Facebook Advertising Marketing – Budget

Types of Budgets

1) Daily Budget

The daily budget refers to the average amount you are willing to spend each day, not a hard cap. The daily budget is the average spending per day in a week. Sometimes a certain day may be 75% higher than the budget, and sometimes it is lower. So it is normal for the spending to fluctuate. The actual cost will be averaged over a calendar week (Sunday to Saturday). That is, the spending will not exceed 7 times the daily budget for the week ending on Saturday night.

For example, if you set a daily budget of $10, the total spending for the week will not exceed $70. The spending on some delivery days may be as high as $17.5, while the daily spending on some delivery days may be less than $10.

Therefore, it is recommended to set the amount to 5-7 times the cost per conversion when setting the daily budget. If the advertiser’s cost per conversion is $10, then the daily budget should be set between $50-70, because if Facebook ads do not have enough budget, there is no way to obtain enough data analysis to optimize the ads.

2) Total budget

The total amount spent during the ad campaign is a hard cap, not an average. It is applicable to campaigns with a clear end date. Daily budget consumption fluctuates, and several days’ budget may be spent in one night. For example, if a total budget of $100 is set, the total cost during the ad campaign will not exceed $100.

1) Campaign Budget Optimization

Manage budgets at the campaign level and set an overall campaign budget. When using ACB, Facebook will dynamically adjust budget allocation based on the performance of each ad group to optimize ad performance. Enabling campaign budgets are best suited for campaigns with at least 2 ad groups.

2) Ad group budget optimization

By managing budgets at the ad group level, you can set specific budgets for each ad group. When using ASB, we can precisely control the budget of each ad group, whether it is a daily budget or a total budget, and can adjust it according to specific needs.

Choice between ACB and ASB

When advertisers want to reduce manual adjustments and rely on Facebook’s algorithm for optimization, they want to save time and energy and simplify the management process, or when they have a large number of ad groups and large differences in ad performance, it is more appropriate to choose Facebook ad campaign budgets.

1) Advantages: Based on the performance of different ad groups, more budget can be given to the ad groups with better performance to ensure the maximization of the overall effect. Ad groups within the series will not bid against each other, which is more suitable for large-budget expansion. Easier management.
Automatic optimization: Facebook will automatically allocate budgets based on the performance of each ad group to maximize the advertising effect. Reduce the manual adjustment workload of advertisers, saving time and energy.

Improve advertising effect: By automatically allocating budgets, ensure that ad groups with good performance get more resources and improve the overall advertising effect.

Simplified management: Applicable to ad campaigns with a large number of ad groups, reducing the complexity of managing one by one.

2) Disadvantages: The budget is more inclined to be allocated to the larger ad groups of the audience, which may result in insufficient exposure for some ad groups.
Low flexibility: Advertisers have less control over the budget of each ad group and rely on Facebook’s algorithm to allocate. If advertisers have a specific budget strategy, it may be difficult to achieve precise control.

Dependence on the algorithm: The budget allocation effect depends on Facebook’s algorithm. If the algorithm is inaccurate, it may lead to unsatisfactory budget allocation.

ASB, “Ad Set Budget”

Facebook ad group budgets are more suitable for campaigns with a small number of ad groups and need to be optimized for specific audiences. Advertisers will also have greater control and flexibility over each ad group.
1) Advantages: More refined control over ad groups. Different bidding strategies can be used for different ad groups. More suitable for ad testing.
High control: Advertisers can set a separate budget for each ad group and accurately control the expenditure of each ad group. Applicable to situations where budget optimization is required for specific ad groups.

High flexibility: Advertisers can adjust their budgets at any time based on the performance and needs of each ad group. Applicable to campaigns with a small number of ad groups or flexible budget adjustments.

Clear resource allocation: It can ensure that important ad groups get enough budget to avoid being consumed by poorly performing ad groups.

2) Disadvantages: Not suitable for large budget expansion, which is easy to collapse. Difficult to manage.
More management required: Advertisers need to continuously monitor and adjust the budget of each ad group, which increases the workload of management and optimization. Applicable to advertisers who have time and resources for detailed management.

Potential waste of resources: If advertisers do not adjust their budgets in time, poorly performing ad groups may consume too much budget.

By understanding the advantages and disadvantages of ACB and ASB, as well as the corresponding selection scenarios, we need to choose the most suitable budget management method according to our own needs, advertising goals and management resources to achieve the best advertising results.

In Facebook Advertising Marketing – Relationships, Levels, Goals, we mentioned that FB’s advertising level is a pyramid structure. Under one advertising campaign, there can be many advertising groups. Therefore, in the same advertising campaign, we can either control the budget at the series level or at the advertising group level, that is, ACB and ASB are two choices.
However, whether it is ACB or ASB, you can choose to use a daily budget or a lifetime budget.

Optimization of advertising budget

1) Planning of advertising budget

When planning Facebook advertising budget, if you are a novice without enough data and experience, you can check the industry benchmarks. By comparing the advertising performance with these averages, such as click-through rate (CTR), cost per click (CPC), conversion rate (CVR) and cost per conversion (CPA), we can determine whether the expenditure is too much or too little, and adjust the budget accordingly.

In addition, whether using ACB or ASB, you can adopt the “small steps and fast running” approach, that is, start the budget small and test:

Low-budget campaigns: Run initial campaigns with limited budgets to test different ad formats and positioning.

Low-cost ad groups: Optimize ads by creating smaller ad groups in the campaign, and be able to test variants with low budget risks.

Of course, this “low” needs to be kept within a reasonable range. Too low a budget may cause the ad to not run.

2) Make sure the audience targeting is set reasonably

The audience size of the ad may affect the operation of ACB, because ACB will automatically allocate the budget to the ad group with a larger audience size.

For example, if the audience size of ad group A is large, and the audience size of ad group B is small, then when using ACB, most of the delivery will be concentrated in ad group A, because there are more optimization events there and the cost is naturally cheaper. In addition, if the audience size of an ad group is too small, it may also cause the effectiveness cost of this ad group to be too high, and ultimately fail to deliver.

3) Choose the right bidding strategy

For more information about bidding strategies, see this article Facebook Advertising Marketing – Bidding Strategy.

1) Calculate based on product sales price
Pure new products/new websites can be calculated based on product prices, which is actually a comprehensive calculation of product costs and profits.
Daily budget for advertising group = 15%~25%*product sales price
For example: if the product sales price is $100, the daily advertising budget is $15-25.
Reason: Let our Pixel have enough time (4-5 days) to conduct machine learning and reach the available population. Among them, 15%~25% is an advertising cost range. Different industries and products are different, and everyone’s cost control goals are also different. Of course, everyone hopes that the advertising cost is as low as possible, so it is necessary to master a balance between cost and advertising benefits.
Finding a break-even point is a simple idea for budgeting. That is to say, the 15%~25% given by the formula is a rough range. You can calculate a ratio based on the sales price of your product, minus various costs, and the remaining profit. If the advertising expenditure is within this ratio, it can basically avoid losses.
Calculation is a basic skill of operation, so experienced operators generally will not set the advertising budget to 30% of the sales price for products with a gross profit of 40%, which is a waste of money for charity and a loss for every order. Of course, setting the budget too low will also lead to the advertising fee not being spent.

2) Calculate based on existing data
If you have accumulated data, you can calculate based on the CPC and CVR, or the CPA of a single conversion.

Total budget of the advertising campaign = 3~5CPC/CVR=3~5CPA