Budgeting on your Facebook campaigns should be all about the data – the science. In our experience, this usually only contributes half the success. The rest is art, or, if you will – experience.
We have found that there are three factors that meld together when trying to figure out how to budget a Facebook campaign. Annoyingly they’re not all in your control hence why budgeting across these three dimensions becomes more of an art versus outright science.
Facebook will provide an indication of how many people fit your targeting criteria on its platform. Remember this targeting should represent your best guess about the people that would be most responsive to your ad.
Depending on what type of messaging you are running your audience size will vary drastically. As an example, if you are running an awareness campaign using video your audience size could be in the hundreds of thousands of people. Alternatively, if you are running an ad to a re-targeting audience that visited your site in the last day your audience size might be materially smaller.
Anyway, let’s say that after narrowing down the potential audience your total audience size is 10,000 people. Now you have to decide on how much you want to spend to reach these people.
Our rough rule of thumb is that $10 will result in a reach of around 1,000 people or a CPM of $10. So to reach these 10,000 people, 10,000 people that you think are really interested in you, it’s just going to cost $100 right? Not so fast…
The $10 rule is an easy one to use, but there are other factors at play which will sway the actual costs of your ad and therefore the amount of people that you actually reach.
To provide some background, when you place a Facebook ad you are competing with other advertisers hoping to show an ad to someone in the target group. Facebook’s algorithm is a closely guarded mosaic that I suspect only a handful of people are completely across. But in a nutshell, if you select automatic bidding it will determine who to show your ad to in the group of 10,000 at the lowest cost based on your budget and time frame. In general, we find that the automatic bidding system is fine and dandy particularly with smaller amounts of spend and a longer time frame.
If you have a really small target group that you know are hot to trot you can use manual bidding. When you do this you can put in a much higher bid in order to ensure that your ad is shown to people.
…back to costs. How much should you budget for given the 10,000 people? The answer is you don’t really know. Facebook could show it to 5,000 people for your $100 or 10,000. The way it’s determined is on whether that audience is being targeted by a ton of other advertisers competing for their eyes, how much you’re willing to spend AND how relevant your ad is. You have no control over other advertisers – but you can do your best to try and make your ad a thumb stopper.
It is well known that the Facebook platform takes a little time to work. Try not to run ads for less than three days. This gives the algorithm time to optimise ie see who’s clicking on the ad and start showing it to other people in your defined target group that are likely to do likewise.
When you’re thinking cross the dimensions on Facebook when it comes to budgeting 1) potential reach 2) how much your ads are costing you the timeframe question is also important.
Give ads three days minimum and let the Facebook algorithm work for you.
Facebook’s relevance score is assigned to each ad from 1-10. In essence, it is Facebook’s view of the ‘quality’ of your ad to consumers. If you have a relevance score of 10 it means that people are responding positively to your ad. There are also two other metrics called ‘negative’ and ‘positive’ feedback. I’m a little sceptical on the impact of these though because I have seen far too many ads perform well from a cost, relevance score and conversion perspective ie low costs, high relevance scores and lots of sales that also have ‘high’ negative feedback.
How Should I Budget?
So – how do you decide how much to spend? Start with the $10 rule. Then see how many people you’re actually reaching and the frequency that Facebook is showing your ads to people with. If, at the end of your initial $100 campaign to reach 10,000 people, you see that you have a:
– high frequency targeting a group of 10,000 people – Facebook is showing your ads to just 5,000 of them ie reaching the same people repeatedly – you have a high relevance score You can bet that other advertisers are outbidding you within the Facebook platform. Or, in other words your campaign has stalled. To kick start it again you can shift to manual bidding or start a new ad set with new creative. The issue with starting a new ad set is that your targeting will reset in the Facebook system and may simply be shown to the same 5,000 that saw it the first time.
What’s A Good Result?
This is always industry and messaging/offer dependent. If you’re trying to sell a $1,000 product versus a $10 product you will experience a different range of outcomes on Facebook.
You should know a range of your industry stats and see if yours are comparable. In general, we use the following metrics as a starting point:
– 0.50c to get a click to site – $1.50 to get an email signup (this is highly variable depending on what you’re offering) – $10-15 to sell an $80 product
Over to you – do you have any tips for good budgeting on Facebook campaigns?
– Rukmal Co-founder of The Plus Ones, Rukmal lives and breathes digital marketing.