Spend too little on your Facebook ads budget and risk missing out on conversions. Spend too much, and your monthly marketing budget will vanish into thin air. What’s a social media marketer to do?
Never second guess your Facebook ads budget again! This guide tells you what you need to know about Facebook ads budgets—from explaining budget types to showing you how to make the most out of every ad dollar.
We’ve also included our free Facebook Ads Budget Calculator, which can tell you exactly how much to spend on Facebook ads to hit your marketing goals.
Whether you want to increase impressions or make more sales, you can figure out exactly how much to budget so your next ad campaign is a success.
Types of Facebook Ads Budgets
When determining your Facebook ads budget, you need to make two choices:
- How to divide your ad dollars between all of your ad sets (campaign budgets vs. ad set budgets)
- How each ad set spends its allotted money (lifetime budget vs. daily budget)
Depending on the kind of ad campaign you’re running, these budget choices can help you maximize your hard-earned advertising dollars.
Campaign Budget vs. Ad Set Budget
Chances are you plan on having more than one ad set running on Facebook at a time. But how do you determine how much money is given to each ad set from your total Facebook ads budget? You’re answering this question when you choose between a campaign budget or an ad set budget.
With a campaign budget, you set one overarching budget for all of your ad sets and let a Facebook algorithm called campaign budget optimization (CBO) decide how to best spend it. Instead of each ad set getting equal amounts of money, Facebook will determine which ad sets will net you the most return for each dollar spent.
Campaign budgets are best for people who:
- Are more interested in optimizing at the campaign level rather than ad set level
- Manage campaigns with lots of ad sets
However, campaign budgets do have some drawbacks. The algorithm may not understand that one of your ad sets is valuable beyond just surface-level metrics. For example, if one of your ads is narrowly targeted at a small but important new market you want to break into, the CBO could take ad dollars away from it as it may not see the future value that these ads can bring.
An ad set budget gives marketers the ability to control how much money goes to each ad set.
This level of control makes it ideal for people who:
- Are testing ads to see how they perform
- Have ad sets that are valuable in a way that isn’t obvious to a bidding algorithm
- Have ad campaigns that have only a couple of ad sets
- Have ad campaigns that have mixed audiences or campaign goals
Overall the most significant upside to ad set budgets is that they give you control. The downside is that you have to be the one monitoring and optimizing your bid strategies. When you have only a couple of ad sets, this can be fine, but mistakes can happen when the campaign grows.
Lifetime Budget vs. Daily Budget
Now that you know how you’ll split your money between ad sets, you need to decide how each ad set will use its budget over a period of time. Facebook refers to this as budget duration.
Lifetime budgets are perfect for pre-defined campaigns. You start by putting in an end date and a total spend amount. After that, you let Facebook pick and choose the best times to show your ads.
Facebook’s algorithm will show ads based on when it believes you’ll get the best returns for your ad dollars. With this budget duration type, there will sometimes be a big difference in the amount of money spent day-to-day.
A lifetime budget is best for people who:
- Are running a campaign with a defined budget and end date
- Are running shorter, more targeted campaigns, like retargeting efforts or special promotions
- Don’t care about consistent daily spending
Depending on your situation, a lifetime budget can be the best way to put your ads out there, especially if daily consistency isn’t your main concern.
In contrast, a daily budget has you set an average dollar amount per day, and Facebook will do its best to hit that target over the course of a week. Each day, Facebook is free to deviate from your average by as much as 25% if they feel they can get more value for you by shifting the numbers around a little.
A daily budget is for people who:
- Want a (mostly) consistent daily spend in their ad campaign
- Are running an ongoing campaign, like one that’s building brand awareness
Each of these budget types has its upsides and downsides, and the best one for you is going to come down to what you want to accomplish.
Now that you know about the different budget types, you can start looking at how to determine your campaign’s ideal budget.
How to Find Your Perfect Facebook Ads Budget
The perfect Facebook ads budget achieves your marketing goals without overspending to get there.
To help you find your best Facebook ad budget, we’ve built a calculator that crunches your numbers and spits out the amount you need to spend to reach your Facebook marketing goals. But it needs some raw data to work. The following steps will help you get those numbers so you can use the calculator to grow your business on Facebook.
If you’re already running your ads on Facebook and just need the calculator to refine your budget, click here to download our Facebook Ad Budget Calculator right away.
Step 1. Consider Your Goals
Start your budgeting by determining what concrete goal you want to achieve through your Facebook marketing efforts. Once you’ve settled on a goal, you can begin to figure out what you need to spend to get there.
