A Quick Guide to Facebook Ad Budgeting for Auto Dealers

A Quick Guide to Facebook Ad Budgeting for Auto Dealers

The most common question about Facebook ads that we hear at 9 Clouds is: “How much should I spend on Facebook?

For auto dealers and other businesses that are incorporating Facebook ads into their digital ad strategy for the first time, deciding on the right ad budget can be difficult and frustrating. 

There is no perfect formula for setting the right ad budget, but in our experience working with car dealers and automotive marketers, we’ve found that starting out simple is best.

The ideal Facebook ad budget should be based on three things

  1. A percentage of your overall digital ad spend
  2. The size of your intended audience
  3. The goal of your ad campaigns

In this post, we’ll explain these three basic budgeting principles for your dealership’s Facebook ads

(Please note that these principles are simply a good starting point for dealerships new to Facebook advertising. You will need to continually monitor and adjust your campaign budgets). 

Let’s dig in!

Why Facebook Ads Matter

At 9 Clouds, we talk a lot about Facebook ads and how to create the ideal Facebook ad budget. We have Facebook webinars, eBooks, and dozens of blog posts explaining how to best use these ads.

It’s for good reason. People spend 38 minutes per day using the Facebook platform, plus about 28 minutes per day on Instagram (also owned by Facebook). 

Average time spent on Facebook and Instagram
Image credit: eMarketer

In short, Facebook ads matter because they allow you to display the right message to the right audience at the right time

When targeted to the right people, Facebook ads engage potential customers at their personal stage in the sales funnel — and help guide them toward a purchase at your dealership.

How Much Should Your Dealership Spend on Facebook Advertising?

Your Facebook budget should be based on the following three principles.

1. One-Third of Your Entire Digital Ad Budget Should Be Spent on Facebook

Most auto dealers spend large sums on digital ads, especially pay-per-click ads like Google Ads.

While Google Ads should be an important part of your digital marketing strategy, auto dealers should realize that advertising on Facebook often costs less than advertising on Google alone. 

According to WordStream, the average cost per click (CPC) for automotive Facebook ads is $2.24, while CPC for automotive Google Ads is slightly higher at $2.46

How can you determine whether your Facebook ads are actually providing you with a good return on investment (ROI)? Facebook actually has a built-in tool called Offline Events that allows you to measure your Facebook ad conversion. Learn more about using Offline Events.

Setting aside budget for both Google Ads and Facebook advertising will allow you to get your message to the right people at their stage in the buyer’s journey. 

Wondering how your automotive Facebook and Google Ads stats compare to others in the industry? Access our annual Performance Benchmarks Report!

2. Spend $1 / Day for Every 1,000 People in Your Campaign’s Audience

After entering the desired targeting parameters to your ad set, Facebook will project your ad’s potential reach: how many people could potentially see your ad based on the targeting parameters you’ve set.

Facebook ad reach

We can use our “one-third” rule to find our recommended daily ad budget from the example above:

36,000 estimated reach / 1,000 people = $36 / day

If you typically run your ads monthly, over the course of 30 days, this ad will require a lifetime budget of $1,080 ($36 per day x 30 days). 

3. Set All Budgets with the Buyer’s Journey in Mind

Not all of your ads will require the same budget. When your ad strategy follows the buyer’s journey, you’ll reach people at every stage of the sales funnel with a slightly different budget:

  • Top of Funnel: Broad message to a larger audience. Requires a larger budget. 
  • Middle of Funnel: Targeted message to more qualified audience of past customers or those who have been browsing on your website. Requires an average budget.
  • Bottom of Funnel: Specific message to an audience of people whom you want to take a specific action. Requires the smallest budget. 

Own Facebook Before the Competition Does

The average American spends more than three hours a day on their phone, and nearly 35% of that time — more than an hour a day — is spent on Facebook and Instagram. This trend is only increasing.

Less than 25% of businesses with a Facebook page are spending any money on Facebook advertising. The lack of competition means that Facebook ads are currently underpriced for their value. 

But where else do your customers give an hour of their attention each day? 

The cost of ads will inevitably increase as businesses realize the opportunity to reach the right customers at the right time on Facebook. Take advantage of the price arbitrage now to get as many leads and customers as possible at the current cost before it rises.

Get Better Results from Your Facebook Ad Budget

Setting the right Facebook ad budget isn’t a perfect formula. It often takes some trial and error in order to discover the right budget for your Facebook campaigns and business goals. 

From budget setting to targeting to creative format and more, Facebook ads can get complex. Learn how to make the most of your Facebook ad budget by building quality ads that drive leads and sales with online advertising services from 9 Clouds.

Ready to learn more? Access your free copy of our eBook, Facebook and Instagram Ads for Auto Dealers! Fill out the form below to get your PDF.