How Much Budget Should Businesses Spend Facebook Ads?

How Much Budget Should Small Businesses Spend on Facebook Ads? Facebook is a marketing game-changer. It can give you huge ROI and boosts your business. Facebook ads are popular among marketers who want to target a broad audience with optimized investment.

The budget needs vary from business to business. So, how much should a small business spend on Facebook ads?

It is a big question for newbie professionals. We have detailed knowledge about what budget best suits your business. Also, on how you can turn your investment into profit.

Boost Post is where people promote their business on Facebook. Also, Boost Post helps you gain post visibility, engagement, and page likes. You can either customize a Boost Post campaign or let Facebook decide everything for you.

Small businesses prefer Facebook ads because of the huge competition on Google. Also, there’s more ROI. On average, Facebook costs you nearly one dollar a day. However, you can choose the budget based on your needs and ad goals. With one dollar a day, you have can’t go wrong. You don’t have to hire a third-party agency, and there’s no fear of failure.

The outcome depends on your budget. How much you can get from running your Facebook ads depends upon how you make the ads. However, the budget that a small business should use depends on many things. Some of them are listed below.

Your Ads Objective:

Why are you running Facebook ads? It’s a question that decides how much investment you need. For example, If you are investing to gain sign-ups, your budget will be higher than another campaign that just wants more traffic.

Many marketers don’t know the right way of Facebook ad marketing.

So, they invest too much. The best way to find a budget for small businesses is to set different goals with at least $1 per day. Investing a small sum will tell you what can work for you and give you a high ROI.

Once your goal is set, you can now work on the Facebook audience, demographics, creatives, etc. Use this data and prepare a strong marketing plan for Facebook ads.

Think Creatively and Outside the Box:

New, small businesses can’t fight big brands. However, they can think outside the box and do something unique. Creatives used in your Facebook ads play a big role in boosting your online presence and ROI.

However, to test the outcome, you can decide how much you want to spend on your ads. Take inspiration from existing small businesses. Check how their Facebook ads gave them good results.

You can also be creative. Bring work that your audience would love and increase your ROI. This way, you can focus on saving investment and manage your expenses.

Test, Test, Test!

As a small business, you can only test your efforts. You may have heard success stories about Facebook marketing strategies. Now, you might want to use them to lower your spending. But, there’s no universal strategy for all business niches. So, you must always try to find the best and most effective ad copy.

After you find the high ROI ad on Facebook, you can both increase the budget and set it according to your business requirements.

Here, taking ample insights into the online data is highly recommended. Don’t rely on reports based on one day or two.

With that said, it’s clear that small businesses are able to adjust their budget. So, they can decide whether to spend less or more on their ads. Facebook ads can be highly effective. In fact, they give better ROI than Google ads if your user base is active on social media.

Starting with less isn’t a false practice. Instead, it is good to have a safe game and test what works well for you.

Besides, it’s been mentioned that you could spend as little as $1 per day on Facebook and still get good results.

So far, you have enough knowledge about how much you can spend on Facebook ads. It’s time to see what budget you must spend to get fruitful results from ads.

Before talking about the factors that decide your Facebook expenses, let’s take a look at some stats.

FACT: The average Cost Per Click (CPC) is about $0.35 globally and about $0.28 in the U.S.

Image Source: https://buffer.com/library/content/images/size/w1000/library/wp-content/uploads/2017/01/2016-Q3-CPC-Facebook-Ad-Cost-countries-1.png

Now, let’s look at the factors that you must evaluate in your Facebook ad expenses.

Your Maximum Bid Amount:

Running a Facebook ad means you are competing in a huge market. You need a strong and effective ad copy to outrank your competitors. Your bid rate plays a significant role.

Bid rate is the maximum amount you are willing to pay for your ad objective. Facebook gives you two options. Namely, Automatic Bid and Manual Bid.

In Automatic Bidding, Facebook decides the right bid rate and populates their ad. The bid is automatically decided to give you huge results with a full budget. Facebook always prefers this option over manual bidding.

In Manual bidding, the social media marketer is the decision-maker and fixes the maximum amount for Ad copy.

Small businesses more often recommend opting for an automatic bid. Under manual bidding, your ads might not compete against others. Hence, they remain in the ideal state.

Ad Relevance Diagnostics:

Facebook evaluates the quality of every ad based on relevant diagnostics. Then, it starts delivering work based on its results. Facebook ad relevance diagnostics include three sections.

Quality Ranking
Engagement Rate Ranking
Conversion Rate Ranking

The outcomes are shown in predefined parameters. Namely:

Above Average
Average
Below average

Image Source: https://www.socialmediaexaminer.com/wp-content/uploads/2019/05/facebook-ads-improve-below-average-relevance-diagnostics-600@2x.png

Based on this, you can see how your Facebook ads are performing. Make sure all values are ‘Above Average’. It means you have the best ad optimization. However, ‘Below Average’ is a critical case that results in a high budget with low results.

Your Audience Targeting:

The audience you chose for your ads influences the Facebook ad cost. Different audiences have different competitions.

Thus, you must always consider a high-ROI audience that can benefit you with minimal investment.

Selecting a highly competitive audience means you will pay more than usual to keep your Facebook ads showing.

Above all, your Facebook ad cost will be higher than other marketing practices.

Image Source: https://neilpatel.com/wp-content/uploads/2015/10/facebook-ads-manager-beginning-interface.png

So, you must focus on your Facebook audience and narrow it down to build an effective audience loop.

Right audiences mean high ad visibility. It gives you high results with low investment.

Ad scheduling is one big factor that you shouldn’t forget. People remain in an ideal state during night hours. So, you should prefer pausing your ads during nighttime.

Most Facebook ads don’t have high clicks during the night. That can exhaust your budget. Instead, you should focus on specific times when your audience is more prone to see your ad and turn into a potential customer.

Placement of Your Ads:

Where are your ads showing? It is an important question. You must check that when optimizing your Facebook ad. The common ad placements in Feeds are:

Facebook News Feed
Instagram feed
Facebook Marketplace
Instagram Explore
Facebook right column
Messenger Inbox
Facebook video feeds

Source: https://en-gb.facebook.com/business/help/175741192481247?id=369787570424415

Apart from Feeds, you also get Search, In-Video Ads, Stories, In-Article, and Apps placements.

It’s important to know what can give you high results. Marketers suggest running your ads on both Facebook and Instagram. Targeting the same audiences on those platforms will grow your ads’ visibility.

Distribute Your Facebook Ad Spend:

It’s good to distribute your money on multiple ads. That gets you the best results from your Facebook ads. Using all your budget on one ad won’t ruin you. However, it won’t bring you the desired results.

On the contrary, spending a limited budget on multiple ads will maintain good results and low investment. Running several ads will also boost performance.

Interestingly, not every startup business can manage their Facebook ads. Here comes the role of an offshore Facebook ads agency. It’s good to choose Facebook ads management services and get assured results with minimal spending.