How Much Budget Do I Need to Advertise on Facebook?

This is one of the most popular questions from our clients: how much do we need to spend on Facebook ads to get tangible results?

The answer, however, isn’t so simple – some agencies may claim that you need to spend tens of hundreds of thousands to get maximum reach without any foresight or acknowledgement of what your actual business objectives are.

How Big is Your Audience?

Unfortunately, there are no hard and fast, cookie-cutter rules on what you should and shouldn’t spend on Facebook for advertising. A lot of how much you can (and should) spend will depend on the type of business you are, the actual locations and areas you are advertising in, and what your objective is.

For example, if you own a large online fashion brand with national or even global coverage, there will naturally be a need for a larger social advertising budget, which could easily run into the tens of thousands of dollars per month.

On the other end of the spectrum, you might be a boutique fitness studio that has a very localised market and only wants to advertise to people who live within a 3-4 kilometer radius around the studio, therefore the reach and potential audience will be vastly narrower than that of a global company and therefore the budget requirements a lot less.

Apart from the potential audience size, the mix of objectives will also have a huge impact on how much budget you should be assigning to your campaigns – whether you are going for brand awareness and exposure, consideration, conversion focus or retargeting, there are numerous factors to consider.

Deciding on Budgets

A lot of your budget decisions, however, will be determined by a testing phase at the start of your campaigns or from looking at previous campaign performance and data. As a data-driven digital agency, it is these tests and reviews that will help us ascertain what your base level cost per acquisition is – from then, we can work out firmer budgets based on these findings.

Just remember that if you are getting a positive ROI with a smaller budget, increasing the budget 2x/3x/5x is not an effective way of scaling your ads and can, more often than not, have a detrimental affect on performance and your overall cost per acquisition. This is something that we have to manage on an ongoing basis with our clients – sometimes when the going is good a client will want to just throw more money at it in the same way, but this isn’t always going to give you the desired result.

This is why we prefer a more strategic approach to campaigns, especially when scaling. Whatever agency you choose to work with should be able to look at your historical paid Facebook campaign data and recommend budgets to you.

Similarly, if you have no history or haven’t run any campaigns in the past, then using a small testing budget is a very easy way of gaining helpful insights from Facebook in the early days.

The most important thing is that your agency should be able to find a sweet spot where you can get your desired reach and exposure with a favorable ROI!