Facebook advertising has become increasingly cutthroat in recent years. According to Invoca, 64% of social media marketers aim to use Facebook ads more in 2025. With this growing competition, Facebook ad costs tend to rise.
It’s important to set a strategic Facebook ad budget to allocate your resources wisely and get the most out of your ad spend. In this article, we’ll walk you through optimizing your budget so you can advertise on Facebook more efficiently.
How do you set your Facebook ad budget?
Mastering setting your Facebook ad budget is essential to unlocking the full potential of your campaigns. Using Facebook Ads Manager, you can improve your spending, maximize your return on investment (ROI), and achieve your marketing goals.
Follow this step-by-step guide in using the ads manager to help you get started:
Step 1: Define your campaign goals
Before you can set a budget, determine what you’re trying to achieve with your campaign. This will influence how much you spend and how you structure your ad allocation.
For example, if your goal is to drive conversions, you might allot a larger budget to ensure you reach people who are more likely to buy. On the other hand, if you’re focused on awareness, you may set a lower budget to maximize reach.
Facebook offers the following objectives to choose from:
- Boost brand awareness
- Drive traffic
- Increase engagement
- Generate leads
- Promote apps
- Make sales or see conversions
Additionally, adjusting your budget isn’t necessary for this but it’s important to note that Facebook also lets you use demographic targeting. This means you can set the location in which you want to show your ads, the age range for your audience, and other specifics you want to include.
These options are found under ‘Audience controls‘ and ‘Advantage+ audience‘ in the ‘Ad set‘ section.
Step 2: Enable campaign budget optimization
The next step is to turn on the ‘Advantage campaign budget‘ tool. It allocates your budget to the ad sets that deliver the most value according to your chosen objective.
- Key benefit. Rather than constantly and manually tweaking individual ad set budgets, Facebook’s algorithm automatically handles this for you. This saves you time while ensuring your money is spent where it will make the most impact.
- How it works. Once enabled, Facebook analyzes each ad set’s performance to identify the ones producing the best results while reducing the budget for those that are underperforming.
- When to use. This tool is best if you’re running multiple ad sets targeting different audiences or placements.
Step 3: Choose your budget type
Daily budget
A daily budget is the average amount you’re willing to spend daily on your Facebook ad campaigns.
- How it works. Facebook will spread this amount evenly across each day. On some days, Facebook may spend a little more or less based on ad performance. Though, the total amount won’t exceed your daily limit.
- When to use. A daily budget is ideal for ongoing campaigns where you want to set a consistent amount of ad cost each day.
Lifetime budget
On the other hand, a lifetime budget is the total amount you’re willing to spend over the entire duration of a campaign.
- How it works. Instead of setting a daily limit, you’re setting a total spending limit for the whole campaign. Let’s say your lifetime budget is $500, and your campaign lasts for ten days; Facebook will aim to distribute the amount evenly across those days. But again, Facebook may adjust the daily budget depending on performance.
- When to use. The lifetime budget is useful for time-sensitive campaigns or promotions that need to run on a set schedule.
Step 4: Select your bidding strategy
Facebook’s bidding strategies ensure you’re not overspending on ads while still reaching your marketing goals. With the right approach, you can control your budget, boost your ROI, and improve the overall performance of your ads.
Highest volume
The ‘Highest volume‘ strategy gets you as many results as possible within your budget.
- How it works. Facebook automatically bids to maximize the number of actions (e.g., views or conversions) your ads generate. This option focuses on volume over cost-efficiency.
- When to use. This technique is beneficial for campaigns where the main goal is reach or engagement.
Cost per result (CPR) goal
With this method, you set a target cost for each desired outcome, such as a website click or app install.
- How it works. Facebook works to achieve that goal while staying within that cost target. This strategy helps you balance cost-efficiency with performance.
- When to use. Use this if you have a specific cost per action in mind and want to control your spending.
Return on ad spend (ROAS) goal
The ‘ROAS goal‘ technique is focused on getting the best return for your investment.
- How it works. You set a target revenue you want to generate for every dollar spent on ads. Then, Facebook will prioritize actions that are most likely to generate the earnings you expect.
- When to use. This strategy is ideal for eCommerce campaigns or any campaign focused on ROI.
Bid cap
This approach gives you full control over the maximum amount you’re willing to pay for each ad.
- How it works. You set a cap for your bids, and Facebook will try to stay within that limit to get you the most results possible.
