Determining the right budget for your Facebook Ads depends on factors such as your product’s average cost-per-purchase, your risk tolerance, and your total advertising budget.
Determining the right budget for your Facebook Ads depends on factors such as your product’s average cost-per-purchase, your risk tolerance, and your total advertising budget. In this guide, we’ll break down different strategies for optimizing your ad spend using MisterCMO, a platform designed to help you manage and optimize your advertising investments with automation.
Level 1: Spend the Minimum on Facebook Ads
If your goal is to start with a minimal investment, even as little as $1 per day can make a difference. Let’s break it down with an example:
The average Facebook CPM (Cost Per Thousand Impressions) in 2023 is $8.99. Using the formula to calculate daily impressions:
Daily Impressions = (Daily Budget x 1000) / CPM
By substituting the values:
Daily Impressions = ($1 x 1000) / $8.99 = 111 impressions per day.
This means that, for just $1 a day, you can reach approximately 40,515 impressions in a year. Even with such a small budget, you can start familiarizing yourself with the platform and testing your audience, as long as you focus on bottom-of-funnel audiences like past purchasers, abandoned carts, or product page visitors.
Level 2: Spend More to Leverage Facebook’s Algorithm
To get better results, you need to spend enough to leverage Facebook’s powerful algorithm. According to Facebook, an ad set needs 50 conversions per week to exit the "learning phase." Reaching this threshold allows Facebook to collect sufficient data to find more users who are most likely to achieve your goal.
Luckily, "conversions" don’t necessarily mean purchases. You can set your campaign’s objective to add-to-carts or even link clicks. By moving up the funnel—e.g., from purchases to add-to-carts—you can decrease the minimum spend required to take full advantage of Facebook’s algorithm.
💡 Example: If your average cost-per-add-to-cart is $2.50, your weekly Facebook ad budget should be $125, or about $540 per month.
Level 3: Spend Enough to Achieve 50 Purchases per Week
The downside of optimizing for add-to-carts (Level 2) is that you’re optimizing for add-to-carts, not purchases. While adding products to a cart is a necessary step before making a purchase, it’s possible for users to abandon their cart without completing a transaction.
For Level 3, you should spend enough on Facebook Ads to achieve 50 purchases per week. If your average cost-per-purchase is $11, you need to budget $550 per week, or about $2,360 per month, on Facebook Ads.
Level 4: Optimize to Lower Your Cost-Per-Purchase
After successfully spending the budgets required for Level 3 (or even Level 2), your focus should shift to improving your ad creatives and targeting to achieve a lower cost-per-purchase.
💰 Goal: Achieve a low enough cost-per-purchase to remain profitable while spending enough to maintain at least 50 conversions per week. If you’re spending profitably, you should continue increasing your budget as long as you maintain profitability.
Maximize Your Facebook Ad Spend with MisterCMO
With MisterCMO, you can automate your budget-saving strategies and automatically pause low-performing ads. Here are some strategies you can implement:
- Reduce spending on underperforming ads: Pause any ad that has zero conversions after spending more than twice your target cost-per-conversion.
- Increase budgets for high-performing ad sets: Increase an ad set’s daily budget by 10% if its ROAS (Return on Ad Spend) remains above a certain threshold.
Key Takeaways
- Even a small budget, such as $1/day, can make a difference if targeted correctly.
- An ad set needs 50 conversions per week to exit the learning phase and feed Facebook’s algorithm with data to optimize for your desired goal.
- To optimize for add-to-carts, multiply your current average cost-per-add-to-cart by 50 to determine your weekly budget.
- The goal is to achieve a low enough cost-per-purchase to maintain profitability while spending enough to secure at least 50 purchases per week.
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