Learn how to set a budget for your Facebook ads to reach new audiences and see a solid return without overspending.

how to budget for facebook ads

Facebook is a powerful platform with over 1.9 billion daily active users, so using it to advertise your business can be a solid strategy to reach new audiences and increase revenue.

However, when figuring out how to budget for Facebook ads, many business owners don’t know where to start. What your business spends on advertising might differ significantly from what another company chooses to invest.

The good news is Facebook offers a robust advertising platform with precise targeting parameters and flexibility in how much you can spend.

Why should you learn how to budget for Facebook ads?

Facebook ads are big business. The company pulled in over US$84 billion from ad revenue in 2020. Seventy-four per cent of users visit the site at least daily, and 78 per cent of American consumers say they have discovered products on Facebook.

The right budget for your business will depend on your total advertising budget and what you’re selling. In addition, you’ll want to compare costs against potential return.

Let’s dig into what you’ll need to know to budget for Facebook ads.

How much do Facebook ads cost?

Your budget for Facebook ads is the amount of money you allocate from your marketing budget to promote your ads on Facebook. The amount you spend will dictate how many people Facebook shows your ad to and how wide an audience you can reach.

You can run ads across all networks owned by Facebook, including Facebook, Instagram and Audience Network, for as little or as much as you’d like to spend. 

With Facebook’s advertising platform, you choose how much you want to spend on each ad or campaign. Facebook will show you how much your desired reach and frequency will cost you. As you adjust the variables, your estimated cost will also rise or fall, allowing you to select a budget that works for you.

Why do companies need a budget for Facebook ads?

While setting these budgets may seem challenging at first, there are significant benefits to having ad budgets in place. Most importantly, a budget helps you control your costs. Budgets also help you break out your advertising dollars across multiple campaigns without overspending.

You’ll also be able to understand where your money goes as you set up your campaigns. You’ll choose the reach and frequency for your ads, and Facebook will tell you how much it will cost to reach your desired audience. Then once you launch your campaign, it will spend how and where you approved.

Types of Facebook Ads

There are many different types of Facebook ads, and your selection will affect the cost of your ads. You can choose from single image ads to video ads and carousel ads, and much more. As you get more comfortable running ad campaigns, you can start mixing up different types of Facebook ads.

Facebook ad budget types

There are different types of Facebook ad budgets you can set, depending on your priorities and preferences. Let’s have a look at the different types of budgets you might want to consider as you set up your campaigns.

Campaign or ad set budget

Campaign budget

A campaign budget covers all the different ad sets you might want to run. It acts as your overall budget. Then you allow Facebook to decide how to spend it using campaign budget optimization.

Campaign budgets can work well if you manage campaigns with many different ad sets and are primarily interested in optimizing each campaign rather than each ad set. Just be careful that you’re aware of situations where this type of optimization might hurt you. For example, suppose you’re trying to market a new product or tap into a new audience. In that case, your early results may appear lacklustre to the algorithm, meaning Facebook will show them to fewer people simply due to their performance.

Ad set budget

An ad set budget is one you create for an ad set within your campaign. You’ll likely have multiple ad sets running at a time. This type of budget works well to control how much money goes to each ad set.

Lifetime or daily budget

While setting budgets, you’ll notice you have a choice of a lifetime or daily budget. These help you plan your spending so that you don’t go over budget per day or for the campaign’s lifetime.

Facebook calls this your budget duration, and it’s another handy way you can be sure not to overspend.

Campaign budget optimization

Let’s look a little more closely at campaign budget optimization and why it might help you get started with Facebook advertising. Effective advertising means getting the most out of your investment each time you run a campaign. Optimizing your campaigns for best results is an excellent way to be sure you’re allocating your spending correctly.

Campaign budget optimization is built into the Facebook advertising platform, allowing the platform to manage your campaign budget automatically. It will allocate your campaign budget across your ad sets to help get you the best results. This helps you get the maximum impact out of every dollar you spend.

Six steps to help you set your ideal Facebook ads budget

Now that you understand how Facebook allows you to create and spend budgets, you should have a number in mind. Right? Maybe not. Understanding what the platform can do doesn’t necessarily mean you can accurately guess budget numbers.

Here are six steps you can take to develop an initial budget, test your ads and adjust

  1. Consider your goals: Do you want to focus on promoting products or services, building your audience or retargeting by showing ads to people who have previously visited your website? Do you have an ideal audience size you want to reach?
  1. Review the different ad types and campaign types: Go through Facebook’s advertising platform and compare the different ad and campaign types and their relative costs.
  1. Compare against your budget: As you refine your targeting and adjust your audience size, Facebook will show you the cost for each scenario you create. Choose one to try as a starting point.
  1. Test and watch metrics: As you begin to test advertising on Facebook, each ad and campaign will give you valuable information you can use for campaigns to follow. Some important Facebook ad metrics include your conversion rate, your click-through rate, your cost per thousand impressions and your cost per result.
  1. Expand on what works: Use the data you collect to repeat your success.
  1. Measure return to build out a more robust plan: As you measure the impact your campaign has had, you’ll start to get a better idea of how much return you can get from your investment. You’ll use this information to better plan future campaigns.

Let us help you plan your next ad campaign

You now have a good handle on what goes into learning how to budget for Facebook ads. The next challenge will be to run these calculations and plan campaigns that make the most of what you can afford to spend.

Want an expert to run the numbers with you to see how best to invest your marketing dollars in Facebook advertising? Reach out today for a consultation with one of our account managers. We’ll take a comprehensive look at your marketing goals and your overall budget. Then we will show you just how much you could be doing with your Facebook ads.