If you don't spend enough on your Facebook Ads budget, you risk missing out on conversions. If you spend too much on a particular ad set or campaign, your marketing budget can quickly vanish into thin air. But how do you find it optimal allocation for your individual online company?
Of course, there is no one-size-fits-all formula that can be used as standard. Because when determining the ideal allocation of your budget, there are many business-specific factors that count.
Sounds complicated? Not if you understand the logic behind the Facebook Ads funnel. With our two-part guide, we'll help you find the perfect split for your ad budget and achieve your marketing goals.
In the first part, we lay the foundation for understanding how Facebook Ads work in the first place. In the second part, we explain how to build the optimal marketing funnel for your business and how to divide the ads into the individual levels in order to achieve maximum success.
Types of Facebook advertising budgets
If you have your budget for Facebook advertisements you need to make two decisions:
- How to split your advertising budget across all of your Ad Sets: Campaign budgets vs. ad set budgets
- How Each Ad Set Uses Its Allotted Budget: Lifetime budget vs. daily budget
Depending on the type of your ad campaign, these budget decisions can help make your ad spend profitable.
Campaign budget vs. ad set budget
Chances are you plan to run more than one set of ads on Facebook at a time. But how do you determine how much of your total Facebook ad budget will go to each ad set?
At a Campaign budget set an overall budget for all of your ad sets and leave one Facebook Ads algorithm called Campaign budget optimization (CBO) decide how best to spend it. Instead of each ad set receiving the same amount of money, Facebook predicts which ad sets will bring you the most profit for every CHF spent.
Campaign Budgets are best for businesses that:
- more on one Campaign level optimization than are interested at the ad-set level
- Campaigns with many ad sets manage
However, campaign budgets also have some disadvantage. The algorithm may not understand that one of your ad sets is worth more than what is evident from available metrics. For example, if one of your ads is on a small but important one new market that you want to penetrate. The CBO could be deducting ad budgets from this as it doesn't see the future value these ads can bring.
A Ad set budget gives you the ability to control how much money goes into each ad set.
This level of control makes it ideal for companies that:
- Test ads want to see how well they perform
- Have ad sets that are valuable in ways that are not obvious to a bidding algorithm
- Have ad campaigns just a few few ad sets contain
- Ad campaigns with mixed target groups or campaign goals to have
The biggest benefit of ad set budgets is that you can get the control have about it. The disadvantage is that you your Monitor and optimize bid strategies yourself have to. If you only have a few sets of ads, that may be fine. But as the campaign grows, mistakes can creep in.
Lifetime budget vs. daily budget
Now that you know how you are going to split your budget between ad sets, the next step is to decide how each ad set will use its budget over a period of time. Facebook calls this the budget duration.
Lifetime budgets are perfect for predefined campaigns. You start by entering an end date and total spend amount. Then leave it up to you Facebook to pick the best times to show your ads.
Facebook's algorithm displays ads based on when it believes you will get the best results for your advertising budget. With this type of budget duration, there is sometimes a big difference in the amount of money spent each day.
A Lifetime budget is best for companies that:
- a campaign with a defined budget and end date carry out
- shorter, more targeted campaigns perform such as retargeting or special promotions
- not worrying about consistent daily expenses
Depending on your situation, a lifetime budget can be the best way to run your ads. Especially if daily consistency isn't your main concern.
In contrast, you place a Daily budget an average amount of CHF per day, and Facebook will do its best to accommodate this Achieve goal within a week. Facebook is free to deviate from your average by as much as 25 % each day if it believes that a small shift in the numbers can add more value to you.
A Daily budget is for people who:
- a (mostly) consistent daily output wish for their advertising campaign
- a ongoing campaign operate, e.g. B. to increase your brand awareness
Each of these budget types has its advantages and disadvantages. Which option is right for you depends on what goal you want to achieve with it. But we'll get to that in a moment.
How to determine your ideal Facebook advertising budget
With the ideal budget for Facebook ads, you can achieve your marketing goals without spending too much money.
Step 1: set your goals
Start your budget planning by determining what specific goal you want your Facebook marketing efforts to achieve. Once you have decided on a goal, you can determine how much you will need to spend to achieve that goal.
