How to Calculate and Set Your Facebook Ad Budget [Free Tool]

Do you think your Facebook ad budget is just a shot in the dark? Have you ever wondered if there is a more strategic way to calculate and install? You are not alone when it comes to how much to spend on Facebook ads.

Well, marketers, business owners, and content creators, it’s time to get ready – we’re about to explore the secret depths of Facebook’s ad budget.

Grab your calculators, put on your math hat, and put your phone on Do Not Disturb as we uncover the secrets of successful Facebook ad spending!

Types of Facebook Ad Budgets

Facebook ad budgets control how much you spend on ads.

When setting your Facebook ad budget, you will be faced with two options:

1. How to split your ad dollars between all your ad sets (campaign budgets and ad set budgets) and
2. How each ad group spends its allotted money (lifetime budget vs daily Facebook ad budget)

Depending on the type of ad campaign you’re running, these budget options can help you maximize your hard-earned ad dollars.

Tip: If you don’t understand the difference between Facebook Campaigns, Ad Sets, and Ads, check out the Meta Blueprint tutorial on how to structure your ads.

Campaign and ad group budgets

You can set an overall budget for your campaign or individual budgets for ad groups. Before setting up any of these, consider your total Facebook ad budget (we’ll help you figure that out below).

Campaign budgets are like one big bucket of money that flows to all of your ad groups. It chooses which ad group receives funds based on which one has the best opportunity. If you are flexible with your budget, then this option is the least time-consuming and usually produces results at a low cost.

In addition, you can set separate budgets for ad groups. This option means you have control over how much is spent on each ad set. Individual ad set budgets are useful when your bidding strategies vary between sets, or if you have large audience size differences.

Individual ad set budgets are also useful when you’re testing different advertising tactics to see how they perform.

Lifetime and daily budgets

Whether you’re choosing a campaign budget or an ad set budget, you’ll need to choose between a lifetime budget and a daily budget.

With a daily budget, you set your average ad spend per day. This is great if you want to spend about the same amount per day. Daily budgets are not hard limits, meaning they can fluctuate slightly from day to day.

On the other hand, a lifetime budget is the total amount you are willing to spend from start to finish. If you know how much you want to spend and don’t care if you spend more on Friday than on Monday, this is for you. Lifetime budgets are a hard cap; they will not exceed your limit.

Facebook Ad Budget Calculator

Look, we would never send you into the digital marketing jungle without the right tools. That’s why we’ve created a Facebook ad budget calculator that does the math for you. Download our handy Facebook Ad Budget Calculator to determine exactly how much you need to spend to get the results you want.

To use this calculator, you need to know a few things. Don’t worry; it won’t be like a high school math class. We promise you won’t be able to fail this lesson!

For this example, we will use the fake Business Bats company as a replacement. Business Bats sells baseball bats for your business needs, whether it’s smashing your printer Office Space style or working out in the boardroom to burn off some energy after a meeting. Business bats are loved by room dwellers all over the world.

Find out your CPM, CTR and conversion rates

You will need to run at least one previous Facebook ad campaign for this section. If you haven’t run any campaigns, skip to the “How to get a benchmark without running a Facebook Ads campaign”section below. Otherwise, read on to gather the right data and instructions on how to calculate your Facebook ad budget.

Your CPM (cost per thousand impressions), CTR (click through rate) and conversion rates can be found in Facebook Ads Manager.

The default column view is Performance, so you need to select the Performance & Clicks view from the Columns dropdown menu to see your CPMs and CTRs.

Once you’ve changed your column view, simply scroll to the right to find CPM and CTR.

Then it’s time to find the conversion rate. Start by deciding how to categorize your “conversions”. A conversion can be many things, such as when a consumer initiates a checkout on your site or installs your app. Think about it this way: what do you want someone to do after seeing your ad?

Once you’ve decided on your conversion event, you can set up the main reporting dashboard in your Facebook Ads Manager. Click “Columns: Performance”and then scroll down to “Customize Columns”at the bottom.

Then click “Conversions”, “Standard Events”on the left. From here, you can click on the metric you want to measure for your conversion rates. Then click Apply.

How to calculate CPM, CTR and conversion rates yourself

Knowing how to calculate social media metrics is a skill that all marketers should have. This way you can find out what you need to know, no matter where your data is stored.

Your CPM is calculated based on the amount you spend on your campaign and the number of times your ad has been shown. So you take your total ad spend, divide it by the number of impressions, and then multiply by 1,000. If you spent $300 and got 5,000 impressions, your CPM would be $60.

CPM = (total ad spend/impressions) x 1000

Your CTR is the number of clicks on your ad that you received divided by the number of ad impressions and then multiplied by 100. If you had 100 clicks and 5,000 impressions, your CTR would be 2%.