Campaign goals are often split into three broad categories:
- Awareness: Bringing audience attention to your services, product, or brand
- Consideration: Having your audience consider you as a solution to their problems
- Conversion: Converting your audience into customers
Within each of these broad campaign goal categories, there are more specific marketing objectives for your ads. When you set up your ad campaign, you’ll choose one of these objectives so that Facebook can optimize your ads with this goal in mind.
For example, if you want to focus on lead generation, Facebook will help you create a lead ad where you can collect information on potential clients, which you can follow up on later.
In total, there are 11 different marketing objectives that you can optimize for. To find out more about these goals, check out our in-depth guide on marketing objectives.
Step 2. Understand How Much It Might Cost
Each kind of campaign goal can have different costs associated with it. Luckily, we have the hard data to help you understand how much you may need to spend to achieve your objectives before you start testing out your new ads.
But first, some background information for beginners.
Facebook ads work on an auction system. Every time there’s a chance to display an ad to a Facebook user, Facebook will hold an auction among the most relevant ads and then show the ad with the highest “value” (a combination of the bid amount, estimated action rates, and ad quality). Depending on several factors (including your goal, the target market, the time of day, etc.), Facebook ad costs can change.
This is all fascinating, you say, but how much is it going to cost me? Well, let’s look at the stats.
In 2020, AdEspresso did a study of advertising costs on Facebook. We found that:
- The average cost per click (CPC) for the first three quarters of 2020 was $0.39
- The average cost per like (CPL) for the first three quarters of 2020 was $0.20
- The average cost per app install (CPI) for the first three quarters of 2020 was $3.40
When we accounted for campaign objectives, we found that the prices varied by a lot.[Image Source]
As you can see, some objectives are far pricier than others. If you want to create an ad set designed to increase impressions, it’s going to cost you more than just link clicks.
This means you need to be confident that you’re going after the best campaign objective for you. Choosing the wrong objective won’t just waste your time but also potentially a fair amount of money. Start to get a picture of what your budget may need to be for your goal.
Step 3. Start Small and Track Your Metrics
You won’t know what works in the wilds of Facebook until you test it. Testing allows you to see which ads are the horses to back and which ones need to be put out to pasture.
Generally, you should start with small ad spends across 3–5 days (even $2–$5 per variation will do) to see how well different ad sets perform.
The longer you run the ad, the more data you’ll have on it, and the better Facebook will be at showing it. By leaving the ad up for about five days, you should have enough performance data to evaluate the campaign. You don’t want a good ad thrown out over one bad day.
Here are some key metrics you’ll want to keep an eye on when evaluating your ad’s performance:
- Cost per result (CPR): The average cost of a pre-determined result based on your campaign objective (i.e., view counts for a video views objective). This is important because it can indicate how efficient your ad will be at turning your marketing budget into your desired outcome.
- Cost per thousand impressions (CPM): The average cost of getting 1,000 ad impressions. A single impression is counted when your ad is displayed for the first time in a session.
- Click-through rate (CTR): The rate people are clicking on your Facebook ad. A high CTR can be an indication that this ad is working well.
- Conversion rate: How often your ad leads to a conversion when it gets clicked on. A low conversion rate may indicate a disconnect 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).
After you’ve collected your data, you’ll begin to see which ads are working best, and you can start rolling out your ad campaign.
However, you should never forget to continue to refine your ads as your campaign continues. Get a full rundown on how to do A/B testing like a pro by checking our Beginner’s Guide to A/B Testing Facebook Ads.
Step 4. Ramp Up Ad Spending
After five days or so, you should begin to see what is (and isn’t) working in your ad strategy. It’s time to spend your budget and achieve your goals.
You can change your ad budget on Facebook by accessing the Facebook ad manager. Once there, you’ll want to:
- Move your mouse over either the ad set or campaign that you want to edit (depending on which kind of budget type you chose)
- Click on “Edit,” then make the changes to your budget
- Make sure to click “Publish” before closing
Monitor and optimize your campaign based on how well the ad is performing. You can learn more about how to tell if your campaign performance is crushing it or not by reading about Facebook optimization strategies.
Wait, wait, wait. Did we miss a step? How do you know how much to spend on Facebook ads to accomplish your marketing goals? Trial and error? Tarot card reading?
You could try those things, but it would probably be much easier to just use our Facebook budget calculator.
If you’re working with fewer ad dollars, you can still market yourself on Facebook. To see how, check out our guide on how to succeed with Facebook marketing on a small budget.
