Ad Budget Facebook: How To Calculate Effective Ad Budgets

How much should a beginner spend on Facebook ads to get the best results? Is there a magic Ad Budget Facebook formula for calculating the perfect budget? With years of experience in Facebook advertising, I’ll share with you some content about Facebook advertising budgets. Hope this article is helpful to you.

What Is An Ad Budget On Facebook?

Your ad budget Facebook is the amount of money you want to spend on advertising on Facebook. It directly influences the reach and frequency of ads, determining how many people see them (reach) and how frequently they’re exposed. To optimize campaign performance and achieve your revenue goal, managing your ad budget carefully is essential.

When distributing your ad budget across different ad sets, you have two primary options: campaign budgets and ad set budgets.

For both methods, you can decide whether to distribute funds daily or over the entire lifespan of the ad campaign. We’ll explore these options in detail.

Campaign budget vs Ad set budget

You have the option to set a total budget for your entire campaign or allocate specific budgets to individual ad sets within that campaign. Before making this decision, it’s important to calculate your overall ad expenditure (I’ll provide guidance in the next section).

Campaign budget

A campaign budget is managed through Meta’s Advantage campaign budget (previously known as campaign budget optimization).

By setting a campaign budget, you establish a total spending limit for the entire campaign. Facebook’s algorithm then automatically distributes this budget across your ad sets in real time, prioritizing those with the highest potential for success. This approach can help you simplify budget management.

Ad set budget

With an ad set budget, you can determine the budget amount for each ad set a campaign by yourself. This means you have greater control over how much is spent on each ad set and can modify the budgets separately to optimize your campaign by yourself. 

Daily budget vs Lifetime budget

You can allocate your Facebook ads budget in two primary ways: daily or lifetime.

Daily budget

A daily budget sets an average daily spending limit for your ad campaign and doesn’t require an end date. For instance, when you set a $5 daily budget, Facebook aims to spend approximately $5 each day.

It’s important to note that this isn’t a hard cap but rather an average over time. Spending can fluctuate a bit from day to day.

Lifetime budget

A lifetime budget defines the total amount you’re willing to spend on a campaign within a specified timeframe. For example, if you set a $50 lifetime budget over 10 days, Facebook will spend up to $50 within that period, and never exceed your limit. However, the amount of money spent on each day can vary significantly based on ad engagement, rather than being evenly distributed.

How To Calculate Your Ideal Facebook Ad Budgets?

There is no perfect ad budget Facebook formula for all businesses, but I’ll reveal some tips to calculate the effective Facebook ad budget based on your overall digital ad expenditure, your revenue goal, and the number of customers you can consult or serve in a day.

Budgeting Facebook ads based on your overall digital ad budget

While both Google and Facebook are considered leading digital advertising platforms in terms of both usage and performance, businesses should be aware that Google Ads typically have higher costs compared to Facebook.

Generally, you should allocate about one-third of your entire digital ad budget to Facebook. This approach ensures sufficient funds for creating compelling ads and running successful campaigns without overextending resources that might be required for other advertising channels.

Ad budget Facebook calculator based on your Facebook revenue goal

Not a numbers person? No problem. I have got an ad budget Facebook calculator for you. Download it right below to find out the perfect spending amount to reach your sales goal.

Download Ad Budget Facebook Calculator

To use this calculator, you’ll need your CPM (cost per thousand impressions), CTR (click-through rate), and conversion rate.

How to find your CPM, CTR, and conversion rates

Before beginning, you must have run at least one Facebook ad campaign previously to get these numbers. Don’t worry if you’re new to Facebook advertising. I’ll provide estimates to help you ballpark your budget.

Otherwise, you can find your CPM, CTR and conversion rate in your Facebook Ads Manager:

• Go to https://adsmanager.facebook.com/adsmanager/manage/campaigns
• Click on the Columns button to open the Columns drop-down menu.
• Choose the Customize columns option.

• In the Performance section, tick on CTR and CPM to see data.

• Then, click on Conversions on the left menu > Standard Events. Choose the metric to measure your conversion rate, then click Apply.

Average CPM, CTR, and conversion rates

If you have never launched an ad campaign on Facebook before, I suggest you use Facebook ad benchmarks by industry for reference.

Data: Legesbue

According to Wordstream, on average, Facebook ads across all industries have a conversion rate (CVR) of 9.21%. Here are Facebook conversion rate benchmarks by industry:

Calculate your budget

Now, you can start calculating your ad budget on Facebook based on your desired revenue. Here’s how:

• Download the Ad Budget Facebook Calculator, then open thhe file.
• Fill in the input section: revenue goal, price of product/service, CPM, CTR and conversion rate.
• See the estimated ad budget in the output section.

Depending on the number of customers you can consult/serve in a day

One thing you also need to consider when setting your ad budget is the number of customers you can consult/serve in a day.

For example, Jane, a personal consultant, decides to run Facebook lead ads offering an incentive to get more customers. Averagely, it takes her about $8 for one lead. Jane can consult up to 10 people per day, so the maximum daily budget should be about $80.

Conclusion

Ad budget Facebook calculating doesn’t have to be overwhelming. With a strategic approach and the right formulas, you can optimize your spending and maximize your return on investment. Follow these tips to unlock the potential of your Facebook ad budget. For more Facebook advertising insights, keep an eye on our blog. SpeedX Agency wishes you continued success.