Understanding how much of your Facebook Ad Budget you should allocate to every campaign requires weighing a number of variables.

Let’s face it—it’s tough to know exactly how much your Facebook ads should cost.

In today’s article, we’ll talk through where to set your Facebook Ad budget in Ads Manager, why you must run test campaigns to determine your Facebook Ad budget baseline, and how to calculate exactly the cost of your next Facebook Ad campaign (without guessing).

Spoiler alert: you need the Facebook Ads Budget Calculator. It’s a smart and super easy to use tool our Facebook Ads specialists use every day. Read to discover how to claim your own copy, right now, for FREE!

From the objective and target audience to the duration and concurrent campaigns, there are a lot of factors to consider when setting your ad budget.

And it’s hard to weigh all of these factors.

Sure, you can make estimates and look at what’s worked for your ads in the past. But the one thing we’ve always found to be helpful is that of running a test campaign!

There’s no better way to see how the various different aspects of each campaign make an impact on your bottom line. We’ll prove it to you.

Let’s get started then! But first, here’s something special, just for you!

Where to Set Your Ad Budget in Facebook Ads Manager

Facebook requires advertisers to set a budget for every campaign. During the campaign creation process, you can define your budget in the Ad Set section of your Facebook Ads Manager account.

Just click on the Budget & Schedule option.

From there, you’ll have the option to set Optimization for Ad Delivery, Cost Control, and Budget and Schedule.

We suggest you use Conversions for your optimization, as that tells Facebook to look for people who are further down the funnel and only display ads to them. You also have the option of either a Daily Budget or a Lifetime Budget.

• Daily Budgets are great for ongoing campaigns like brand awareness that don’t warrant a specific start or end date.
• Lifetime Budgets require you to designate how long your campaign will run, which makes them better suited for shorter, more targeted campaigns, like retargeting or sales promotion.

Setting your budget is the easy part—figuring out how to make it sustainable for each campaign is a bit more complex.

Let’s take a look at some strategies you can use to determine the most reasonable Facebook ad budget for your campaigns!

How to Create a Realistic Facebook Ad Budget

There are a number of different factors to consider when you’re building your Facebook ad budget.

For example, you need a solid understanding of your goals, and you must run test campaigns to evaluate different budget amounts.

We’ve put together a four-step process to help determine a reasonable budget amount and what you need to do to validate your estimates.

1. Nail Down Your Campaign Type

The type of campaign you’re running has a direct impact on how you spend your budget. There are a number of factors, including audience and objective, that you need to solidify before getting started.

We’ll talk through the different considerations you need to make for two of the most popular types—retargeting ads and cold audience campaigns.

For retargeting ads, like those trying to increase brand awareness, many advertisers consider running low budget, long-term campaigns.

Creating a realistic budget for this type of campaign is driven by the size of your audience and how aggressive you’d like to be with your ad placements.

The key is to keep track of frequency and performance, so you know when to up your daily budget or pause for a while to bypass periods of low engagement.

One successful retargeting campaign we’ve seen was a long-term brand awareness campaign that started with a budget of around $5 for 500,000 followers.

Consider the first few days of a campaign like this as your test, after which you can adjust your budget and spend based on actual performance metrics.

Any changes can be made during the Campaign Creation process in AdEspresso.

Just enter your targeting choices and keep an eye on the numbers in the Audience box on the right of your screen.

After that, you can edit your budget, adjust optimization goals, and more:

For cold audiences, many advertisers run ads for short-term goals, such as driving new sales and getting more leads.

It takes 72 hours for Facebook to optimize these campaigns.

On the campaign’s first day, Facebook’s algorithm refines the ad audience based on the first 500 to 1,000 people. From there, Facebook will expand its targeting to include similar users. Finally, on the third day, you’ll be able to track how your ad is performing with the optimal audience.

There’s a lot that goes into determining your overall ad budget, so once you determine the campaign type, the next step is thinking about what you want the results to be.

2. Set a Goal for Your Results

To set a budget amount that works for your business, you must focus on what you want to achieve with your campaign.

Instead of thinking, “I want to spend $X on my ad campaign,” you should be thinking, “How much budget do I need to make an impact on my [desired outcome]?”

In a retargeting campaign, for example, you might set a revenue goal for the ad.

Let’s say you have an audience of 10,000 Facebook users who’ve engaged with your ad content in the past. If your product is $50, you might set a revenue goal of $50,000. That would mean that, of your audience of 10,000 users, 1000 of them need to make a purchase to consider the campaign successful.

Once you have a goal in mind for your campaign, you can truly understand what success looks like and make adjustments to your estimated budget accordingly.

3. Run a Test Campaign

The best way of determining an ads budget is to run a test campaign, even if it’s only $100 although more is better. That will then allow you to put some real figures into the budget calculator rather than having to make a complete guess for each metric. Once you start running your production campaigns, you can then update the figures in the calculator and get an even more accurate budget estimation.”
                                                                                         Paul Fairbrother, AdEspresso Head of Education

An essential part of setting a sustainable budget is experimentation—making changes to your budget amount based on how the campaign actually impacts Facebook users.

Test campaigns help you establish a baseline, informed by actual results, for important metrics.

Instead of throwing numbers out there, like a cost per click (CPC) of $2 or a click-through rate of 5%, run your experiments; you’ll know exactly how Facebook users react to your campaign.

Going back to our cold audience example from earlier—if it takes 72 hours for Facebook’s algorithm to work out the best placements for your ads, your test campaign needs to run at least three days to provide good data.

If you start by running ads at $10/day, then after three days, you’ll have spent $30 to run your test. That gives you enough data to understand what your ads’ performance looks like, but we still suggest taking it a bit further to five days or a full week.

Longer test campaigns provide more information to work with when you’re plugging numbers into your budget.

You might find that engagement ramps up after four days or that it dips a little bit between days two and three.

This is all valuable data when you’re creating a budget and calculating how much impact your ads actually have towards your goals.

4. Use Our Free Facebook Ad Budget Calculator

We’ve created a downloadable budget calculator you can use to make setting a realistic Facebook ad budget easier.

Click below to get your free copy now!

To give you the answer you need, this handy tool simply needs to know a few key metrics to fill in the blanks.

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 per 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.

You can then decide how to distribute that budget—through a lifetime or daily budget campaign.

Determine Your Facebook Ad Budget Today!

Understanding what metrics impact your budget and how to include those in your calculations makes building a realistic Facebook ad budget easier for current and future campaigns alike.

When you’re able to understand exactly how much ad spend will make a positive impact on your company revenue, it makes justifying the price of your advertising to leadership and your team easier.

Use the power of the information in this article together with the Facebook Ads Budget Calculator to find a reasonable budget amount for your Facebook ads that will drive successful campaign results.

Once your budget is set, you’re ready to create Facebook ad campaigns that deliver the highest positive impact for the lowest amount of money.

And now, you know what to do!

Did you get your free copy of the Facebook Ads Budget Calculator? What do you think? How are you using it for your ad campaigns? Let us know in the comments!