How Much to Spend on Facebook Ads: Our Ads Budget Calculator
Our Facebook Ads Budget Calculator will help you determine the amount of ad spend you need to meet your ad campaign’s marketing goals.
All we need you to do is input your data in the left column, and you’ll get your results in the right column.
On the left-hand side in blue, we have your Inputs. These include:
- Your revenue goal: What you want to get out of this campaign
- The price of your product/service: How much your product costs
- CPM: The cost per 1,000 impressions on Facebook
- CTR: The click-through rate for your campaign
- Conversion rate: The percentage of clicks on your site that results in a sale
Once you’ve entered the information, the Facebook Ad Budget Calculator will give you the following outputs:
- CPC: The cost per click for your campaign
- The number of clicks you need to reach your revenue goal
- The number of sales you need to reach your revenue goal
- CPA: The cost of acquiring a single customer
With that information, the Facebook Ad Budget Calculator estimates your campaign budget, which is essentially the cost of acquiring enough sales to reach your goal.
Easy right? Now you have everything you need to run a successful Facebook ad campaign!
Set the Right Budget to Help Your Ads Take Off on Facebook
It can seem daunting at first, but Facebook ad budgets only get easier with practice. The best part is that once you’re familiar with how they work, you can get the most out of every Facebook ad campaign you ever run.
We know budgeting isn’t the most exciting thing. But it’s also true that getting your budget right consistently can be what your company needs to take things to the next level. Our budget calculator will help you nail your Facebook budget every time so your sales can jump, and your brand can grow.
How do you manage your Facebook ads budget? Let us know in the comments!
If you guys have a newsletter, please sign me up!
Massimo Chieruzzi says
Thanks James 🙂 You can signup from the Newsletter box on the right column!
Rami Djeffal says
I think that you need to switch places between retargeting ads and cold audiences in this paragraph
”For retargeting ads, many advertisers consider running low budget, long-term campaigns for brand awareness. For cold audiences, many are often running ads for a specific campaign to e.g. drive new sales, leads or something else that is more short-term focused.”
Aske Christiansen says
Hi Rami, they shouldn’t but I appreciate you taking the time to point it out 🙂
Retargeting using a low budget continuously to your customers/audience is a great way to stay on top of mind.
Many advertisers see a boost in conversions when they test that while running other temporary campaigns compared to not.
I guess it’s a lot easier to convert a current customer again than bring in a new one.
Hope that makes sense?
Yusuf Salaam says
I’m promoting a speaking tour my audience can plan with a particular speaker, so the target audience may know who the speaker is but not necessarily been a paying party beforehand – would they be considered a cold audience or should I re target an ad for this audience?
Interesting article. How would these concepts in your article apply to testing the validity of a new online guitar lessons business? I’m specifically asking about setting a budget for a cold audience. I will be using FB ads as a way to test the interest in my idea. The thought was to run about 3 variations of the ad with a budget of $100 lifetime for each variation. How would you evaluate the data and what data points would be important to you? Would appreciate your feedback.
Hi Gene, if you are still looking for advice then I would say you should be assessing the engagement your ads receive – CTR, likes, shares, comments. These would be a good barometer for the interest in your product. Be sure you have conversion tracking set up though and optimize your ads after they have been running a few days or reached 500-1k people as the article says!
Are the revenue and budget numbers in the calculator weekly, monthly, quarterly, yearly, etc?
I want to generate $10,000 in sales on a $99 product. My calculation using the default 3% conversion rate, and 30% open rate , produces a budget of $11,000.
What am I failing to understand?
Julia Schuller says
I am wondering the same thing. Does the calculator give you a monthly budget?
All I want to do is get a video in front of 20,000 people in a specific demographic… How do I estimate how much that will be? I’m not finding a tool that tells me this one thing – am I missing something?
Digital Santhosh says
great explanation about advertising cost for Facebook ad campaigns.
Josh Michaels says
We have been running Facebook ads for a year now. As usual, you guys have helped us again and again. thank you for the fantastic information. One of our biggest struggles is figuring out whether daily budgets or lifetime budgets run better.
Also when using your calculator and I get a final budget is that per day, campaign?
I absolutely a beginner. I learnt a lot from this article and I have a better basic image. Thank you.👍
The Ad Calculator is NOT editable. What can I do? is there a spreadsheet version available?
Shannon Tien says
To use this template, select File > Make a Copy. Then you’ll be able to edit it.