Campaign goals are often broken down into three broad categories:
- awareness: Draw the audience's attention to your service, product or brand
- Recital: Your target group should consider you as a solution to their problems
- Conversion: Converting your target audience into customers
Within each of these general campaign goal categories there are more specific marketing goals for your ads. Overall, there is Facebook Ads Manager 11 different marketing goals for optional. From brand awareness to traffic generation and engagement to store visits or conversions.
When you set up your ad campaign, choose one of these goals so that Facebook can optimize your ads around that goal. For example, would you like to Lead generation focus, Facebook helps you create a lead ad where you can gather information about prospects and follow up later.
Step 2: understanding how much it could cost
Different campaign goals come with different costs. This is why it is important to understand how much it is estimated that you will have to spend to meet your goals.
Facebook Ads work after a Auction system. Every time an advertisement can be shown to a Facebook user, Facebook conducts an auction among the most relevant advertisements. The advertisement with the highest “value” is actually shown to the user. It's a combination of the bid amount, estimated promotion rates, and ad quality. Depending on various factors (including Your goal, the target market, the time of day etc.) the Change the cost of Facebook ads.
It's all fascinating, you say, but how much will it cost me? Well, let's take a look at the statistics.
According to Study by AdEspresso last year 2020 saw the average advertising costs on Facebook as follows:
- The average Cost per click (CPC) cheat 0,39 $.
- The average Cost per Like (CPL) cheat 0,20 $.
- The average Cost per app installation (CPI) cheat 3,40 $.
Under Consideration of the different campaign goals it was found, however, that the Prices varied widely. Some destinations are much more expensive than others. For example, if you want to create an ad set that is designed to drive impressions, it will cost you more than just link clicks.
This means that you should be absolutely certain that you are striving for the right campaign goal for your company. If you choose the wrong destination, you will not only waste your time but also potentially a lot of money.
Step 3: start small and track your metrics
You won't know what works in the Facebook Ads wilderness until you test it. Testing can help you figure out which ads to bet on and which ones you should rather put to the siding.
Generally you should with small Start spending on ads over 3-5 days. Even CHF 2-5 per variation is enough to see how well different ad sets are performing.
The longer you run the ad, the more data you have about it and the better it can be displayed by Facebook. If you run the ad for about five days, you should have enough performance data to evaluate the campaign.
Because just because an ad is having a bad day doesn't mean that it should be discarded immediately!
Here are some of the most important metrics to keep in mind when evaluating ad performance:
- Cost per Result (CPR): The average cost of a predetermined outcome based on your campaign goal (for example, the number of views for a video view goal). This is important as it can give an indication how efficiently your ad can convert your marketing budget into the desired result
- Cost per thousand calls (CPM): The average cost of 1,000 ad impressions. A single impression is counted the first time your ad is shown in a session.
- Click-Through Rate (CTR): The rate at which people click on your Facebook ad. A high CTR can be an indication that the ad is working well.
- Conversion rate: How often your ad will convert when it's clicked. A Low conversion rate may indicate a mismatch between the ad and the landing page So make sure your ad is selling exactly what you're offering (and that your website is ready to convert visitors).
So by watching this data you will see which ads are performing best and you can begin rolling out your ad campaign.
However, you should never forget to refine your ads further as the campaign progresses. You can find detailed instructions on how to carry out ad tests (e.g. A / B tests) like a pro in the second part of our Blog.
Step 4: increase spending on your ads
After about five days, you should begin to see what is working (and what is not) in your ad strategy. It's time to spend your budget and achieve your goals.
CONCLUSION: With the right budget, you can achieve your marketing goals through Facebook Ads!
It may seem daunting at first, but Facebook ad budgeting will only get easier with practice and experience. However, once you understand how they work, you can get the most out of any Facebook ad campaign.
Consistent adherence to the budget can be just the right lever to achieve your business goals and more Sales, leads or downloads to generate.
You don't have time to deal with it yourself? We would be happy to advise you on your Facebook advertising strategy and help you generate more sales. Let us grow your brand and contact us today for a free analysis of your advertising accounts.