Introduction
When used effectively, Facebook Ads have the potential to help any business, no matter how big or small it is. Since Facebook has more than 2.9 billion monthly active users, it dwarfs almost every other platform for business. However, setting a budget for your campaigns is essential to fully taking advantage of this platform.
Setting a spending limit that’s too low might mean your ads won’t even appear. On the other hand, setting a spending limit that’s too high means you’re wasting money without any guarantee that you will have a positive outcome. The good news? You can find the ideal middle ground by knowing your objectives, understanding your audience, and employing strategic techniques.
This post will discuss setting a suitable Facebook Ads budget while achieving some results for your business.
Clarify Your Goals and The People You Want to Advertise To
Before calculating a budget, ask yourself what you are trying to do with that campaign.
Develop A Purpose
Is your primary objective getting more leads, sales, or traffic to your website? You can get people to download your app or raise awareness for your brand. Whatever your goal is, it will determine not only the creatives of your ads but also the amount of money you will put in.
For example, if the campaign’s goal is only to spread brand awareness, then there’s no need to spend much money since you’d focus on getting more impressions.
Where your ambition is in securing leads, you must invest abundantly in ads; otherwise, you will spend much more than anticipated.
Target Audience Understanding
Who would you like to contact? Speaking of Facebook, the demographic, location, interests, and behaviors are sufficient for advanced audience targeting. Exactly telling it impacts how well you can reach those likely to engage with the content.
For instance, describing the audience as ‘Sydney Women aged 25–40 who like yoga’ will have higher resonance than targeting ‘All Women in Australia,’ where the audience is vague. This helps to understand how to create Facebook ads, but more significantly, focusing on whom the ads are to be is essential.
Facebook Ads Essentials on Budgeting
Now that your goals and audience are clear, it’s time to understand budget types and Facebook’s charging model so that you can make effective decisions and control costs.
Hourly and Lifetime Budgets for Advertising
While setting your campaign up on Facebook, there are two different options, the first one being:
• Daily Budget
This works in the sense of how much you plan to spend on your ads in Australia for that specific day. This one works best with repetitive campaigns as it reinvests in itself and can get the best results consistently.
• Lifetime Budget
As the name suggests, this type of budget ends once the specific amount is reached, which is set for the campaign duration you wish to have.
It’s strategically suitable for limited-time offers or promotions with a starting and an ending time.
Work Out Your Budget
Typically, Facebook ads will be charged on either CPC, CPM, or CPA. Understanding these metrics can assist you in budgeting your advertisements and reaching your target audience.
• CPC campaigns might range from $0.50 – to $2 per click based on the type of targeting and how competitive the market is.
• CPM campaigns are directed towards reach and engagement; therefore, the cost will generally fall to $5-$12 per 1,000 impressions.
• CPA campaigns that are conversion-focused, which could include filling out a form or making a purchase, will, on average, be high, ranging from $5-$50 or even more.
Utilizing Mathematical Calculations in Predicting Ad Budgets of Facebook
Now, to give context on how to estimate the ad budgets for Facebook, consider a situation where a business wants to increase the scale of its ad spend over the next 6 months. We set the scenarios which head start in the following manner:
• Ad spend per month is $5,000.
• The growth rate per month is 10%.
• The projection period is for 6 months.
We can calculate the projected monthly ad spend using the formula for compound growth:
\[P_n = P_0 \times (1 + r)^n\]
Where:
• \( P_n \) = projected ad spend after \( n \) months
• \( P_0 \) = initial ad spend ($5,000)
• \( r \) = monthly growth rate (10% or 0.10)
• \( n \) = number of months
Let’s calculate the projected ad spend for each month:
Month 1:
\[P_1 = 5000 \times (1 + 0.10)^1 = 5000 \times 1.10 = 5500\]
Projected spend = $5,500
Month 2:
\[P_2 = 5000 \times (1 + 0.10)^2 = 5000 \times 1.21 = 6050\]
Projected spend = $6,050
Month 3:
\[P_3 = 5000 \times (1 + 0.10)^3 = 5000 \times 1.331 = 6655\]
Projected spend = $6,655
Month 4:
\[P_4 = 5000 \times (1 + 0.10)^4 = 5000 \times 1.4641 = 7320.5\]
Projected spend = $7,320.50
Month 5:
\[P_5 = 5000 \times (1 + 0.10)^5 = 5000 \times 1.61051 = 8052.55\]
Projected spend = $8,052.55
Month 6:
\[P_6 = 5000 \times (1 + 0.10)^6 = 5000 \times 1.771561 = 8857.81\]
Projected spend = $8,857.81
Set of Conclusions
If the ad spend on advertising is increased by 10% every month:
By keeping the baseline as $5000 in month 1, the total ad spend will be around $8857.81 in month 6.
