I often asked about the advertising budget for the Facebook platform.
Let’s talk about – How to calculate your monthly advertising budget
It’s a tricky question, and it depends on many different factors.
First of all, I recommend looking at your advertising not as the money you are spending on Facebook, but as the money you are investing in your business.
Ask yourself, how much are you willing to pay for 1 sale or 1 customer?
Then the budget is defined by the number of sales or customers that you want to generate per month. And there is one more thing to consider here, is that it’s very unlikely to get the ideal price per result in your first month of advertising, that’s why you need to add at least 20 to 30% to your count.
But there are other ways to know how much money do you really need for Facebook ads, they are more technical but easy enough to understand even if you never have been advertising on Facebook before.
All you have to do is to define your customers on Facebook.
Go to your Ads Manager and click on “+Create” in the Campaign Level.
Choose Traffic as an objective that will allow you to see how much will you pay if you want to send out traffic to your website.
Click “Continue” and proceed to Ad Set level, to define your audience.
Knowing who you want to reach with your Facebook ads is the key to understanding how much money you should invest in your advertising. However, it is also can be difficult to define the specific audience, since usually there is more than one definition. Try testing it out by splitting your audiences into different categories and finding them on Facebook one by one. You’ll see how the price changes according to your settings.
For example,
I am testing out an audience that looks like this:
Women, ages 18 to 25, from the USA who are interested in the Loreal cosmetic brand.
The estimated audience size that I got is between 3,700,000 to 4,300,000 people
And the estimated daily result with a $20 daily budget is.
It means that the price range for Reaching 1,000 people on Facebook with the characteristics that I am looking for (Women, 18-25, from the USA, interested in the Loreal brand) will be $2.8 up to $8.
And the price per click will be from $0.06 up to $0.19.
All I need is a simple count when my default daily budget is $20.
I recommend basing your further calculations for your daily and monthly budgets on Facebook on the maximum price, in this case from $0.19 per click or $8 per 1,000 people reached.
Calculate how many clicks you need on average to make a sale or to get a lead, multiply it by the price of 1 action and you’ll have your monthly budget.
Now, it’s Ok if you do not have the whole amount that you need to use for your advertising, you can start with whatever you have and later you can always increase your budget.
Another thing to consider is that this is just an estimated price that Facebook is showing you, based on the competition in the area. In order to beat this price, you need to have a great copy and even greater creative, to attract your audiences. But it is more than enough to know the rough number for your advertising budget.
You might also be interested in Why Facebook Ads Do Not Work