CTR = (Total Ad Clicks/Total Ad Impressions) x 100

Your conversion rate is calculated by dividing the number of conversions from your Facebook ad by the total number of link clicks your ad received and then multiplying by 100. If you had 100 conversions and 2500 link clicks, you would get a 4% conversion rate.

Conversion Rate = (Total Ad Clicks/Total Ad Clicks) x 100

How to budget if you’ve never run a Facebook ad campaign

If you’ve never run a Facebook ad campaign and don’t have historical data, you can use industry benchmarks for your numbers.

Keep in mind that benchmarks can vary greatly depending on various factors such as industry. Take, for example, conversion rate benchmarks.

Source: Hootsuite Q2 Digital Trends Update.

The tests aren’t perfect, but you still need to start somewhere. So, take a few benchmarks that are closely related to your business as a starting point.

Pro tip: In the Hootsuite Q4 Digital Trends Update, CPM and CTR comparisons are discussed on page 262. You can find conversion rate benchmarks in the Hootsuite Q2 Digital Trends Update on page 266.

For business bats, we will use 1.2% for CTR and $8.15 for our CPM since these are Q3 2022 averages. %, since this is the average of industry indicators for the first quarter of 2022. Average ecommerce conversion rates are around 2.5-3%, so this number is a pretty reasonable baseline.

In the next section, we will find the ideal Facebook ad budget for Business Bats using these numbers.

How to set a Facebook ad budget

You can calculate your Facebook ad budget manually, or do it the easy and fun way with our Facebook Ad Budget Calculator!

Step 1. Download the calculator

Your first step is to download the Facebook Ad Budget Calculator and copy it to your Google Drive.

Step 2: Enter your numbers in the appropriate boxes

Fill in column B with the numbers you got by following the instructions above. Choose a revenue goal and add the value of your product or service.

As for business bats, we would like to earn $3,000 from this campaign and each of our bats is worth $50.

Step 3: Check your budget in column G.

We estimate that in order for Business Bats to reach our revenue goal, our Facebook ad campaign budget would need to be around $1,770. Not bad!

How to change your Facebook ad budget

Now that you know what your budget should be, you can go to Facebook Ads Manager to adjust your numbers.

You just need to hover over the ad group or campaign you want to set up. Click Edit, enter the budget change you want to make, and click Publish. Your advertising budget should be adjusted within 15 minutes. And voila, you’ve changed your Facebook ad budget.

What is the best Facebook ad budget for a small business?

Unfortunately, there is no one-size-fits-all answer when it comes to deciding on a Facebook ad budget or the best Facebook ad budget for a small business.

Several factors can affect your budget, such as your industry, your goals, and the habits of your audience.

Frankly, determining the optimal budget will require trial and error. But there are some best practices that you can use to get it right.

Start experimenting

Determining the budget for your Facebook ads requires experimentation. Changing elements of your ad such as text, visuals, targeting, budget, and timing can lead to understanding what works.

You can also try a number of other tactics, such as targeting similar audiences and targeting audiences that are interested in your competitors.

Testing different strategies at different levels will help you decide how to effectively allocate your online marketing budget, which will ultimately lead to higher conversions among your target audience and a high ROI on your investment.

It takes time

Not seeing the results you hoped for in a day? Do not panic.

As you experiment with different ad types, be sure to give your ad groups time to develop and work. You’ll want to see how they work at different points during the week. Is Friday better than Monday? Time will show.

Rate and customize

Once you see how your ad variations work, you’ll have a much better idea of ​​what works and what doesn’t. Check the Facebook data to see which ad sets performed the best, then reflect those strategies for your future ad spend.

You can take the three most effective ad sets and recreate them for your next campaign. Adjust them a little, based on your knowledge and data from your experiments. By doing this a few times, you’ll end up with the most effective ad sets.

Be sure to keep experimenting!

Start with what you can afford

You don’t need to spend a lot of money for your ad to be successful. You can set a minimum daily budget for your Facebook ads that you can afford. Your Facebook ad budget can be whatever you feel comfortable spending.

At Hootsuite, we experimented with a $100 budget. It just goes to show that you don’t need much to get started.

Heed Facebook’s Minimum Budget Guidelines

While you definitely shouldn’t go broke trying to run ad campaigns, you should pay attention to Facebook’s minimum budget guidelines. The platform will send you an alert when your budget is too low to get the results you want. And it can give you a great idea of ​​how much to expect to spend in the future.

Experiment with budget scaling

Once you figure out the minimum spend, you might start to wonder how to scale Facebook ad budgets. Try increasing your budget and see if conversions increase at the same rate.