Are you a business owner considering investing in Facebook Ads for the first time and feeling stuck as to how much you should invest? We’re here to help! 

The first question to ask yourself actually has to do with your website! Before investing in paid ads, there are a few things you want to make sure are set up properly in order to maximise your chance for success! We have a handy video all about this.

Do you have an optimised, user- and search-friendly website? Your website needs to be mobile-optimised, able to be found on search engines and easy to navigate for potential customers. Because the reality is that driving your paid ads to a website that isn’t functioning properly or converting customers could mean you’re wasting hard-earned money.

Paid ads aren’t a fire-starter, they’re fuel to add to an already-burning fire.

What Facebook Ads budget should you start with?

As a beginner, it can be tricky to know how much to spend on Facebook Ads to achieve your marketing goals. So let’s break it down with our recommendation if you’re starting out, and explain why!

Facebook Ads are made up of three layers: campaign, ad set, and ad. You can choose to set the budget at the campaign level or ad set level.

If you choose the campaign level (campaign budget optimisation), you are allowing Facebook to distribute your total budget across all of your ad sets (ie. target audiences) and ad creatives within it.

On the other hand, if you set the budget at the ad set level, Facebook is provided with a certain budget for each target audience. (We personally love this strategy when you’re testing ad sets out at the start, so you can force Facebook to spend evenly and test each target audience).

For example, if you set the campaign budget at $5 per day and you have 5 target audiences and 3 ads within each, that’s $5 per day that you’re asking Facebook to distribute amongst 15 different ads. Doesn’t seem like enough, does it? The more ad sets and ads you have, the more budget you’ll want to spend. This allows you to test things quicker.

Overall, as a guide, we suggest beginning with a budget of approximately $5 per day for each ad set.

However, to further determine your budget, there are the first few factors to consider, such as:

Are you targeting locally, nationwide or internationally?
A local service-based business targeting a local audience with a 15km radius around their service area will have a much smaller potential audience size than an e-commerce store targeting nationwide. Naturally, you may want to invest more if your target audience size is larger.

How much does it cost you to acquire a new customer?
If it costs you on average $20 to acquire a new potential customer through your paid ads and you have a budget of $60 per day, you can assume your ads will generate around 3 leads or sales per day. The higher your budget, the more leads or sales you may see.

Hot tip: Something to keep in mind about your cost per acquisition, is also to think about the lifetime value of your customer. Spending $20 to acquire a new customer may seem like a lot for a business where the average order value and repeat purchase behaviour are low. Whereas, if the average order value is high, such as selling a high-ticker course or a car OR the number of times a customer purchases from you is high, then $20 to acquire that customer is a great return on investment.

What is your campaign objective?
The objective you select for your Facebook Ads campaign can also influence how quickly you achieve results and how much money you need to spend to achieve them.

For example, if you’re optimising a campaign for website traffic, you will likely get more bang for your buck in terms of getting more eyeballs on your website. This is because Facebook understands your objective as your primary goal and puts your ad in front of people who meet your target criteria, but are most likely to click on your ad and get to your website.

Since clicks on your ad and traffic to your website naturally happen more frequently than a website lead or purchase, you’ll find it cheaper to optimise for website traffic than purchases. But…it’s important to note that optimising for purchases or leads will put your ad in front of the people in your target audience most likely to take that kind of action.

In other words, the higher up the funnel you’re optimising for, the cheaper the cost per acquisition will be and therefore, the more ‘results’ you’ll get for your budget.

The difference between daily or lifetime Facebook Ads budgets

There are two types of Facebook Ads budgets you can select: lifetime budgets or daily budgets. A lifetime budget is the total amount you’re ready to spend over the duration of your campaign. Whereas, the daily budget is the amount you want to spend on an ad set or campaign daily.

Understanding the difference allows you to better understand which options suit your business better. A daily budget is the perfect option for ongoing, evergreen campaigns with no end date. We suggest selecting a lifetime budget for your promotional campaigns that have a specific start and end date (e.g. Mother’s Day, Winter Sales, Black Friday etc).

Investing in Facebook Ads can be a game-changer for your business, but knowing where to begin with your ad spend can always stump business owners starting out with Facebook Ads. We hope this blog post has provided you with valuable insights to get started!

Ready to take your business to new heights with the power of Facebook Ads? Don’t hesitate to contact us today to schedule a FREE discovery call and explore marketing strategies that will help you achieve your goals.

Interested in booking a 1:1 Clarity Call to determine the best next step for your business and get unstuck? Book it in here!