How To Properly Allocate Your Facebook Marketing Budget


There are three things that you have to keep in mind while allocating your Facebook marketing budget to different ad sets. These three things are: the conversion window, the optimization event you are using, and the cost per result for that optimization event.

So what exactly are these things and why are they important?

Let’s start with the conversion window. The conversion window is the period of time that you allow Facebook to use look back data to optimize your campaign. This is chosen at the ad set level. Facebook gives you the options of 1-day click, 7-day click, 1-day click OR 1-day view, or 7-day click OR 1-day view.

An optimization event is the event that you are telling Facebook to optimize your campaign for. This could be Page Views, View Content, Leads, Initiate Checkouts, Purchases, or several other events. By choosing an optimization event, you are telling Facebook to serve your ads to people who are likely to take the desired optimization event. So for example, if you choose to optimize for Leads, Facebook will learn to serve your ads to people who are likely to become leads, but not necessarily people who are likely to purchase.

The cost per result is pretty straight forward - the amount of money on average that it costs you to achieve your desired optimization event.

So how do all of these things work together?

All of these things play a role in properly allocating your marketing budget to optimize your campaigns. It all starts with knowing the average costs of all of your optimization events. You need to know your Cost Per Acquisition (CPA), Cost Per Lead (CPL), Cost Per View Content, etc.

The reason that this is important is so that you know which optimization event to choose based on your conversion window and budget.

VERY IMPORTANT: Facebook likes to have 50 optimization events fired during a conversion window period in order to properly optimize your campaign.

This means that you have to look at your budget and your Cost Per Result for each of your optimization event options and choose an optimization event that you can get 50 event fires throughout a conversion window.

Why would you do this?

Well, an ad set that is fully optimized (generating 50+ events per conversion window period) for an optimization event that’s higher in your funnel will likely generate more lower funnel events (purchases) than an ad set that is not fully optimized (generating less than 50 events per conversion window period) for your lowest funnel event. This is because once an ad set is optimized, it will likely have a very high Click Through Rate (CTR) and low Cost Per Click (CPC), which will drive more traffic to the site than an un-optimized ad set. Since these are all people that are likely to take action on higher funnel events, a certain percentage of those people will also be likely to go all the way to the bottom of your funnel (purchase). With the high CTR and low CPCs of this optimized ad set, you will likely end up driving more people who are likely to purchase to your site than if you were to optimize for a purchase event, but not receive enough optimization events per conversion window period.

So how does this look when allocating your budget in real life?

First off, what conversion window did you choose? One day or seven days?

Now look at your Cost Per Results. I recommend that you start with your lowest funnel event and work your way up. What’s your Cost per Acquisition? Can you get 50+ purchases in one or seven days with your budget? If not, can you get 50+ Initiate Checkouts in one or seven days? Work your way through this and figure out what makes sense for your budget.

For example, let’s say your Cost Per Acquisition is $10, but your Cost Per Lead is only $1 and your budget is $400 per month. That’s roughly $100 per week. With this budget, you won’t be able to get 50+ purchases per week, but you can get 100 leads per week. Try optimizing for that instead of purchases.

There’s a saying among Facebook advertisers that Facebook Ads are 30% technical knowledge and skill and 70% letting the algorithm work its magic. By understanding how to properly optimize your Facebook Ad Sets, you will be well on your way to crushing it with Facebook Ads.


Steve KrakowerComment