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The Digital Cauldron

How Much Should You Spend On Facebook Ads

TDC blog image shoing a laptop with graphs on it and coins on the keyboard with text saying how much should you spend on facebook ads

How Much Should You Spend On Facebook Ads?

The ideal and short answer to this question is: “as much as you can without incurring loss”! However, the strategy for spending $10 per day is different than $100 and is so much different than $1,000.

The Digital Cauldron has been running Facebook ads for quite some time now and we work with a wide variety of ad spend levels. Our highest client was spending around $9,000 per day and we have also worked on a store that has been spending only $55 per day for the last couple of weeks and we will be scaling this client to $70 or $90 soon. Completely different strategy for each, but if both brands were spending the same amount on ad spend, the strategy would be quite similar.

Here is a breakdown of each level and our strategy and process for each.

NOTE: These are the levels of ad spend that we have done for ecommerce stores with 1 to 4 products ranging from $10 to $200 per product. Anything outside of that will probably require a bit of different ad spend and different implementation at each level.

NOTE 2: The specifics of each strategy can be done out of order and still work. This means you can implement something from level 3 when you are under $50 per day at level 1 but your ad account and/or product might not be ready to implement it correctly. For example, pre-mature LALs, high spend retargeting ads, CBOs, etc.

Level 1 – Under $50/day

At under $50/day, you are at a level where you need to collect data. This is really a testing phase to see what works for your store in terms of the ad types and audience types.

Goal: Testing if your target audience for your product is on Facebook and are willing to buy it. Breaking even at this point is a VERY good sign that you can scale things up higher because you are gathering a lot of data on what is working and NOT working.

Audiences: Large relevant interests or geographic audiences. Give Facebook a lot of data to work with for that sub $50 per day budget.

Ads: The ads need to be very clear what you are selling. No need to get super creative here because that can cause confusion to your target audience. If it takes longer than 2 seconds to figure out what your ad is selling then that is too complicated.

Common mistake: A lot of people here will make the mistake of spreading their already small budget far too thin. Doing things like spending $5 per ad set and have 5 different ads inside of it. At this phase it is better to have 1 to 3 ads and 2 to 4 audiences.

Getting to the next level: Depending on how large your budget is here, it could take as little as a week or up to a few weeks to find enough winning ads and audiences to help you get to level 2.

Level 2 – $50 to $200/day

Once you’ve gotten some sales from level 1, you want to essentially double down on what’s working in level 1 and continue to find more winning audiences and ads.

Goal: See if you can spend more on the winning combinations (ad + audience) from level 1 while still having good results. This is why we went with large audiences because if you had an audience that was very small then it wouldn’t be able to handle a high level of spend.

Audiences: The top 2 or 3 audiences from level 1. Spend like $25 to $40 per day each. Then you want to allocate some budget towards continuing to find new audiences that resonate with your ads so that you can scale those up.

Ads: Try to create ads that are better than what you made in level 1. If you feel confident in your product, you could invest in getting a professional video edited. Take the new and improved ads and run those towards the winning audiences.

Common mistake: The most common mistake we see at this phase is turning off ads too soon. This is due to the fear of spending double on an ad set but you need to give Facebook a few days to optimize and collect data. So many times we’ve seen ads be turned off on day 3 because of only 10-12 hours of bad results. If it worked well on day 1 and 2, it might shift a little bit on day 3 and 4, and then come back better on day 5.

Getting to the next level: Find around 7 to 10 audiences that work well at the $25 to $40 per day range. Even if it is only for a few days and then goes into learning limited, that audience will probably still perform well in the strategies in level 3.

Level 3 – $500 to $1,000/day

Now you’ve got a lot of audiences that are working well and you’ve got a few good ads that have been running with a lot of budget and have probably generated a lot of social proof as well. You’ve got a lot of data to work with to give to Facebook that it will be able to perform at higher levels of ad spend.

Goal: Restructure campaigns into high budget CBO campaigns and start to test for good performing lookalike audiences.

Audiences: The top 7 to 10 audiences put into 1 or 2 CBO campaigns at $100 to $200 per day each with the best 1 to 3 ads in each ad set. And if budget allows, start to test as many Lookalike audiences as you can to see which one can perform best. Test the different types of LALs (purchases, add to cart, website traffic, etc.) and the different percentage levels. Sometimes a traffic LAL will outperform a purchase LAL if it has more quality data but it’s something that you can’t predict until you actually run the ads and test it.

Ads: You should have somewhat of a good formula in terms of what type of copy and creative work for your product. You can start to create new ads that follow that formula but are just slightly different. This will help with catching the attention of some of the audiences that might be experiencing ad fatigue. At this point, if you create a new ad that you are confident will do well and have an audience that you know it will do well with, you can create a post engagement campaign for a week or two in order to give that ad a lot of reactions, comments, and shares. Post engagement ads aren’t good for making a bad ad good, but they are amazing for making a good ad great. If an ad is so bad that even with 20,000 reactions it doesn’t perform then using post engagement campaign objective on that ad is a waste. However if you are using a proven ad format towards a proven audience then it is worth the investment to prime that ad with a lot of reactions to be more eye-catching.

Common mistake: Being impatient with the CBO campaigns. The CBO campaigns can take a few days to optimize but for long term performance they are usually very solid when setup properly.

Getting to the next level: Find winning CBO campaigns that perform well at the $100 to $200 per day.

Level 4 – $5,000/day +

At this point, you should have a lot of data to work with. You’ve got winning interest audiences, winning ad styles, winning CBO campaigns, winning Lookalike audiences. This is where you scale things up with “similar but different” shifts in your structure.

Goal: Scale aggressively with the assets that you have collected. If you have not done so already, you should start to implement similar but different products into your campaigns.

Audiences: Take your top performing LALs and put them into a CBO campaign. Take your top performing interests and put them into a CBO as well. If you have a lot of budget to work with, then we would recommend allocating $100 to $200 per day on just testing interests and/or LALs within a CBO campaign, but keeping a similar theme to the CBOs. For example, you could create a CBO that has 5 different interests that are celebrities your target audience follows, call it “Celebrity Interests CBO” and that will tell you which audiences are best to put into your “Winning Interests CBO” campaigns. At this point you should have a lot of data to start making retargeting ads that scale very high. You can obviously use retargeting ads whenever you want to, but it’s not really up until you get this level to where you can spend $500 to $1000 per day just on retargeting audiences and have it scale up. If you have similar but different products that you are releasing, then you’ve got ALL of these winning audiences, proven ad formulas, and all of this pixel data to where you can immediately spend hundreds of dollars per day on the first day of launching a new product. Imagine if you have scaled up to $3,000 per day with just one product, you could pretty much clone the entire strategy for another product, essentially doubling your ad budget – The Digital Cauldron would recommend scaling up step by step with a new product so that you don’t waste a ton of money on a bad product.

Common mistake: Making too many changes directly on the actual campaign or ad set. Things like cutting the budget in half on a CBO if it is not performing well. This can cause issues with Facebook when it comes to optimizing properly. The Digital Cauldron would recommend instead to duplicate a campaign and/or ad set and then set it at the desired budget that you want to test, let them BOTH run for a few days and compare the results of the two of them. What you don’t want to happens is to take a campaign from $100 to $50 per day, then have the results tank after a day or two, try and bring it back to $100 per day, then it takes another 3 to 5 days to re-optimize and you’ve just wasted over a week of poor results due to messing with the optimization process.

If you have any specific questions about ad spend, leave it in the comments and we’ll do our best to respond!

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