget toward promotion and generating conversions and the final 20% toward retargeting. 

Avoid Ad Budget Mistakes

There are a few common mistakes businesses make with their Facebook ad budgets and spending. First, make sure you’re giving campaigns enough time to get initial data, see what the data is telling you and make smart, insightful adjustments as needed. 

Another mistake is not spending enough on your Facebook ads. If you’re not spending enough, then your budget is thinly distributed to the point you might not see any results, and this isn’t giving you a real view of what advertising on Facebook could do for your business. 

Finally, make sure you learn how to read the data in Ads Manager. You need this data to make decisions going forward. 

About the author

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