Such a forecasting method offers a systematic and rational approach toward expansion by increasing the ad budget and illustrating where growth could occur.
Start With a Modest Budget, Then Expand
Wait till you have achieved enough before going on a spending spree. Start with a low daily minimum of AUD $20-$50, then analyze the performance before upping the budget. Afterward, spend as you please as per the results.
Setting a Limit on Your Facebook Ads
Setting a budget is crucial. There are steps to follow to achieve a set budget for a Facebook advertisement campaign.
Step 1. Fix The Dates Right
Deciding the campaign’s duration is the first step and one of the more critical steps. The funds allocated for the campaign will vary depending on whether it lasts for 3 weeks a month or longer.
Step 2. Set The Monetary Limit on Facebook Manager
When starting Facebook Ads, there are limits on how much might be spent per day or for a lifetime. Setting these is vital as it is the first step in controlling exaggerated spending.
Step 3. Always Be Prepared For Changes
Ever since the campaign began, spend time observing how well Facebook reports performances regarding the campaign. The insights provided by Facebook assist in deciding efficiently on a CPC promotion strategy.
For instance, favor shifting the promotions so that the coffee fans in Melbourne are targeted over Sydney with fewer promotions.
Pro Tip
“Ad Scheduling” on Lifetime Budgets helps gauge what times are best suited for your target audience and when to run your ads to ensure maximized engagement and sponsorship.
For example, if your target demographic is primarily active at night, run your advertisements from 6 PM until 10 PM.
Case Studies and Examples
Example 1
The Victorian fashion hub set an AUD 30 daily budget to target women between 18 and 40 interested in sustainable fashions. They were able to garner 10,000 impressions and 1,000 clicks over 2 weeks and achieve a 7 percent conversion rate, which resulted in the sales of 70 items. A further increase in their daily budget to AUD 50 saw a 50 percent increase in their conversions.
Example 2
Over 500 pre-start app installs were funded from a 10-day campaign targeting users to call them and try them out during that time. Their total lifetime budget was restricted to AUD 500, roughly 500 starts, which they aim to receive from CPA bidding on the targeted.
Tools and Resources for Budgeting Facebook Ads
Make productive use of platforms that help consolidate your budget planning and maximize the optimization of advertisements.
• AdEspresso by Hootsuite allows for more straightforward campaign creation and recommends a suitable dollar figure.
• Facebook Ads Manager is the ultimate platform for advertising, featuring advertisements and graphs and establishing priorities and complex moves to streamline functions.
• Google Analytics helps track and calculate your ROI on investments outside Facebook.
• Without a designer, a simple ad can be produced via Canva cheaply.
Using these tools allows better budgeting over campaigns, leading to better resource delivery c.
Use Your Full Advertising Budget
Do not fret about your Facebook Ad budget; it is just numbers. Just set some objectives, build compelling audience profiles, and choose the proper funding mechanisms, and you will be creating campaigns that will have an impact.
Achieving objectives will never be a one-time thing; there will be consistent monitoring and tracking and post-mortem of campaign performance. Research and allocate varying budgets for different parts of the campaign while your business expands or whenever there are changes in trends.
Without any further ado, let’s get you started! Use these steps as an outline for your next campaign to help you maximize the potential of Facebook Ads for your company’s growth. No idea how to even begin? Jump into Facebook Ads Manager and create a campaign designed specifically for your company to get your feet wet.