January 7, 2021 | By: Emily Dundee

How to Budget for Facebook Ads That Work

Facebook is the most popular social media platform in the world, with over 2.7 billion active users every day. When done the right way, advertising your local business on Facebook can quickly grow your audience and increase revenue.

In this article, we’ll teach you how Facebook ads work and how to run a successful campaign on a small business budget.

How Much Do Facebook Ads Cost?

Many small business owners struggle with figuring out how much to spend on Facebook ads, but in reality, these ads can cost as little as one dollar per day.

One of the most convenient parts about using Facebook ads is that you can choose how much you want to spend. Facebook will then take that amount and work to get you the best results possible. You can invest as little as $5 a week or as much as $50,000.

The good part about this approach to advertising using social media is that the time and knowledge barriers to entry are very low. You don’t have to be an expert in Facebook advertising to begin. The bad part is that you have little context about how your ad money is being spent. It’s kind of like a used car salesperson asking you how much money you have to your name after you ask them how much a particular car costs.

Your Facebook minimum campaign budget will depend on a variety of factors we’ll discuss below.

Minimum Budget for Facebook Ads

If you have a small- to mid-sized business or are new to Facebook ads, give yourself a budget of around $1.00-$3.50/day for your first few campaigns. Starting off with a low daily budget will allow you to see which ads are most effective, and you can later adjust your budget if needed.

When it comes to small businesses, organic social media posts reach only about 6% of their followers. It would be more beneficial to post occasionally with a small paid budget and ensure your content is reaching potential customers in addition to current followers.

How to Calculate the Best Facebook Ad Budget for a Small Business

how much to spend on Facebook ads

Before isolating your Facebook Ad budget, ask yourself – how much should a business spend on marketing?

Typically, businesses should allocate 5-12% of their revenue for their marketing budget. New companies that want to grow aggressively should spend closer to 12%, while companies that want to maintain their growth might spend only 5%.

Whatever your overall marketing budget, you may want to allocate around 17% to run a successful social media marketing campaign.

How to Run Affordable Facebook Advertising

Many small business owners struggle with advertising because they don’t know how to budget for Facebook ads. According to a new survey, 62% of small businesses feel like their paid Facebook Ads are failing.

how Facebook ads work

Small businesses often experience challenges such as low marketing allowance and even budget cuts. However, just because your business’ marketing budget has been cut doesn’t mean you have to stop advertising.

If you target the right audience with the right content and invest wisely, you should achieve a positive return on investment.

1. Establish Your Facebook Ads Budget

The first step to advertising on Facebook is establishing your budget. There are two types of budgets on Facebook:

  • Daily Budget – This is the average amount you want to spend on an ad each day. For example, if you set your daily budget to $10 over the course of four days, you will be charged up to $40 total.
  • Total Budget – This is the maximum amount you want to spend on an ad until it stops running. For example, if you set your total budget to $20, you’ll be charged no more than $20.

To preserve your budget, we recommend using the Lifetime Budget feature on your ads. This tool allows you to set a specific dollar amount you want to spend over the lifetime of an ad.

To determine the best budget for Facebook ads, you will need to consider a few factors, including your revenue, how aggressive you want to grow, and how much time you can commit to advertising. All of these should be taken into consideration when planning your Facebook ads budget.

Distribute Budget Across Different Ad Types

how much is it to run Facebook ads

It’s important to distribute your Facebook ad spend across different types of Facebook ads. Here are the three main types of Facebook ads you should be using:

  1. Offer Promotion – 60% of your Facebook advertising budget should focus on directly promoting your product or service. You need content-focused ads to get clicks and generate leads.
  2. Audience Building – 20% of your budget should focus on engagement, education, and audience building. This will help you establish an audience that you can continually target over time.
  3. Retargeting – 20% of your Facebook ad spending should be used for retargeting ads. When a potential customer visits your website, tracking cookies will follow them across the internet so that they will continually see your ad on other websites. Facebook is great for retargeting so it’s important to allocate a chunk of your budget for this method.

By splitting your ad budget across these three ad types, you will ultimately get the biggest bang for your buck.

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2. Determine the Right Audience

Billions of people use Facebook every day, and your target customers are among them. Narrowing down your audience will help to reach the right buyers and grow your business.

If your audience is too wide, your ads won’t convert and you’ll just be wasting money. Determine who your ideal audience is by paying attention to your current customers’ unique behaviors and interests.

Once you figure out who your potential customers are, you can work on creating content that will resonate specifically with them. Knowing your customers and followers also allows you to create more personalized ad content. Studies show that 71% of consumers prefer personalized ads.

3. Create Effective Ads

When you know who you are trying to reach it’s much easier to create effective ads. Tailoring your content to your target customers’ interests will help you make the most of your small business budget.

The types of ads you run should reflect your business goals. Here are some common goals for small business owners:

  • Generate business leads and attract new customers
  • Build brand awareness
  • Increase new customer calls
  • Improve customer retention
  • Increase website traffic

4. Boost Engaging Posts

One of the cheapest ways to advertise on Facebook is by boosting posts. The boost feature allows you to widen the audience of a post exponentially, targeting relevant users. This tool is great for small businesses because it’s affordable and effective.

Facebook advertising budget for small business

Boosting engaging posts will increase your brand’s visibility and can even help combat algorithm changes. The amount you spend on boosting will be determined by the number of posts you want to boost, the posts’ performance and duration.

However, it’s important to pay attention to which posts you’re boosting. Paying to boost random posts just because it’s quick and easy isn’t the best strategy. Take the time to analyze your content and predict how it will be perceived by a new audience.

5. Identify Effective Ads & Focus on What Works

Once you’ve run a few campaigns, take some time to evaluate and determine which ads and boosted posts achieved the best results. Knowing which ads received the highest engagement will help you decide where to put your future efforts when it comes to creating content. You may even decide to increase your marketing budget.

MARION Can Help Make the Most of Your Small Business Budget

Just because your marketing budget is small doesn’t mean your results have to be. With the right marketing plan, Facebook ads can help you reach new customers and grow your audience while keeping costs low.

MARION is a full-service marketing agency in Texas that has been helping small businesses advertise big since 1981. Our social media marketing strategists in Houston, Austin, and DFW are experienced in working with small- to mid-market marketing budgets.

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About Emily Dundee

Emily Dundee is a lover of all things digital marketing. When her eyes aren't glued to a screen, she's most likely eating Tex-Mex or spending quality time with her three small dogs.

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