How to Calculate Your Facebook Ads Budget

social media ad spend

Facebook is hands down the most popular social media platform worldwide, boasting over 2.7 BILLION active users every day. Advertising your business on Facebook can help you to quickly grow your audience and increase revenue when done correctly (especially by an incredible Facebook ad agency.).

We’ll go over just how to do that for small and medium-sized businesses.

What do Facebook Ads cost?

When first starting out, many small businesses find it difficult to figure out just how much money to spend on Facebook ads.

Depending on your industry and strategy, running ads on Facebook can cost your business as little as $1 per day.

One of the best parts of advertising with Facebook is that you know in advance exactly how much your Facebook ad spend will be each day.

Facebook ads manager will allow you to set a cap on spending and work within that amount to get the best results possible for your ads. Your Facebook advertising budget can range anywhere from $5 per week to $50,000 per week. It’s completely up to you.

Facebook ads manager

To make it even more appealing, you don’t need an advanced marketing degree to figure out how Facebook ads work or how to achieve your advertising goals with Facebook.

However, you will need to be careful as you are not offered a lot of insight as to how your ad set’s budget is being spent.

The actual cost of your Facebook ad campaign will depend on numerous factors that we will go over below.

The Minimum Budget for Facebook Ads

If your business is a small to medium-sized business, or if you are new to running Facebook ads, it’s a safe estimate to budget between $1.00 – $3.50 per day for your ad campaigns when first starting out.

Facebook ad spend - cost per day

By starting off with a low daily budget, you’ll be able to use Facebook’s analytics tools to discover which ads are going to be the most effective for your business.

As you learn more about the performance of your ads, you’ll be able to alter your budget as needed.

Small businesses can really struggle on social media if they are trying to garner followers, engagement, and ultimately conversions in a strictly organic fashion.

If your budget is very limited, you may want to consider posting occasionally with a small paid budget, instead of every day without a budget. This will help to ensure that your content is reaching your target audience as well as any current followers you may have.

Calculating Your Facebook Ad Cost

When considering how much your Facebook Ad budget will be, it’s a good idea to ask yourself- how much do you think a business should spend on marketing?

minimum budget for ads on Facebook

It’s typical for businesses to allocate anywhere from 5% – 12% of their revenue for marketing.

If you are just starting out and wanting to make sure you are aggressively pursuing results, 12% is going to be closer to your target spending. While if you are a little more established, and only want to maintain and stay on target, you can spend closer to 5% of your revenue.

Whatever your overall marketing budget is, a good place to start is to allocate around 17% of your marketing budget to social media marketing campaigns.

How to Make Facebook Advertising Affordable

It’s very common for small business owners to struggle when it comes to advertising because they don’t know how to budget for Facebook ads.

We hear from many clients when they first come to us that they feel like they are throwing money out the window because they haven’t had the results they have been wanting with Facebook advertising.

Don’t worry though. Facing these challenges as a small business is normal, and just because you have a low budget, doesn’t mean you need to stop advertising.

content focused ads

If you are careful about how to run your Facebook ads and are targeting the appropriate audience, with the right content, you should see a positive return on your marketing investment.

Establishing Your Facebook Ads Budget

So obviously, you don’t want to throw caution to the wind and just start blowing money on advertising on Facebook.

The first thing you need to do before even considering your campaign is how much you are going to budget for Facebook ads.

using ads to meet your sales goals

There are two types of budgets you can set for Facebook ads:

  • Total Budget – This is the maximum you want to spend on an ad for the entirety of its run. So if the maximum you want to spend is $30, you won’t be charged any more than that.
  • Daily Budget – This is the average amount that you want to spend on an ad each day. Let’s say your daily budget is $5 and you choose to run your ad for 5 days. You will be charged up to $25 total for Facebook to run your ad.

Especially when first starting out, we recommend using the total, or Lifetime Budget feature for your ads.

When determining the total amount you want to spend, you’ll need to take a few things into consideration. For instance, what is your revenue, how aggressively do you want to grow, and how much time and effort can you commit to advertising. Your hard-earned dollars should never go to waste, so it’s important to think about all of these factors carefully when planning out your advertising budget.

Using Your Budget Across Different Ads

You can, and should, be spreading your ad budget out to include different types of ads. While there are several choices out there, the three main ad types of Facebook ads that we would recommend are:

  1. Offer Promotion – The bulk of your Facebook advertising budget should go directly to promoting your product and/or service. You need ads that are content-focused in order to grab a user’s attention and promote conversions.
  2. Audience Building – Building an audience is essential for any business. It will not only increase visibility and interest in your brand but will allow you to learn more and more about your target audience to better attract them in future campaigns.
  3. Retargeting – Retargeting is another essential component of a successful marketing campaign. By retargeting users, you are showing your ads to users who have already shown interest in your brand. So if a customer visits your website, tracking cookies will allow follow them to other websites so they continually see your ad on other sites. Facebook is a fantastic retargeting tool, and you’re really missing out if you don’t allocate around 20% of your budget for these types of ads. This method may seem counter-intuitive, because you may be thinking that fewer eyes will see your ads. But really, this is the best way to get the most for your money.

2. Find Your Target Audience

With so many users on Facebook every day, your target customers are guaranteed to be among them.

By narrowing down your audience, you will help to not only reach the right buyers but get the most out of your advertising dollars.

If your targeting is too wide, your ads simply won’t convert the way you need them to, and you’ll be wasting money.

Pay attention to your current customers’ or your competitor’s customers’ unique behaviors and interest.

Once you know who your potential customers are you can work to create content that will grab their attention.

3. Creating Effective Ads

As we touched on above, knowing who you are trying to reach makes it much easier to ensure you are creating effective ads by ensuring that your content is tailored to their specific needs and interests.

The types of ads you run are also an important part of a successful ad campaign and should reflect your business goals.

creating content that works with advertising

Some common goals you may want to consider for your own advertising campaign are:

  • Building brand awareness
  • Generating new leads and sales
  • Increased website traffic
  • Improved customer retention

Boosting Posts

One of the most budget-friendly, and easiest ways to advertise on Facebook is by boosting posts. Boosted posts are able to widen the audience of your post, therefore targeting relevant users. This is a great tool for small businesses because of how affordable and effective it is.

beat Facebook's algorithm by boosting"

By boosting posts that are engaging, you will not only increase your brand’s visibility, but you’ll also be able to beat any changes that might have been made to the algorithm, which happens frequently we might add.

How much you spend on boosting your posts will be determined by the number of posts you want to boost, the duration of the boost, and its performance.

While boosting a post is a great option for limited budgets, you need to pay attention to which posts you are boosting.

Boosting every post just because it’s quick and easy isn’t a great strategy. It’s important to take the time to review your content imagine how it will be received by a large audience. Be choosey and put your best foot forward.

Analyze Ad Performance 

After you have gotten a few ads in, take the time to go back through and evaluate their performance. See which ads performed best, and identify why. This will help you to budget your ads in the future to focus on what works, and before you know it, you’ll be comfortable trying new ways to advertise on top of it.

Advertising can be daunting at first, especially for beginners. Our single, most important piece of advice is this: Take your time, find what works, then go from there. You’ve got this!

Cheers to you and your business. We can’t wait to see what you do!