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How to set the budget for your Facebook ad

How to set the budget for your Facebook ad

The Facebook Ads platform has plenty of control options to help you reach your target audience in the most effective ways.

There are lots of customizations around audience, ad copy placements, conversion actions, etc., but one lever that doesn’t get much attention is budget.

There are two types of budget for Facebook – daily and lifetime – each with its own pros and cons. Choosing the wrong one can be detrimental to the effectiveness of your campaign.

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We review each of these in detail below, but first we need to discuss what levels you want your budgets to be managed from campaign or ad sets.

Campaign budget optimization

Historically, budgets on Facebook have been checked at the level of ad sets. But in the last few years, Facebook launched Campaign Budget Optimization, which lets advertisers set a budget at the campaign level, which Facebook then conveys for ad sets based on performance.

Campaign Budget Optimization (CBO) leverages Facebook machine learning to display ads, regardless of which ad set is expected to deliver the best results. Here’s a quick overview image that Facebook uses to show its potential impact:

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In the first example, each ad set has a daily budget of $ 10 that Facebook spends during the day, and each generates a few conversions, resulting in a total of 10 conversions.

In the second example, you set a $ 30 campaign-level budget, the same amount as the combined advertising budgets from the first example, and Facebook will (in theory) deliver it to the most potential ad sets, resulting in ad set spend levels of $ 7, $ 18 and $ 5 and a total of 15 conversions generated.

While this chart makes this seem like a no-brainer, this is not always the case. The CBO is sensitive to audience size differences.

If you have three ad sets in a campaign, 2 with an audience of 100,000 users and a third with 32 million users, Facebook will almost certainly spend the majority of your campaign budget on the largest audience size, as it has the greatest potential, regardless of the number of conversions or return the smaller looks.

There are some quotas for daily minimum and maximum levels with CBO, which means you can tell Facebook that an ad set can only spend a certain amount, while others need to spend at least as much each day.

These can help clear up some of these service issues, but they are not a silver bullet.

If you plan to use minimum and maximum ad sets, do not use them to dictate the entire daily budget of your campaign. This does not allow Facebook to learn and optimize for the target audience that performs best, and it would be the same as if you used ad-level budgets.

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Instead, only approx. 50% of your budget across your ad sets, and let Facebook do the rest of the work.

With that out of the way, let’s now dig into the pros and cons of Daily Vs. Lifetime budgets on Facebook.

Daily budgets

Daily budgets are the easiest to set up, but also have some difficulties that all advertisers should be aware of. With daily budgets, Facebook spends up to that budget per day. Ad set you give it per. Day. Seems pretty simple, and it is.

Disadvantages:

Facebook not only uses up to the daily budget limit, but will actively try to use the full daily budget you have given every single day, no matter what performance is on the given day.

In the image above, the advertised budget is $ 32, and this is where the average spend over the last 30 days is.

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Facebook targeting works more like Display than Search, so it works on getting impressions in front of an audience rather than responding to their fluctuating demand. With daily budgets, Facebook shows as many impressions as necessary for that target audience to make up your daily consumption.

It may sound ominous, but it’s not necessarily a bad thing. More on that in a moment.

The other disadvantage of daily budgets is that it is not possible to schedule your ads for specific times of the day or weekdays. With daily budgets, your ads will run 24/7 (unless you have an external tool to help).

If your business model, offer, or call to action dictates that your ads appear only in certain parts of the day or weekdays, daily budgets are probably not the right fit for you.

The benefits:

First, I want to look again at “spending the entire budget every day”. This spending pattern allows for much easier pacing of spending.

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Every day, you can count on Facebook spending the same amount, making it much easier to control your budgets and plan financially.

Additionally, if your ad set performs well and you get the desired returns, there is no harm in scaling into your full daily budget to get those results as quickly as possible, as future performance is never guaranteed.

Second, Facebook’s daily budgets are the simplest option if you’re always creating an evergreen campaign. This allows you to keep your ads running at all times without having to adjust end dates to keep them active.

Additionally, if you work with weekly, monthly, or quarterly budgets and they change from time to time, daily budgets are a good option. Lifetime budgets, which we will discuss, are best when a budget is set and then left in place until the end date is reached.

If you expect regular changes to your budget, daily budgets are probably the better choice.

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When changing daily budgets, there is a good practice to keep in mind: Limit budget adjustments to 20% of their original level for each day. Any change greater than this will have too much of an impact on the Facebook algorithm and performance may be adversely affected.

If you need to double or halve your consumption, you would ideally make changes every day at 20% intervals until you reached the level you needed. (I realize this is not always possible, but if it is, then this is the way to go.)

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Lifetime budgets

With Lifetime budgets, you give Facebook the budget you want to spend on the entire campaign, then select the date on which the ad set will end. These work differently than daily budgets, but also have their own pros and cons.

The benefits:

With Lifetime budgets, Facebook adjusts daily spending levels based on campaign performance. On days when performance is strong, Facebook spends slightly higher than the average daily budget to reach the lifetime goal.

On days when performance is lower, it will underutilize to save money for another day. At the end of the campaign, you will only use the lifetime budget you set at launch (or adjusted to when the campaign continued).

Many advertisers find that this fluctuating consumption is an advantage, as in theory you should have better returns on your campaigns.

In addition, Lifetime budgets also have ad scheduling available so you can choose which days of the week and what hours of the day you want your ads to appear.

If you only need to have ads turned on during certain hours, this is the budget type for you. That said, this can only be something to use if it is important that you do.

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For example, if your call to action is to call in and you do not have someone there to answer the phone, it’s a pretty bad user experience and you should probably schedule your ads.

But if you only plan them because you do not think anyone fills out a form after noon. 20.00, then I encourage you to start with all the days and hours running and see what performance you get first.

Sometimes people are not able to be on their phones during typical hours and they can take action in the wee hours of the night.

Disadvantages:

With the good comes the bad, but admittedly, the “bad” for Lifetime budgets is more a sense of convenience than anything else.

With Lifetime budgets, daily spending can fluctuate a lot, and these fluctuations can make it difficult to predict or plan what type of coverage you get each day.

If you are in an important season for your business and need to make sure you have coverage or just want to know what to expect when it comes to spending, it may make more sense to go with daily budgets.

Lifetime budgets require advertisers to set an end date with your budget. By doing this, you are telling Facebook how much money it will need for that time frame.

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If you are sure that there will be no changes in the time frame or budget, this is a good option. However, if you are likely to get an extra budget or extend or shorten your campaign, it may not be a good fit.

While it is possible to adjust the budget and change the end date, it will affect how Facebook prioritizes your budget.

If you set an ad set to run for two weeks but then have to cut it down to just one after a few days, Facebook will then adjust and spend a much higher amount on the last few days to try to spend your Lifetime Budget in it. shortened period.

If you need to change the date range or budget, I suggest that you also adjust the other to balance and mitigate large fluctuations in average daily consumption to try to prevent refueling performance.

Conclusion

Checking budgets on Facebook is a sort of retailer’s option, but there is technically no right or wrong way to do it, only some scenarios where one option might make more sense than another.

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Hopefully this overview will make you feel more confident in creating budgets and knowing what all the options you have at your disposal!

Featured Image Credit: Paulo Bobita

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