How To Determine Facebook Ad Budget: Estimate, Set, Track

How much should your ad spend be for your first Facebook ad campaign? What are some methods for managing this spend?

Today we dive into how to set your budget with some rules of thumb as well as methods for estimating, setting, and tracking your Facebook ads budget.

Optimizing Your Facebook Ad Campaigns

The number you set aside for Facebook ads cost depends on the business size and campaign objectives.

If you are using the conversion objective Facebook recommends, then you need 50 purchases within the week. These 50 conversions must happen within your attribution window if you set that for 1 day, 7 days, etc.

Ultimately, the goal is to drive enough traffic to your site to be statistically significant.

Facebook Advertising Budget For 5-6 Figure eCom Business Advertising Nationally

If you are an eCom business advertising nationally your Facebook ads manager is going to tell you a number somewhere between 3-5k a month to get effective Facebook ads data. This doesn't include the fee to the ad manager in-house or agency.

If you are confident in your sales process and have already seen sales come organically you should run this budget for your Facebook campaigns for about 3 months.

This allows time for you to implement, test, and optimize your Facebook ad performance.

Facebook Advertising Budget For eCom Just Getting Started Advertising Nationally

If this is your first time running ads and you don't have the 3-5k to spend. The minimum you can get away with and still have data to work with is $1,000/month.

Keep in mind that you may need longer to see results. Also, you may need time to develop a successful Facebook ad that connects with your target audience.

In addition, because you may not hit the 50 conversions required by Facebook to scale your ad spend it will be harder to scale.

Because of this, the focus at the level of ad spend should be on discovering your message and finding any channel that can drive sales.

Facebook Advertising Budget For Local Business

If you are a local business, consider starting with a smaller daily budget of around $50-$100.

I live in Santa Barbara. For a local business here. I would set the location to Santa Barbara for all ad sets. This will ensure that our budget is spent locally.

Facebook Ads Take Time

Discovering the Facebook ad copy that works best for you can time. Especially, if you are just getting started.

You can always increase your budget as you get more comfortable and develop your Facebook ads strategy.

The best way to find out what budget works for you is through trial and error. Start with a small budget and scale up as needed. Keep in mind that it takes time to build up an effective Facebook campaigns. Don't be discouraged if your first few attempts don't produce the results you want. Stick with it and you'll eventually find the sweet spot for your business.

If you need help getting started, feel free to contact me and I'd love to answer any questions you may have.

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Estimate, Set, And Track Your Facebook Ad Budget

Now that you have determined your Facebook budget there are a few different steps to managing your ad spend.

• Back of the napkin

• Set it and let it run Campaign Budget Optimization CBO (lower touch)

• Set it and maintain control Ad Set Budget (higher-touch)

• Tracking Google sheet

Back Of The Napkin Estimation For Facebook Ad Costs

One way to measure Facebook ad costs is to work back word from your revenue goals.

If you have been running Facebook ads for a while you probably have a good idea of your cost per acquisition (CPA) for each new customer. Let's say your CPA is $10 and your average order value (AOV) is $20.

You know that for every 10 sales you make, it costs you $100 in Facebook spend and you make $200 in revenue.

Now let's say you want to make $40,000 or 2,000 sales this month ($40,000 / $20 AOV). You would need to budget a total of $20,000 for Facebook ads (2,000 sales x $10 CPA).

This is a very simple way to estimate your Facebook ad budget and it's great if you're just getting started.

If you don't have this type of data. Take your total spend on customer acquisition and divide it by your total purchases from new customers. This will give you your CPA.

Keep in mind that this number is an estimate and may not reflect what you see when you start your ads.

Set It And Let It Run Campaign Budget Optimization

You've done the back-of-the-napkin math and want to set your budget and let it run. There are two bid strategies you can use with Facebook.

The first way to manage your ad spend is through Campaign Budget Optimization (CBO). This sets your budget for the entire ad campaign and is set at the campaign level.

You can set a daily budget within the Facebook Ads Manager, as seen above.

To do this, scroll down to the bottom of the screen when creating a new campaign, make sure you are at the campaign level and set your daily spending limit.

This will prevent you from overspending on your Facebook ads.

However, it's important to note that your ad spend may fluctuate depending on your ad settings and targeting options.

What Does CBO Do?

CBO takes into account how well each ad set is performing and allocates more money to better-performing ad sets.

You could end up with a scenario where one campaign spends $50 and the other campaign spend $1000.

This is because Facebook's algorithm is scaling back under-performing ad sets and images based on your objective.

CBO is lower touch because Facebook is optimizing the ad budget to spend on Ad Sets that are performing well. This means that you don't have to do as much work on Facebook.

That being said if you are running a new Facebook ad campaign I would recommend checking in consistently to ensure that the overall ad campaign is performing well.

Set It And Maintain Control Ad Set Based Bidding

Maybe you're like me and want a little more control over how your Facebook ad budget is spent.

If so then an ad set based bid strategy is for you.

You can set up ad set based bidding by going to the ad set level.

To get started you use a daily budget. If you have a Facebook ad budget of about 3k then $100 a day.

Keep in mind that Facebook limits spend for new ad accounts promoting products to $50 across all campaigns. So if you have a timeline for a launch consider running ads before hand and requesting a higher level of spend over time.

You could use lifetime budget, but if your campaign is evergreen why set an end date for a successful ad campaign.

Remember, you can always change your CPC bid amount and Facebook ads budget at any time by editing your ad set.

What Does Ad Set Level Bidding Do?

When you set the ad budget at the ad set level each of your ad sets will spend your daily budget.

This is unlike CBO. With CBO we had a scenario where one ad set could get all the spend... $1000 for one ad set and $50 for the other over the course of the month.

With Facebook ad set based bidding. If you split the ad spend off $1000 between two ad sets. Each ad set will spend approximately $500 during the month.

You may find yourself choosing ad set level bidding when exploring new audiences.

This is a common strategy in the first 9 months of the year as you seek to find the audiences that have the lowest CPA or are most efficient for your business.

Once you hit Q4 you then switch to the best performing audiences, consolidate, and move to CBO.

Tracking Your Facebook Ad Spend In A Google Sheet

If you want to get more precise with your Facebook ad budget, you can create a Google Sheet to track your results. You may also want to get data into a spreadsheet for your finance team.

There are a lot of spreadsheets and software out there that can track your Facebook ad spend. The below method is the quickest method I've found for getting your data into a spreadsheet that does not require a 3rd party.

First, create a column preset. I've created one that tracks my ads from impression -> purchase.

I can take this preset column and export table data.

Export as .CSV.

Once you've exported the data you can do what you want with the data. You can scroll down to the bottom of your sheet and sum/average your rows or create pivot tables using this data.

Create Your First Facebook Campaign In the Facebook Ads Manager

You now know some general rules of thumb for setting your budget as well as how to estimate, set, and track it.

You are ready to launch your first ad campaign. If you would like to learn how to set up your first Facebook campaign in the ad manager. We've created a guide that will walk you through the set up of your first campaign as well as why it should be built in the ads manager and not a boosted post.