One of the biggest questions business owners have when starting with Meta (formerly Facebook) ads is: How much should I spend? Too little, and you may not see results; too much, and you risk wasting your budget on underperforming ads.
The good news is, there’s a strategy behind budgeting for Meta ads that can help you determine the right amount to invest based on your goals and audience.
Step 1: Define Your Campaign Objective
The first step in setting your Meta ad budget is to define what you want your ads to achieve. Are you looking to build brand awareness, generate leads, or drive direct sales? Your campaign objective directly influences how much budget you’ll need.
Common Campaign Objectives:
- Brand Awareness: Reach as many people as possible to get your brand noticed. Typically requires a lower budget but may need a longer run time.
- Traffic: Drive people to your website or landing page. Requires a moderate budget to balance clicks and reach.
- Lead Generation: Collect email addresses, phone numbers, or other contact details. This usually requires a higher budget because you’re asking users to take a specific action.
- Conversions: Drive sales or specific actions on your website. Conversion-focused campaigns often need the highest budget to optimise for the most valuable actions.
Once you’re clear on your objective, you’ll have a better idea of how much budget to allocate based on the type of engagement you want.
Step 2: Set a Daily vs. Lifetime Budget
Meta ads offer two primary budgeting options: Daily Budget and Lifetime Budget. Choosing between them depends on how you want to control your spend and the duration of your campaign.
- Daily Budget: This sets the average amount you want to spend per day. It’s ideal if you want to maintain a consistent presence over an extended period (e.g., always spending $20/day).
- Lifetime Budget: This sets the total amount you’re willing to spend over the entire duration of your campaign. It’s perfect for short-term promotions where you want to distribute the spend across specific dates (e.g., a $500 budget spread over a 10-day campaign).
Which Should You Choose?
If you’re new to Meta ads, start with a Daily Budget to control your spend and adjust based on results. Once you’re more comfortable, you can experiment with Lifetime Budgets to see if you achieve a better return.
Step 3: Calculate Your Initial Budget
Determining your initial budget can feel a bit like guesswork, but there are some basic formulas that can help you get started. A good rule of thumb is to use the 50/30/20 Rule:
- 50% for Testing: Allocate half of your budget to testing different ad creatives, audiences, and placements. The goal is to gather data and identify what works best.
- 30% for Scaling: Use 30% of your budget to increase spend on the top-performing ads.
- 20% for Retargeting: Use the final 20% to retarget users who’ve engaged with your ads but haven’t converted yet.
Example: If you have a $1000 monthly budget:
- $500 for testing
- $300 for scaling
- $200 for retargeting
This approach ensures that you’re spending wisely and can pivot based on performance without blowing through your budget too quickly.
Step 4: Know Your Customer Acquisition Cost (CAC)
One of the most critical metrics for budgeting is your Customer Acquisition Cost (CAC). This is how much you’re willing to spend to acquire a new customer. To calculate it, use this formula:
CAC = Total Ad Spend / Number of New Customers
For example, if you spend $500 on ads and acquire 10 new customers, your CAC is $50. Knowing your CAC helps you understand whether your budget is being used efficiently and if you’re getting a good return on investment (ROI).
Pro Tip: If your CAC is too high, it may be time to revisit your targeting, ad creative, or budget allocation.
Step 5: Start Small and Scale Up
If you’re just starting out, it’s best to begin with a modest budget and scale up as you see positive results. This approach minimises risk and gives you room to optimise before committing larger amounts.
Suggested Starting Budgets:
- Brand Awareness: $10–$20/day
- Traffic: $20–$30/day
- Lead Generation: $30–$50/day
- Conversions: $50+/day
Begin at the lower end of these ranges and increase by 10–20% once your campaign has had a chance to stabilise (typically after 3–5 days). Gradually increasing your spend allows the Meta algorithm to learn and optimise, improving your overall campaign performance.
Step 6: Monitor and Adjust Based on Performance
Budgeting isn’t a set-it-and-forget-it exercise. Once your ads are running, keep an eye on key performance indicators (KPIs) like click-through rates (CTR), cost-per-click (CPC), and return on ad spend (ROAS). If certain ads are performing well, allocate more budget to them. If others are lagging, consider pausing them or lowering their spend.
Key KPIs to Watch:
- Click-Through Rate (CTR): Are people engaging with your ads?
- Cost Per Click (CPC): How much are you paying for each click?
- Conversion Rate: Are people taking the desired action after clicking?
- Return on Ad Spend (ROAS): Are you getting a good return for every dollar spent?
By regularly monitoring and adjusting, you can make sure every dollar is working as hard as possible.
Final Thoughts: Budgeting is a Learning Process
There’s no one-size-fits-all answer to how much you should spend on Meta ads. Your budget will vary depending on your business, your goals, and your audience. The key is to start small, learn what works, and be prepared to adapt. With a strategic approach, you’ll find the sweet spot that maximises your ad spend and helps you achieve your goals.
