There is much to consider when determining your Facebook ad spend budget. You may allocate $500 throughout a campaign because that’s what the marketing budget allows for, but there is a smarter way to ensure that you see results from the money you invest into your Facebook ads.
Understand your goal
Know what you are trying to achieve before you allocate Facebook ad spend budget. Are you looking to collect 1,000 amount of emails, sell 20 pieces of a particular product, have 100 people download a particular ebook, or simply get 300 new Facebook page likes? Knowing what your goal is will allow you to accurately calculate how much budget you are going to need for your Facebook ads.
For example, if you are looking to sell 20 pieces of a particular product, and you know that you have a 25% conversion rate, it is clear that you will need to serve your ad to at least 80 people to reach that goal.
When creating a Facebook ad, the estimated reach of that particular ad is shown within the ad set creation stage. This can be used as a guide to understand how far your budget will reach, and what your CPM is.
Different audiences will require different budgets
When considering the conversion rate of selling a product, for example, it is also important to consider which audience that conversion rate applies to. A warm lead (an individual who has been exposed to, or purchased from your company before) is more likely to convert and buy a product than a cold lead (an individual who has not previously been exposed to your company). Each audience will convert differently.
Each audience should be targeted with an ad that is relevant to their experience with the company. The ads should then factor in the respective conversion rate for the different audiences, allowing your business to allocate the right budget to those ads.
For example, if you would like to target individuals who have previously downloaded a ‘how to style scarves’ ebook with a scarf sale you can do this by targeting the thank you page URL for that ebook. You can broaden this audience by creating a lookalike audience within Facebook. Custom audiences can also be set up in Facebook by targeting specific URLs on your page.
Campaign length will affect your Facebook ad spend budget
Essentially, the shorter the time you run your ad for, the more money you will have to spend in a small amount of time. The more time you have to reach your goal, the more you can spread out your allocated budget over time.
If you are looking to attract cold leads AND convert them in the same Facebook ad campaign, then your budget will be spent differently again, dependant on how quickly you are looking to have warm leads that are ready to buy.
Track everything and constantly review your data
Every campaign will provide you with new insights on your customers and their behaviour. Accurately tracking this data will ensure that you don’t miss out on important information that could help your business to better their results in the next campaign.
Make sure to review your data to find any changes in conversion and understand why that happened. This will help you to increase your conversion rate for the next campaign that you run.