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2022-07-14 02:53:24 Media Heroes

How Much Should You Spend On Facebook Ads? Set A Strong Budget

Udai Singh
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Facebook adverts are highly versatile. They can help you attract new customers, get your brand out there, promote your content, and more. That’s why Facebook made around 28.3 billion US dollars in the third quarter of last year—their adverts work! But how much should you spend on Facebook ads exactly? In this article, we explore this complex question.

What determines how much you should spend on Facebook ads

How much you should spend on Facebook ads depends on a few important factors. While there’s no clear answer to the question, you can work through each factor and get a better idea of how much to spend on your Facebook ad campaigns.

The first thing to consider is the size of your brand.

1. Size of your brand

how much should you spend on facebook ads conversionConversion ads are much more effective if your brand is established

Companies like Nike and Apple can leap straight into sales campaigns that directly promote their products because people have heard of them, and usually trust them. The same can’t usually be said for a small brand. Unless they are selling low-cost products, they first need to spend their advertising dollars on brand awareness campaigns.

Frustrating as this is, brand awareness is usually necessary for new companies because nobody has heard of their brand. By creating sales adverts right away, they’re targeting people in the “conversion” stage of their buyer journey, rather than correctly starting at the “awareness” stage. Instead, they need to create plenty of valuable content for their target audience (blogs, eBooks, videos, etc.) to nurture them through their buyer journey and slowly win their trust. Only then can they start to think about creating conversion campaigns that invite them to commit to their offers. This technique was made famous in Gary Vaynerchuk’s Jab, Jab, Jab, Right Hook, which we highly recommend reading. 

If you’re creating adverts for an established brand, you can consider jumping straight into conversion campaigns because more people may be in the “consideration” or “conversion” stages of their buyer journey, but we still recommend completing a testing period first, giving people plenty of great content before you try pushing your products or services onto them.

2. The average cost of your products

The more expensive your products, the more trust you will need to build before trying conversion campaigns. If you’re in the market for a new laptop, and see an advert for a $5,000 machine from a company you’ve never heard of, you probably won’t think twice. But if you see an advert from Dell, HP, or Apple, you’re much more likely to click on it because you know and trust the brands.

At the other end of the scale, if you’re in the grip of a cold winter and need some extra thick socks to warm your extremities, you probably won’t care where they come from because socks are cheap. So a company who sells them won’t have to worry so much about brand awareness—they can leap straight into conversion adverts to start generating profit.

3. Your marketing budget

Your marketing budget is obviously a big influence over how much you can spend on Facebook ads. If you’re a new brand, much of your budget should be towards creating killer content and then promoting it with social campaigns (as well as other inbound marketing techniques), to show people how helpful and credible you are. If you’re a little more established, you can try a combination of brand awareness campaigns and conversion campaigns, being sure to keep a close eye on the latter’s ROAS to avoid leaking money.

If people are already aware of your brand and have developed a certain amount of trust for you, advertising should give you a solid return on your investment (provided your ads are well-designed and precisely targeted. Check out some examples of bad Facebook ads). If you are seeing a good return on your ad spend (ROAS), you should invest as much as you can afford into more adverts. Why wouldn’t you?

4. Your goals

Most companies want growth, but differ in how much growth they want, and how they achieve it. If you have the infrastructure and support in place to grow your business aggressively, your Facebook advertising budget will be higher than a company who is happy to sit back and strengthen their foundations first. Or you may be recovering from a period of economic turbulence like the COVID pandemic, in which case your advertising spend may need to be much more conservative (unless you’re already creating profitable campaigns, in which case spend more!)

Whatever your situation, your advertising goals should come out of your broader business goals, which will help you to determine the type of campaign you need to set up—e.g. reach, traffic, or conversions—what you hope to achieve from these campaigns, and roughly how much budget you should set aside.

So—how much should you spend on Facebook ads?

The best recommendation that we can make is to start your ad campaigns small—between $2 to $5 per advert, and continually measure the results. As of July 2022, the average CPM (cost per thousand impressions) is $14.11 across all industries1, so $2 a day can get you around 4000 advert views (impressions) each month. This works for campaigns across the entire buyer journey—awareness, consideration, and conversion—and for every ad objective that Facebook offers, including traffic campaigns, engagement campaigns, and conversion campaigns.

Of course, if you have more budget to play with, you should consider investing more, especially if you’re running a conversion campaign. For Facebook’s algorithm to target people more efficiently and achieve the campaign’s goals, it needs 50 conversions a week. Conversions can be simpler than purchases—page views, phone calls, adding a product to a wishlist, and more. This is a good way to get your conversions up and feed Facebook’s algorithm with juicy data. Once you have 50 conversions a week, you can move onto a more serious goal like purchases, setting specific revenue goals that will help to grow your business.

There’s three important reasons for increase your budget if you can afford it:

  1. The more data you’re giving to Facebook’s learning algorithm, the more efficient your advert targeting will be. 
  2. You will get a clearer idea of what wording works for your audience, which types of content, and which topics. This is all extremely valuable information for optimising future campaigns.
  3. You will learn which kinds of people are most engaged with your adverts—their demographics, goals, pain points, interests, and other persona-related gems.

 

Once you’ve run some conversion campaigns for a while and have a general idea of how much it costs you to acquire a customer (CAC) on Facebook, you can refine your budget using this simple formula: CAC x the number of customers you want. For example, if it costs you $50 to acquire a customer on Facebook, and you want to get 50 new customers, your budget would be $50 x 50 = $2,500. Or if you want to get a more accurate figure, you can also try this excellent Facebook Ads budget calculator from AdEspresso, which considers key values like your revenue goal, the average price of your product or service, your CPM, and other influential factors to give you a total budget amount for an ad campaign.

If you’re focusing purely on brand awareness, the best rule of thumb is to spend as much as your budget allows. Facebook advertising is a fantastic way to promote your business, especially when you use it to provide relevant and helpful content to people. You won’t see an immediate return on your investment, but every time someone views and interacts with your advert, you’re solidifying your brand’s image in their minds. Then when you’re satisfied that enough people are aware of your brand (you can measure this in a variety of ways), and you’ve built up a good amount of trust with people, you can then start to think about creating conversion campaigns that lead to direct, measurable profit.

Advertising is expensive, so it goes without saying that any campaign you create should be regularly measured and optimised. It usually takes about five days to see how an advert is performing. To know what to measure, check out our article on the key social media advertising metrics.  When your measuring is done, you’ll want to add more budget to high performing campaigns, and reduce budget for low performers. If the sluggish campaigns haven’t performed after a few weeks, delete them and divert the funds into your winners.

Facebook advertising budget—summary

Your Facebook advertising budget depends on a variety of important factors, so will be different for everyone. But if you’re confident with your ad creation skills, and are willing to regularly measure and optimise your campaigns, you should consider investing as much as your budget allows. If this makes you nervous, start small, and then slowly increase the budget for your good performers. Eventually you’ll have a series of high-performing campaigns that not only pay for themselves, but also boost the bottom-line of your business.

References

  1. Facebook advertising costs CPM (updated weekly), Revealbot

Topics: Marketing

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