How to Choose Your Facebook Ads Campaign Budget

Francesco Noli

Francesco Noli

Founder Adsvanced Performance Agency - Advertising Expert

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How to Choose Your Facebook Ads Campaign Budget

The existential question (rightly) for first-time campaign creators is: how much budget should I invest in a single campaign?

So, let’s start in order. There are several methods for calculating the optimal budget, and now we’re going to figure out how much budget to allocate in TOFU, that is, for campaigns targeting people who have never seen us.

First method:

If you know at the outset the average or desired cost per share (CPA) you start at a great advantage. In this method in fact if for example from the business history I know the average CPA then I will use that as the starting figure.

Once you have extrapolated this figure, multiply it by the number of specific shares you want to get in total and then divide it by the days the campaign will remain active.

EXAMPLE:

Average CPA = 10€ multiply Desired events = 50 divide Active campaign days = 15 Budget = 33.3€ /day

Second method:

If you don’t know the average CPA then you need to find the average CPM.

What is CPM

CPM is nothing more than the cost per thousand impressions. A single impression equals one user viewing your ad.

CPM is also an important indicator on the type of targeting or quality of our advertisements. In fact, the more quality the target audience, the more likely the CPMs are to have a high average value, and the more quality and relevant ours are, the lower the CPM will be.

Our goal is always to keep it as low as possible. Beware, however, that very low CPMs may indicate that we are targeting a low-quality audience.

Either way, take your average CPM or assume it by doing some online research and divide it by the CTRx10m finding the average cost per click (CPC), multiplying it by the number of clicks needed to get a conversion.

Once the number is obtained, multiply it by the desired conversions.

EXAMPLE

CPM = 3€ CTR = 1.5% * 10 = 15 AVERAGE CPC = 3/15 = 0.20€ CONVERSION EACH 75 clicks CPA = 0.20€75= 15€ Desired conversions = 100 Active campaign days = 20 **Budget = (15100) / 20 = 75€ /day**

Budget for remarketing

It is most important to allocate budget in remarketing as well.

The optimal budget ratio between the various stages of the funnel is as follows:

  • 70/80% TOFU
  • 10/20% MOFU
  • 5/10% BOFU

So, if your budget of 75€ daily in TOFU equals 70/80% you should allocate more or less 20€ to be placed in remarketing broken down into MOFU and BOFU.

If you have never had campaigns go, it is usually best to remarket 4 to 5 days after you have TOFU going. In fact, your audiences in the MOFU and BOFU the first few days will be empty, and it pays to give your listings time to fill the audiences.

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