What Is A Good Facebook Ad Spend Baseline?

Identifying a solid Facebook Ad spend benchmark remains one of the most frequently asked questions within the sphere of digital marketing. Establishing your budget is fundamentally subjective, driven by the value of your product, your appetite for risk, and your overall marketing budget. This piece aims to unravel some of the complexities around Facebook ad spending, providing you with some guidelines and levels to consider.

The Short Answer to Minimum Ad Spend

If you asked me in 2022 what is the minimum Ad Spend? I will say $1,500 and that’s for a start-up business with either an e-commerce or lead gen objective.

NOW in 2023, I would say one needs a minimum ad spend of $2,000 per month. I can already here the side comments “Yes, it’s doable”, “yes it is possible”, and “Yes, one can spend less than that $2,000 and get results”. Having said this, if you want to start your campaigns on a strong foot then you need to spend $2,000+ per month. Do you know why? Because the amount of Ad spend matters. You need as much traffic as possible to your website to get conversions.

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How Much Should I Spend on Facebook Ads and NOT the Minimum?

The first element to understand is how Facebook’s cost per thousand impressions, or CPM, works. Essentially, this refers to the amount you need to spend to make your ad visible to a thousand people. By investing just $1 a day at an average CPM of $8.99, you can receive about 111 impressions daily. Extrapolating that across the year, a modest investment of $365 can earn you over 40,000 impressions.

Focus Your Ad Spend on Conversions If That’s Your Objective

That’s a significant number of potential customers who may not have discovered your product or service otherwise. At this level, your $1 daily budget can go far. However, to get the best bang for your buck and get conversions, focus on bottom-of-the-funnel audiences. 

These could include previous purchasers, individuals who added items to their carts but didn’t follow through with the purchase, or visitors who browsed product pages without adding anything to their cart. By focusing your budget on these target groups, you increase the chance of fostering conversions with your modest ad spend.

But what about those looking to delve deeper and optimise their ad strategy further? This brings us to the second level of Facebook ad spend.

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The Facebook Learning Phase

Here, your objective should be to harness Facebook’s robust algorithm to your advantage. Facebook’s algorithm requires roughly 50 conversions per week to exit its learning phase and then actively identify similar users who are most likely to fulfil your desired goal.

To achieve this, you need not limit your definition of conversions to purchases alone. Facebook allows you to set your campaign to optimise for add-to-carts or even link clicks. By broadening your conversion definition, you can reduce the minimum spend required to leverage Facebook’s algorithm.

How do you determine your spending in this scenario? It’s a simple formula: multiply your average cost-per-add-to-cart by 50 to derive your weekly budget. For instance, if it costs you an average of $2.50 for each add-to-cart, you should consider a weekly ad budget of approximately $125 or $540 per month.

Do You Bother With Add-to-Carts Optimisation?

However, the inherent flaw in the above approach is that it optimises for add-to-carts rather than purchases. Remember to focus your ad spend on conversions if that’s your objective.

While add-to-carts indicate interest, they don’t guarantee a sale. Hence, the next level involves optimising purchases, the ultimate form of conversion. If your average cost-per-purchase is $11, then you should budget approximately $550 per week or around $2,360 per month on Facebook ads.

The next level, aimed at those who are ready to maximise their investment in Facebook advertising, involves achieving a lower cost-per-purchase while maintaining a healthy conversion rate. After mastering the previous levels (two and three), it’s time to fine-tune your ad creatives and target audiences to reduce your cost-per-purchase.

Here’s My Facebook Ad Budget Formula

  • Minimum of $2K per month
  • Increase this to a minimum of $3K per month during high season
  • 5% on Engagement Campaigns
  • 15% on Awareness Campaigns
  • 15% on Pageview Campaigns
  • 65% on Conversion Campaigns
  • If you need to sell and have a budget of under $2K avoid boosting a post
  • Have a minimum Campaign ROAS of 3
  • Aim to get a Campaign ROAS of 4+ ASAP

A Balanced Ad Spend is The Key

The ultimate goal at this level is to balance a lower cost-per-purchase with high-volume conversions. If you can maintain a profit while meeting these parameters, you should consider scaling your ad spend to maximise reach and profitability.

It’s critical to remember that the world of Facebook advertising is not a ‘set and forget’ type of endeavour. Continual campaign optimisation is key to driving success, especially in lower-budget scenarios. One should visit your account at least once a day if your daily spend is $300+ per day.

Efficient strategies include reducing spend on underperforming ads, constantly testing new ad creatives, and incrementally increasing budgets on high-performing ad sets.

Facebook ad automation can be a game-changer in optimising your campaigns. With its ability to reduce costs and quickly respond to performance changes, it’s no wonder it’s a favoured tool amongst digital marketing professionals.

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