How to Set the Budget for Your Facebook Ad

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

There are plenty of customizations around target 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 benefits and drawbacks. Choosing the wrong one can be detrimental to your campaign performance.

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We’re going to go through each of these in detail below, but first, we need to discuss which levels you want your budgets to be controlled from campaign or ad set.

Campaign Budget Optimization

Historically, budgets on Facebook have been controlled at the ad set level. But in the past couple of years, Facebook launched Campaign Budget Optimization, which lets advertisers set a campaign-level budget which Facebook then disseminates to the ad sets based on performance.

Campaign Budget Optimization (CBO) leverages Facebook’s machine learning to serve ads from whichever ad set is expected to deliver the best results. Here’s a quick overview image Facebook uses to show its potential impact:

How to Set the Budget for Your Facebook Ad

 

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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 ad set budgets from the first example, and Facebook will (in theory) serve it to the ad sets with the most potential, 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 isn’t always the case. CBO is sensitive to audience size differences.

If you have three ad sets in a campaign, 2 with audiences 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 most potential, regardless of the number of conversions or return the smaller ones are seeing.

There are some allowances for daily minimums and maximums with CBO, meaning you can tell Facebook that one ad set can only spend a certain amount while others have to spend at least this much every day.

These can help offset some of those service issues, but they’re not a silver bullet.

How to Set the Budget for Your Facebook Ad

 

If you do plan on using ad set minimums and maximums, don’t use them to dictate the entirety of your campaign daily budget. This won’t allow Facebook to learn and optimize to the best performing audience and it would be the same as if you were using ad set level budgets.

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

With that out of the way, now let’s 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 intricacies that all advertisers should be aware of. With daily budgets, Facebook will spend up to the amount of budget per ad set you give it per day. Seems pretty simple, and it is.

The Drawback:

Facebook will not only spend up to that daily budget limit, it will actively try to spend the full daily budget you’ve given every single day, no matter what performance is on that given day.

How to Set the Budget for Your Facebook Ad

In the image above, the ad set budget is $32 and it’s spot on where the average spend is for the past 30 days.

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Facebook targeting operates more like Display than Search, so it’s working to get impressions in front of a target audience rather than responding to their fluctuant demand. With daily budgets, Facebook will show as many impressions as it needs to that target audience to make up your daily spend.

That might sound ominous, but this isn’t necessarily a bad thing. More on that in a minute.

The second drawback for daily budgets is that there is no option to schedule your ads for specific times of the day or days of the week. With daily budgets, your ads will run 24/7 (unless you have an external tool to assist).

If your business model, offerings, or calls to action dictate that your ads only run during certain portions of the day or days of the week, then daily budgets likely aren’t the right fit for you.

The Benefits:

First, I want to revisit the “spending the whole budget everyday” thing. This pattern of spending allows for much easier pacing of spend.

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

Additionally, if your ad set is performing well and you’re getting the returns you want, then there’s no harm in scaling into your full daily budget to get those results as soon as you can since future performance is never guaranteed.

Second, Facebook daily budgets are the simplest option if you’re setting up an always on, evergreen campaign. This allows you to keep your ads on at all times without needing 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 great option. Lifetime budgets, as we’ll discuss, are best when a budget is set and then left in place until the end date is reached.

If you’re anticipating regular changes to your budget, daily budgets are likely the better choice.

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When changing daily budgets, there is a best practice to keep in mind: limit budget adjustments to 20% of their original level for each day. Any change larger than this will have too great of an impact on the Facebook algorithm and performance can be negatively impacted.

How to Set the Budget for Your Facebook Ad

If you’re needing to double your spend or cut it in half, ideally, you would make changes every day in 20% increments until you reached the level you needed. (I realize this isn’t always doable, but if it is, this is the right way to go.)

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Lifetime Budgets

With Lifetime budgets, you give Facebook the budget you’d like to spend for the entirety of the campaign and then choose the date the ad set should end on. These operate differently than daily budgets but also come with their own benefits and drawbacks.

The Benefits:

With Lifetime budgets, Facebook will adjust daily spend levels based on the results of the campaign. On days where performance is strong, Facebook will spend a little higher than the average daily budget to reach the lifetime goal.

On days where performance is lower, it will underspend to save funds for another day. At the end of the campaign, you will only spend the lifetime budget you set at launch (or adjusted to as the campaign went on).

Many advertisers find this fluctuating spend to be a benefit as, in theory, you should have better returns for your campaigns.

Additionally, Lifetime budgets also have ad scheduling available for you to choose which days of the week and hours of the day you want your ads to run.

How to Set the Budget for Your Facebook Ad

If you need to only have ads on during certain hours, this is the budget type for you. That said, this might be something to employ only if it’s imperative that you do so.

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For example, if your call to action is to call in and you have no one there to answer the phone, that’s a pretty poor user experience and you should likely schedule your ads.

But if you’re only scheduling them because you don’t think someone will fill out a form past 8 pm, then I encourage you to start with all days and hours running and see what performance you get first.

Sometimes folks aren’t able to be on their phones during typical hours and they may take action in the wee hours of the night.

The Drawbacks:

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

With Lifetime budgets, daily spend can fluctuate quite a bit and those fluctuations can make it difficult to predict or plan on what type of coverage you’ll get on any individual day.

If you’re in an important season for your business and need to ensure you have coverage or simply want to know what to expect when it comes to spend, it might make more sense to go with daily budgets.

How to Set the Budget for Your Facebook Ad

Lifetime budgets require advertisers to set an end date along with your budget. By doing this, you’re telling Facebook the amount of money it has to spend for that timeframe.

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If you are certain there will be no changes to the time frame or budget, this is a great option. But if you’re likely to get additional budget or lengthen or shorten your promotion, then this might not be a good fit.

Although adjusting budget and changing the end date are possible, doing so will impact how Facebook prioritizes your budget.

If you set an ad set to run for two weeks, but then have to cut it down to only one after a couple of days, Facebook is then going to adjust and spend a much higher amount on those last few days to try and spend your Lifetime budget during the shortened period.

If you do need to change the date range or budget, I suggest you also adjust the other to balance out and mitigate any large swings in average daily spend to try and prevent performance from tanking.

Conclusion

Controlling budgets on Facebook is sort of a dealer’s choice option, but there’s 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 rundown makes you feel more confident in setting up budgets and knowing what all options you have at your disposal!


Featured Image Credit: Paulo Bobita

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