How to set a Facebook Advertising Budget

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How much money should you really be spending on Facebook advertising?

Many people want to know the answer to this crucial subject when planning to advertise their brand on Facebook.

The answer is, it depends on these factors

  • If you are a new business that has not yet made a big marketing investment in any channel.
  • If you’ve had experience marketing through other channels but are new to Facebook ads.

If you are a new business that has not yet made a big marketing investment in any channel. The calculations we frequently hear regarding how much advertising should be allocated are typically directly related to our CAC, or Customer Acquisition Cost.

However, what if you do not yet have many or any customers?

How can you budget for social media based on data that you do not yet have?

Newer businesses may struggle to determine how much money to dedicate to Facebook advertising, but are typically on a tighter social media budget, to begin with.

Most of your early Facebook advertising investment will go toward brand awareness and audience development rather than sales. You should be prepared to lose money on your initial Facebook ad expenditure. And that is a reality that we believe many business owners would prefer to avoid.

However, before you tap out completely deflated, consider the inverse of that truth. When you first begin investing in Facebook ads, you establish the groundwork for a profitable, long-term outcome.

If you are a business that already has some consumer data but is new to Facebook, this section is for you.
If you already have a client list of 1,000 or more people, you may upload it to your Facebook Ads Manager to maximize results and minimize costs on Facebook.

Even so, you’ll be light years ahead of where you would be if you started from scratch. Simply optimize your ads and ad packages and then disable those that are not delivering profitable results in order to reallocate your budget to those that are.

Therefore, if you’ve established a reasonable rhythm on Facebook, conducted some basic A/B split testing, and begun to see some consistent conversions, you can transition your testing budget to a formula-based budget.

How to advertise on Facebook depends upon the above-mentioned factors. If you are planning to venture on Facebook ads, make sure that you have a good assessment of your business presence online.

Here’s a formula you can follow on your Facebook ads

Your Facebook budget = your cost to acquire a customer on Facebook x the number of customers you want from Facebook.

So within your Facebook ad budget, you can generally distribute your budget:
25% towards audience building,
60% offer promotion, and
15% towards retargeting.

In general, you want to get to the point where this thing runs like a well-oiled machine and that the amount you allocate to Facebook advertisements is directly related to how well they serve you and generate revenue for you.