- When to use. Use this if you want to make sure you’re not overpaying for ad placements.
Step 5: Test campaign performance and scale your budget
Now that you’ve set your budget type and bidding strategy, it’s time to publish your campaign. As it progresses, experiment with your ad performances so you can decide how to scale your budget.
Here’s how you can do this step effectively:
Use Facebook’s A/B testing tool
Facebook’s A/B testing tool helps you scale your ad set budget based on performance. It involves creating two or more versions of an ad and testing them against each other to see which one delivers the best results.
- How it works. The tool runs multiple variations of your ad sets or ads within the same campaign. This might include variations in audiences, images or videos, headlines and text, or ad placements. Testing these variations allows you to identify which combinations drive the most profitable outcomes.
Scale your Facebook ad budgets accordingly
Once you’ve identified the best-performing ad variations through A/B testing, the next step is scaling your Facebook ad budgets strategically. This involves a careful approach of starting small, consistently testing, and gradually increasing your budget.
Start with small budgets
Begin your A/B test with a modest budget to test various elements of your campaign. This allows you to gather initial data without committing a large portion of your overall funding.
Run tests consistently
Run A/B tests consistently to refine your ad strategies and ensure you’re always optimizing for the best performance.
Focus on key metrics
Calculating key metrics for your campaigns is important because it provides valuable insights into how well your ads are performing. This helps you make informed decisions about where to adjust your strategy.
Check out this quick breakdown of calculating each metric:
- Cost per mile (CPM). This metric measures the cost of 1,000 ad impressions.
Formula: CPM = (Total Ad Spend ÷ Total Impressions) × 1000
- Click-through rate (CTR). CTR measures the percentage of people who click on your ad. A higher CTR indicates that your ad is engaging.
Formula: CTR = (Total Clicks ÷ Total Impressions) × 100
- ROAS. This measure tells you the revenue generated for every dollar spent on advertising.
Formula: ROAS = Total Revenue ÷ Total Ad Spend
Tip: You can try exploring this Facebook Ad Cost Calculator to help you calculate your key metrics.
Increase budget gradually
After identifying your top-performing ads or ad sets, scale them up slowly by about 20-30% per week. This gives Facebook’s algorithm enough time to adjust.
Emerging trends and best practices in Facebook ad budgeting
Digital advertising is constantly evolving, and the strategies that worked yesterday may not yield the same results today. Keeping up with trends and adjusting your approach accordingly helps you stay ahead of the curve.
Let’s look at some of the most important trends and best practices shaping Facebook ad budgeting for 2025:
Budgeting for new formats: ‘Stories’ and ‘Reels’
Facebook is shifting towards immersive and short-form video content, with formats like ‘Stories’ and ‘Reels’ gaining popularity. Video ads help capture attention more effectively, increase engagement, and are more likely to be shared.
These new formats typically have higher production costs, but they also tend to drive stronger results. So, consider setting aside a significant portion of your budget for video production and distribution across multiple ad placements.
Allotting resources for AI targeting
In AI targeting, Facebook uses AI to analyze significant amounts of data about users. These include their behaviors, interests, and past ad interactions. Based on this data, Facebook automatically targets people who are most likely to take the desired action you set.
The more your ad runs, the smarter the AI becomes. It learns from what’s working and continuously refines who sees your ads to improve performance. Invest in this tool to achieve more satisfactory outcomes.
Reserving funds for retargeting campaigns
Retargeting re-engages customers by reminding them about your product or service. This strategy targets visitors who have seen your ads but didn’t make a purchase. It also encourages those who have abandoned their carts to continue with the transaction.
Retargeting your campaigns increases the likelihood that users will revisit your site and complete your desired action.
Preparing for rising CPMs and bidding challenges
CPMs have been on the rise, partly because of increased competition on the platform. This results in higher costs to reach the same audience.
We recommend you prepare for these challenges by increasing your overall budget. You can also adjust your ad strategies to focus on more cost-effective ad sets.
Other than that, keep an eye on industry trends to predict when CPMs might spike. This usually happens during holidays or peak shopping seasons.
Get started with your next ad campaign
Level up your Facebook ad campaign game this coming new year. We hope this article has equipped you with the essentials for determining your Facebook ad budget. From leveraging Facebook’s Ads Manager to embracing advanced tools and the latest trends in ad budgeting, you’re all set for success!
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