Whether you're an established business looking to take the leap into Facebook advertising or you've got a new idea you want to test out, one thing is certain. One of your first questions is going to be in regards to how much to spend on Facebook ads.
Coming up with your ideal Facebook ad budget isn't easy. But the reality is that the more you can spend, the better. Optimizing your ads requires a learning phase - and during this learning phase, you need to give the algorithm enough to work with so you can start to see quick results. The advertiser who can afford to spend $100 a day will see results far quicker than the advertiser who is only willing to spend $20 a day. It's as simple as that.
With that said, how much should you spend on Facebook ads per day/month? And what is the best way to distribute your budget among the different steps of your funnel? In this in-depth article, we'll answer these two questions along with many others you probably have. We'll even share some advice to help you get the most out of your budget. Let's start with why it matters how much money you spend on Facebook ads.
Why It's So Important To Consider How Much To Spend On Facebook Ads
Why is it so important to consider how much to spend on Facebook ads? Because your budget will be the biggest factor determining how successful you are on the platform. You can't expect to hit lofty goals if you're spending $10 a day. You get out what you put in. Hopefully, you can get a good ROAS with Facebook ads and bring a few dollars in profit for every dollar you spend. By spending more, you stand to gain more.
With that said, the opposite is true. And new businesses in particular are hesitant to spend much on something they're so unfamiliar with. Totally understandable - but hear us out. You need to bite the bullet and spend money on the platform before you can expect results.
Think about it this way: Facebook delivers your ads to users based on an algorithm. In order to find your ideal customer, Facebook needs to try different things. It will reach different people and find users most likely to convert. At first, you may not be thrilled with your results. But trust the system - as you spend more, Facebook learns more. Over time, Facebook will begin spending your money more efficiently. And with a small budget, you'll sit around waiting longer for that learning phase to end. This is why we encourage you to start with an ample budget.
If you can't afford to spend enough on Facebook ads for it to really make sense, you should consider turning your attention to organic media efforts. Paid media isn't the right choice for you at this time. But this begs the question - how much should you spend on Facebook ads per day or month? Allow us to discuss.
How Much Should You Spend On Facebook Ads Per Day/Month?
You came here to find out how much you should spend on Facebook advertising per day - and now, we're going to answer your question. If possible, spend at least $100 a day getting started. In the digital world, it's all about speed. The faster you can get back data and start tweaking/optimizing the better. However, there are definitely other factors that can affect your ideal budget. Let's start there:
How To Determine Your Initial Facebook Ads Budget
Your budget may not be something you have much control over. If you work within a business or agency and have been tasked with running paid media, you likely have been given a budget that you must work within. You won't have a ton of wriggle room. However, if you are the decision-maker for your business or can otherwise influence budget, here are some things to keep in mind during the process:
A typical marketing budget at any given company is anywhere from 5-15% of revenue. That means if you bring in $100,000 a month, you can budget anywhere from $5,000-$15,000 a month. More aggressive businesses looking to scale rapidly may go even higher - but this is just an average ballpark number. But revenue is just part of the equation. You also should know other important pieces of data to help you build your budget:
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Average order value: what is the value of a single order through your business? If your AOV is $20, you'll have less room to spend on advertising than a business with an AOV of $100. Knowing how much you can spend to bring a customer in the door is key to influencing your budget.
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Average cost per customer: if you know other marketing channels cost you $20 per customer, you can use this benchmark for Facebook. Thus, you can seek to spend $100 a day on Facebook ads - knowing it has the potential to bring in 5 purchases.
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Customer Lifetime Value: beyond just a single sale, how much is a customer worth to your business over the course of their life? This is important because many businesses are willing to break even - or even lose money - on the initial acquisition sale for a customer if they know the CLTV is profitable. For example, a subscription-based business may only make $10 per sale - but each month, they rebill at $10. If a customer sticks around for 6 months? A year? 5 years? You get the point.
By starting to dig into this data, you'll get an understanding of what you need to spend in order to meet your business's goals. Only you can dictate your ideal budget. Our recommendation? You should be willing to spend an absolute minimum of $20 per day on Facebook advertising. To really be successful, we encourage a budget of at least $100 per day. This will give you room to allocate the budget to the different stages of your funnel.
Figure Out A Good Split For Your Facebook Ads Budget Among Your Funnel
Another big question we get after answering how much should you spend on Facebook ads is how the budget should be allocated. A solid Facebook advertising strategy has at least three different steps of the funnel:
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TOF: Top of funnel represents the largest portion of your marketing efforts. These are people who are just being introduced to your brand and are furthest away from making a purchase. You typically find these people through cold traffic. Think interest targeting, look alike audiences, etc.
