2024 Facebook Ad Spend Guide: Setting the Right Budget for SuccessNov 21, 2023
2024 Facebook Ad Spend Guide: Setting the Right Budget for Success
"What should my starting Facebook Ad budget be?"
Is the first question everyone asks me whether we are on a discovery call or when Facebook ads come up in casual conversation in my daily life. And yes, Facebook Ads often do come up in my casual conversations because I am a Digital Ads Strategist and I love what I do :) but I don't love this first question because the answer is always "it depends," which is kind of annoying...
But it's true! Every business is unique, and so should be its Facebook and Instagram Ads budget. It's not just about the numbers; it's about understanding your business dynamics, customer value, and market trends. The key to crafting your digital ad budget is starting with the lifetime value of a customer/average customer value to your business and an "acceptable cost per lead," which would ideally be calculated based on your profit margins.
(note, if you do not have the data to calculate the lifetime value of a customer/average customer value, then replace that number with the price of your offer in the examples below).
Real-World Facebook and Instagram Ad Budgeting Scenarios
For Service-Oriented Businesses:
- Assume a Lifetime Value of a Customer/Average Customer Value (ACV) of $3,000.
- Set an Acceptable Customer Acquisition Cost (ACAC) at 25% of the ACV, amounting to $750.
- If your Lead to Customer Conversion Rate is 25%, then you need 4 leads for one customer.
- Your Acceptable Cost Per Lead (CPL) would be: ACAC divided by 4 leads = $750 / 4 = $187.50 per lead.
- For a goal of acquiring 10 new customers each month then your initial ads budget should be $1,8750/month
For E-commerce Ventures:
- Let's say your Average Customer Value is $50.
- Assuming a product cost of $25 (50% margin), your ACAC could be 40% of the margin, equating to $10 per customer.
- For a goal of acquiring 30 new customers, your initial ad budget should be: 100 customers x $10 = $1,000.
When you run your business goals through those calculations does the projected ad spend seem way too high?
That's alright! It doesn't mean you shouldn't use Facebook and Instagram ads in your marketing strategy. The above examples are for calculating budgets to sell products or services with ads.
Leveraging Smaller Budgets for Awareness and Engagement:
It's important to remember that every stage of your customer's journey offers unique advertising opportunities.
In the early stages, when your goal is to build awareness and engagement, Facebook and Instagram ads can be particularly cost-effective. These platforms are excellent for creating a buzz around your brand and fostering connections with your audience.
With smaller budgets, you can craft campaigns focused more on sharing your story, educating your audience, or simply sparking conversations, rather than direct sales. This approach not only saves on costs but also lays a solid foundation and provides feedback for future sales-focused campaigns.
If I had $150/month to dedicate to Facebook and/or Instagram Ads I would run an Engagement Campaign for $5 a day:
What's cool about the Meta's Engagement objective is that we can optimize for different results! You could:
1. Optimize for "Conversations" and send viewers to your DM's to start a conversation
2. Optimize for "Post Engagements" and build up social proof on a post that shares about your current offer.
3. Optimize for "Video Views" and find people interested in the information that you are sharing in your latest video
What's cool about these engagement campaigns, is that later, as you increase your spending with Facebook Ads Manager, you can re-target those people that engaged with this ad which will help drive your future ad prices down.
If I had $300/month to dedicate to Facebook and/or Instagram Ads I would run an Awareness Campaign for $10 a day:
Almost all of my clients incorporate this campaign into their winning Facebook Ads Strategy, especially if they are already investing time into running an organic social media campaign on Facebook or Instagram. This strategy allows my clients to capitalize on their existing marketing material to make additional sales to people who already know them. Here's how it works!
We select ten of their recent Instagram posts with the highest engagement on a variety of subjects and spend $1 on each of these posts per day (so $10 total) in an awareness campaign to their warm audience, i.e. their email list, customer list, website visitors in the last 180 days, and anyone they've engaged with on Instagram or Facebook in the last year.
That way, my client stays top-of-mind to their community and will be there when someone is ready to buy.
*Sometimes, if it feels appropriate, we will subtract buyers OUT of the audience that receives this campaign. It's easy to change the audience for what is best for your business.
Determining "How much should I spend on Facebook Ads in 2024?" is an art and science combined.
It's not just about setting a figure; it's about strategically allocating your resources for maximum impact. Stay tuned for more insights and strategies that will help you navigate the digital marketing landscape with confidence and clarity.
Want to learn how many days you need to run a Facebook Ads Campaign to see "good results?" See my popular blog article here
Meredith Kallaher helps small business owners Expand Their Reach and Explode Their Sales with
Facebook and Instagram Advertising Strategy and Management.
Learn How Meredith Can Help You Build Your Business and Exceed Your Sales Goals. Book a FREE DISCOVERY CALL Today.