How to set the Budget for a Facebook Campaign

7 Jun

Lately I´ve been dealing with an uncommon issue:

one of my clients didn´t know how much S/he would be willing to invest in order to run a paid campaign on Facebook.

I googled my problem several time but I couldn´t find any satisfactory answer. So then I chose to collect as many information as I could and try creating my own formula.

I´m pretty satisfied with my result, so I decided to share it here, in my blog.

The first think you´d to do is to calculate the absolute range for your ADS.

Ex.: If you want to run a paid AD over the Italian territory. Your range is 16.000.000 people.

Once you get the absolute range you can start targeting.

Ex: Target only Man, 18-24, Single, Interested in Football. Your new range is now 8.000.000 people (-50%).

The third step is to define an average CTR that you will use in order to calculate your budget. The average CTR (on Facebook), in my experience (this number may vary a lot, depending on product, market, target, etc.), is between 0,05% and 0,1%. So let´s set an average CTR at 0,075%.

You can now multiply your effective range (8.000.000) people times 0,075. The results (600.000) is the forecast of the clicks you´ll receive by running the AD.

Finally multiply your forecasted range (600.000 in this case) times the CPC that Facebook applies for your target (0,20 Euro in my case). The result (12.000 Euros in our example) is the actual budget you should suggest your client to invest. You can now add a 10% to feel safer and run a test period.

Any suggestion? Feel free to add your feedback, suggestions or offenses here below in the comment box!

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