Are you trying to lock your budget for Facebook Ads? Do you require some budget wisdom? Don’t worry.
In this article, you will learn about several stages of Facebook Ad Spending and the factors on which the budget of your marketing goals depends. Let’s get into the article for more details!
Stages of Facebook Ad Spending
If you are searching for the minimum you can spend on Facebook ads, even just $1 per day can make an enormous difference. The average cost-per-thousand impressions (CPM) for 2020 is $9.77. So, if you spend only $1 a day on Facebook ads, you can get 37,359 ads a year. Spending $1 a day, you can get 37,000 impressions from people who would not have seen your ad.
Spending $1 a day on Facebook ads is a great way to start using Facebook ads and understand how Facebook ads work. In order to make the most of your small budget, make sure that your target audience is only bottom-of-funnel audience, such as previous buyers, adding a shopping cart but not buying, or retargeting product page visitors who have not purchased a shopping cart.
After spending $1 a day, the next step is to spend enough money to take advantage of Facebook’s powerful algorithms. According to Facebook, advertising set requires 50 conversions a week to get rid of the learning phase, and Facebook then provides you with data algorithms to find more of the same users who are more likely to achieve their goals. At this level, you can actually use Facebook ads.
So how much do you need to spend on Facebook ads to get 50 conversions? Fortunately, “conversion” does not necessarily mean a purchase. You can customize your campaign optimization to add a shopping cart or even link clicks. In the funnel (for example, from shopping carts to adding products), you can reduce the minimum expenditure required to use the Facebook algorithm. This is the second stage.
To find out how much you spend on the Facebook add-on shopping cart, you can multiply the current average cost of each shopping cart by 50 to get a weekly budget. For example, if your average cart cost is $2.50, then your weekly Facebook advertising budget should be $125, or about $540 per month.
The disadvantage of second stage and add-to-cart optimization is that it is optimized for adding shopping carts instead of purchase of items. Although adding products to the shopping cart is a necessary pre-purchase step, there may be users who have added them but have not purchased the shopping cart.
On the third level, you need to spend enough money on Facebook ads to achieve 50 purchases a week. Therefore, if your average purchase price is $11, you should reserve $550 per week for Facebook ads, or about $2,360 per month.
Now that you have successfully spent the required budget on stage 3 (or even stage 2), your focus should be on improving advertising and audiences to reduce purchase costs.
The goal of the fourth level is to keep the purchase price low enough to achieve profitability, while spending enough to get at least 50 conversions per week. If your spending is profitable, you need to spend as much as possible while maintaining profitability.
6 Factors Affecting Facebook Advertising Spending
As mentioned earlier, there are many factors that affect your Facebook advertising spending. The following is an overview of some of the more important variables.
People with specific demographic and psychological characteristics are more expensive than others. Therefore, if your target is a high-maintenance audience, your Facebook ad spend will be higher. This is the main supply and demand relationship. Therefore, you may want to narrow the scope of your target audience to narrow the scope of your competitors.
But be careful, since there are fewer available placements, building a small audience may result in higher costs.
When you create an ad, Facebook will ask you to choose a marketing goal. The marketing goals you choose will have a significant impact on your Facebook advertising spend.
Generally speaking, incurring cost of sales is more than just promoting your brand. In other words, conversions are generally more costly than clicks, and clicks are generally more costly than video viewing.
This may be a key factor in the cost of your Facebook advertising. Why? Because of the Economics foundation of supply and demand. If there is no other company trying to reach their target audience, there will be no demand, and their spending on Facebook advertising will decrease.
But back to reality, your spending on Facebook ads depends largely on how many competitors you have, how much they want to spend, and how high your relevance score is.
Time to Advertise
Competition might increase during peak times and hours. Therefore, you can expect your Facebook advertising spending to increase in the months leading up to Christmas or other holidays. More importantly, the day of the week and even the specific time of your promotion will also affect your Facebook advertising costs.
There are many different advertising locations on Facebook. Below is a short list of Facebook ad positions available in 2021.
- Facebook feeds
- Instant articles
- Video streams
- Right column
- Market Place
- Audience network
- Banner videos
Instagram posting is the most expensive, with an average of $1.15 per click. Posting ads on Instagram Feed and Instagram Stories is more expensive than posting ads on Facebook.
Relevance score is an indicator of Facebook that measures the relevance of your ads to target groups. As people interact with your ad, your relevance score will increase. However, if many people ignore your ad or click on “This ad has nothing to do with me”, your rating will drop.
If your ad gets a high relevance rating, Facebook’s algorithm will approve it and may even spend less on the same placement.
Hope this article helped you understand about Facebook algorithms and ad spending. Also, keep the above six factors in mind before investing or setting your marketing budget. Let us know your feedback in the comment section before!