How to Set a Facebook Ad Budget

Calculator determines facebook ad budget

In this new world of digital advertising, do you feel confident that your budget is big enough? Or do you stay out of the game entirely for fear that your budget is too small?

How do you set an ad budget, especially for Facebook ads?

How to Set a Facebook Ad Budget

There are are a couple of things to consider BEFORE you set your Facebook ad budget as these can affect the cost of your ads.

What Affects Cost?

1. Seasonality

When more businesses are spending money on Facebook ads, they will be more expensive. High ad price times include Christmas, New Year’s Eve and Day, Black Friday, Thanksgiving, Cyber Monday and during post-holiday sales periods.

2. Audience

If you are sending your ad to everyone on Facebook, then those ads will be costly, too. Why? Because Facebook will penalize you with a higher ad cost for sending ads to people who are not interested (known as Relevance Score). So having a well-defined, relevant audience for your ads is very important!

Is There a Budget for All Sizes?

Once you are aware of timing and a realistic audience, how do you figure out what’ll work for your business? Because let’s face it, not everyone is your customer and not every company is your competition.

1. Small Budget or New Business

Start with one goal. Awareness ads will get you the biggest bang for your buck with a smaller budget. This ad type can be used for brand awareness and audience reach (getting a lot of people to see it).

2. Medium Budget

Try multiple goals and objectives. Try brand awareness (like the example above) plus traffic (linking back to your website), engagement (getting reactions, shares, or comments) or video views.

3. Large Budget

Consider multiple goals. In addition to the ones mentioned above, conversion ads (sales, store visits, website signups) can be added. Keep in mind that while conversion ads tend to be more expensive, they have a higher ROI. So you may spend $100 to convert a lead but get $600 in sales in return.

Here are few statistics to put costs in perspective as you decide to go small, medium, or large.

  • The average Cost Per Click (CPC) is about $0.35 globally and about $0.28 in the U.S.
  • The average cost per Facebook page LIKE is $0.23 in the U.S.
  • The average cost per app install is $2.74 in the U.S.

Do You Have Goals?

As you can see, GOALS play a big part in determining how you want to structure your Facebook ads budget.

Example of business goals for Facebook ads – 

  • Increase likes to the Facebook page
  • Increase email subscribers or visits to your website
  • Increase app installs
  • Increase sales or sales leads

Which ads you chose to run and how many you run affect your ad budget. All ad types are based on a goal.

Are You In It For The Long Haul?

Whatever budget you set for Facebook ads, it should be realistic and sustainable for the long term. The best results are built over the long-haul. However, if you can’t sustain long-term, can you cover a season (which can be a viable option, i.e., seasonal ads for an event or sale)?

Our own clients tend to be small to medium-sized business and Facebook ad budgets usually start around $300 – $500 per month. We also have larger clients that spend over $2,000 per month. Just like you, our clients have specific goals in mind and employ Facebook ads to meet those goals.

The bottom line is that Facebook ad budgets should be in line with how large your business is and what goals you want to achieve. The rest is a cake-walk!

PS. Not really a cake-walk, but once you set your goals and budget, you are halfway there! Celebrate with cake!