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MOF: Middle of funnel represents a smaller portion than TOF. These people have expressed some degree of interest in your brand - but are still a ways off from making a purchase. These include people who have viewed content, visited certain pages on your site, etc.
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BOF: bottom of funnel are people who are just a step or two away from making a purchase. This is the smallest group of people in your funnel. These people have expressed interest by adding products to cart, initiating checkout, etc.
As you can imagine, each funnel has varying levels of budget allocated. Your TOF represents the largest group of people. And because new customers are the lifeblood of your business, you'll dedicate most of your spend here. A slightly lower allocation will go to MOF, while the lowest allocation goes to BOF. Here is a good split to follow:
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TOF: 60%
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MOF: 30%
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BOF: 10%
Over time you should monitor where you are losing prospects the most. For example, you can try spending slightly more on your TOF CBO if you're struggling to get people into your MOF. On the other hand, if you're not converting enough abandoned carts, you can increase spending on your BOF. This is just one of the many reasons you should consistently analyze Facebook ads data.
Scale Spend Slowly Over Time
Another common question we get from advertisers is how much to spend on Facebook ads while scaling. Your budget in month one should not be the same budget you have on month 3. But the important question is, how fast should you scale? There is nothing stopping you from doubling your budget overnight. If things are profitable, why not scale to the moon?
The problem with fast scaling Facebook ad spend too quickly is that it can lead to your results tanking. Huge changes to ad spend budget will put the machine back into the learning phase. And, we've seen so many instances where winning campaigns never recover from being scaled too abruptly.
Trust us - we know how tempting it is to feed the machine more and more as results keep coming in. But scale your Facebook advertising budget slowly. It's worth the wait to keep results consistent. And many businesses are not always aware of the reach you can get on Facebook. If you scale too fast, you may not be prepared from an inventory/internal processes standpoint.
With all this said, we recommend scaling your ad spend no more than 20% every 2-3 days. Slow scaling is the name of the game!
How Much Should You Spend On Facebook Ads Per Day During Peak Season?
Another factor that will dictate your Facebook advertising budget is seasonality. Both product/brand seasonality and peak buying seasonality. For example, you'll want to increase your advertising budget during summer if you sell outdoor goods. You may spend slightly less during the cold winter months when buying interest is much lower.
On the other hand, a snowboarding goods brand will ramp up ad budget leading into the colder months. As spring approaches as temperatures warm up, these types of brands usually decrease their overall marketing budget.
One thing to keep in mind is the need to increase your ad campaign budget during peak e-commerce season. We're talking BFCM (black Friday, cyber Monday) here. In fact, from late October to late December, you should consider increasing your spend. Buying interest is much higher during this time and you want to make sure you aren't missing out on easy conversions because you ran out of budget.
How Much To Spend On Facebook Ads When Testing
One final thing we want to talk about is how much to spend on Facebook ads when testing. When we talk about testing, there are a few things that it could represent:
- Testing a new product/offer
- Testing a new audience
- Testing a new ad copy/creative
We highly recommend setting up a unique test campaign separate from the rest of your digital marketing campaigns. This will allow you to really good information from your testing efforts before pulling an offer, audience, or ad into your main campaigns. When it comes to setting your testing campaign budget, we recommend going with about 20% of your top-performing CBO. So, if your overall Facebook ad budget is $100 a day - spend $20 on testing.
How Much To Spend On Facebook Ads: Final Thoughts
There you have it - how much to spend on Facebook ads. We've talked about why developing your budget isn't something you should take lightly. Remember - Facebook ads work better when you feed the beast that is the Facebook algorithm. The more you can spend, the better results you'll achieve. We've also explained how to distribute your budget at different steps of the funnel, how to tweak your budget based on seasonality, and how to incorporate testing into your budget.
Want to learn more about Facebook ads? Our articles discussing Facebook detailed targeting expansion and the different parts of a Facebook ad are both great resources. But, if you want the really juicy stuff you can't get anywhere else, join the Utopia today.
Inside our digital marketing community, you can discover real-world insights from the most reputable, successful media buyers in the world. with over 3,000 members and counting, you can find out exactly how much other advertisers are spending on their Facebook campaigns. There is no better way to learn than by following along while others do exactly what you are hoping to do - check it out today and see what we have in store for you on the other side. You won't regret it!