How do you know how much to spend on a marketing campaign?
Setting a budget for Facebook ads is one of the trickiest steps for creating a successful ad campaign — you essentially have to predict the future today.
How much money do you need to create the advertisement in the first place? How much money can you spend before you lose your return on investment (ROI)? These are the questions that keep many traditional and online advertisers up at night.
With social media advertising, particularly through Facebook, this can be even worse. Most digital advertising platforms make it easy to set and enforce budgets for a single campaign. Unfortunately, it is equally easy to go over the budget when you start to get caught up in the instantaneous effects and impacts social media advertising can create.
Here’s a handy guide on how to set up a budget and protect it to keep your next Facebook advertising campaign on track.
Setting Your Budget for Facebook Ads
Your goal here is to find your magic number.
Unfortunately, there’s no golden rule when it comes to setting a Facebook budget. The actual amount you set aside for advertising through Facebook will depend on a number of factors, including:
- The size of your business
- The scope of the audience
- The types of advertisements you choose to use in your campaign
Facebook advertising offers so many intricate possibilities, it’s worth taking some extra time to research and plan.
With that said, there are a few strategies you can use to streamline this process.
First and foremost, think about the percentage of your overall operating budget you have set aside for advertising.
If you use multiple social media platforms, traditional paid-search advertisements through sites like Google, or even direct mail campaigns, your Facebook budget should be a fraction of the overall budget. The exact percentage will depend on how much you want to invest in Facebook as an advertising channel versus the other platforms you are working with.
Second, define the amount of revenue and return on investment you want to generate from this advertising campaign.
In other words, how much revenue do you ideally want to generate from product sales through Facebook? If you know, for example, that you want to make $10,000 in revenue through Facebook alone, you have a number to work with to set the budget.
Take this target goal and do the math to figure out how many successful ads you will need to display on Facebook. This will vary depending on the type of advertisement, target audience you have set, and the average cost-per-click or view of each advertising method.
Once you know how many ads it will take to reach this target goal, under ideal conditions, you’ll have the minimum budget you need to reach the target goal.
Nothing says you actually have to use this minimum budget. If you want to give yourself a buffer zone, increase the budget to account for advertisements that fail to create a conversion. If you feel like the minimum budget is too much, lower the target revenue so your advertising needs are smaller.
Setting the actual budget is a balancing act between too much and not enough.
Sometimes, the only way to truly know what the best budget will be is through some trial and error. This means you cannot abandon the budget once you have it set. The best way to keep a budget effective is to monitor its performance as the campaign goes along and make changes as necessary.
Protecting Your Budget
An advertising budget is just a number unless you take the steps to protect and enforce it throughout a marketing campaign.
Since it can be tempting to pour more money into a campaign — especially if it’s failing to produce the desired results — it takes extra vigilance to keep the budget in the first place. Thankfully, Facebook provides some handy filters and settings to protect your budget, even from yourself.
When you are setting up the Facebook campaign, make sure you include all of the maximum budget settings Facebook offers. These settings include things such as
- Maximum bids for cost-per-click/view rates
- The overall total budget
- Maximum sub-budgets for individual advertisements
You should resist changing the budget before the campaign ends. That doesn’t mean, however, you have to leave the budget alone.
Instead, change the distribution of the budget. If certain ads are failing to produce the same engagement rates as others, move the budget around to fuel the more effective advertisements.
As the campaign runs its course, monitor its performance and change the distribution of the budget when necessary.
Changing the Budget
Sometimes, no matter how much time and effort you spend on planning your marketing budget, it may be necessary to change the budget during the campaign.
While you should try to avoid this outcome, it is important to recognize when it is actually necessary.
Most of the time, people want to continue a successful campaign for as long as possible. Therefore, they will increase the budget to feed the campaign.
This is one approach you can take when choosing to increase the budget. If the metrics suggest the campaign is working, try extending it for a few months and then revisiting the fate of the campaign in the future.
Resist the temptation to increase the budget if the campaign is not producing these favorable metrics!
In fact, these numbers may suggest it is time to pull the plug prematurely on the campaign to save what is left of your initial advertising budget. There is no shame in going back to the drawing board if it means you will have more money to use the next time around.
In the end, stay focused on your budget throughout the entire campaign. In doing so, you’ll avoid going over budget. In the long run, you could end up saving some money or utilizing it in better places.
Got questions? Additional tips? Share them in the comments.
About the Author: Jim Rulison serves as the CEO for Media Loop LLC (formerly the National Center for Pain Inc). Jim oversees the day-to-day operations for all lead generation accounts, with concentration in the healthcare industry. Before joining Media Loop, Jim was the CEO of PME Home Health and was the founder of one of the nation’s first virtual call centers. He lives in Rochester, New York, area, where he and his late wife raised their two children. Jim spends his free time with his family and enjoying cooking and his two dogs. Connect with him on Twitter @Medialoopllc