The right amount of budget to start with for Facebook ads depends on the average cost-per-purchase of your products, your risk tolerance, and your total advertising budget.
When I get asked what’s the minimum amount to get started or how much should I spend on Facebook ads, I like to break it down into three different levels to answer this question.
If you're looking for the absolute minimum amount you should spend on Facebook ads, then even as low as $1 per day can still make a big difference.
The average cost per thousand impressions (CPM) so far in 2020 is $9.77. So if you only spend $1 on Facebook ads per day, you could have people see your ads 37,359 times in a year. That means for just $1 per day, you can get 37k impressions from people who wouldn’t have otherwise seen your ad.
Spending $1/day on Facebook ads is a great way to get started with Facebook ads and get familiar with how Facebook ads work. To get the most use out of your low budget, make sure your audiences are only bottom-of-funnel audiences like previous purchasers, add-to-carts but didn’t purchase, or retargeting product page visitors who didn’t add-to-cart.
The next step above spending $1/day is to spend enough to take advantage of Facebook’s powerful algorithm. According to Facebook, an ad set needs 50 conversions per week to exit the learning phase and for Facebook to feed its algorithm with data to find more users like them who are most likely to achieve your goal. This is the level where you can really take advantage of Facebook ads.
So how much do you need to spend on Facebook ads to get 50 conversions? Luckily “conversions” don’t have to mean purchases. You can set what your campaign is optimizing for to add-to-carts or even to link clicks. By going up in the funnel (e.g. from purchases up to add-to-carts) you can decrease the minimum amount you need to spend to take advantage of Facebook’s algorithm. This is level two.
To see how much you should spend on Facebook ads for add-to-carts, you can take your current average cost-per-add-to-cart and multiply it by 50 to figure out your weekly budget. So if for example your average cost-per-add-to-cart is $2.50, then your weekly Facebook ad budget should be $125 or about $540 per month.
The downside of level two and optimizing to add-to-carts is that it’s optimizing to add-to-carts and not purchases. While adding products to a cart is a necessary step before purchases, it’s possible to have users who add-to-cart but don’t purchase.
For level three, you should spend enough on Facebook ads to achieve 50 purchases per week. So if your average cost-per-purchase is $11, you need to budget $550 per week or about $2,360 per month on Facebook ads.
After successfully spending the budgets required for level three (or even level two), you should now heavily focus on improving your ad creatives and audiences to achieve a lower cost-per-purchase.
The goal in level four is to achieve a low enough cost-per-purchase to be profitable while spending enough to have at least 50 conversions per week. If you’re spending profitably, then you should spend as much as you can while maintaining that profitability.
Make the most of your spend on Facebook ads
A key part of getting the most out of low budget campaigns is continually optimizing your campaigns. The most effective way to do this is to reduce spending on underperforming ads, continually testing new ad creatives, and increasing budget on high performing ad sets.
Reduce wasted ad spend
To pause an ad as soon as it begins to underperform, you can use our Revealbot Strategy called “On the safe side,” which will pause an ad if it has zero conversions after spending more than two times your target cost-per-conversion.
Another automation you can use is our Strategy “Down and out,” which pauses ads if they do have conversions but at too high of a cost-per-conversion.
Increase budgets on high performing ad sets
This Revealbot Strategy, often referred to as “surfing,” will increase an ad set’s budget for the day by 10% if half is spent with a good ROAS. The budget will continue to increase the budget by 10% as long as its ROAS is above a certain amount.
All of these Strategies can be fine tuned to your campaigns, budgets, and style of management. But one thing is for certain: by using automation, you’ll make adjustments to your campaigns faster than a human could at every hour of the day.