How to Set a Budget for Facebook Ads

How to Set a Budget for Facebook Ads

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It happens after every team meeting.

You come out of the conference room with new ideas for your next big auto marketing campaign. The whole team is excited and ready to bring in some historic sales numbers. It’s your job to create a marketing budget and timeline in order to get people in the dealership and meet those sales numbers.

You head to your desk to get started crunching numbers and ordering creative elements. But when it comes to divvying out the online advertising dollars, you feel lost, confused, and utterly annoyed.

Ah, yes. Welcome to the world of digital advertising.

Whether you are a seasoned marketer or brand new to the industry, creating digital advertising budgets can feel like a guessing game. How much should you spend on Google Display? What about Bing Ads? And don’t forget pre-roll!

There are several ways you can split your pie, but let’s walk through one of the best automotive digital advertising options: Facebook ads.

Facebook Ads Goals

To get started with Facebook ads, first, you need to answer why you want to advertise on Facebook.

There are three main Facebook advertising goals to consider:

  1. Brand awareness: Are you looking to increase branding for your business? This is especially important for new dealerships or established dealerships that are just new to Facebook.
  2. Events and specials: Do you have a new car event coming up? Or maybe some product specials? Facebook works well if you have time limitations and need to get ads rolling quickly.
  3. Product placement: Do you have a new model you want to announce? Or do you want to remind your audience about a model they have already viewed? You can place your vehicle in front of a relevant audience using Facebook’s advanced targeting options.

After answering why, decide what action you want your audience to take after viewing your Facebook ad.

There are four basic objectives for spurring action with Facebook ads:

  1. ($) Website clicks: This is by far the most common action for auto dealers since ultimately you want your Facebook audience to become your vehicle detail page (VDP) audience.
  2. ($) Post engagement: This refers to likes, comments, and shares of your ad. Engagement tends to be more important in the branding phase or reputation management phase of a customer lifecycle.
  3. ($$) Page likes: Although page likes have become less important in recent years, this is still a relevant goal for new Facebook pages that are trying to build their audience. Campaigns that target page likes tend to be more expensive per click than other campaign options.
  4. ($$$) Lead form submissions: Lead ads are a relatively new option on Facebook. They allow your audience to fill in a form right on their news feed without having to visit a landing page.

Campaign Length

Now that you have your goals and objectives in place, it’s time to decide how long you want your Facebook campaign to run.

There are two different methods for choosing campaign budget length in Facebook:

  1. Daily budget: Using a daily budget requires more maintenance on your end and limits your targeting options, so you cannot choose the time of day or day of the week on which to show your ads. For these reasons, we suggest using a lifetime budget.
  2. Lifetime budget: With a lifetime budget, you set a start and end date for the campaign, along with the budget you want to spend in that period of time. We have seen the best results with campaigns that last one to three months long.

Campaigns that run one month or less work well for events and specials, while longer campaigns work well for evergreen content and remarketing strategies.

Keep in mind that you can always extend the end date and add more budget. If you notice a campaign is performing above average, you can save time by just letting it run longer.

Audience Size

The audience size is where you really start digging into the cost of the campaign.

Yes, of course, you have to set a daily or lifetime budget, but your audience selection is what will ultimately determine your cost per action (click, like, impression, form submission, etc.).

Typically, a smaller audience — also known as reach — will equal a higher cost per click (CPC). However, a smaller, more targeted audience will usually result in more relevant people taking action.

For some of our larger campaigns, we have had clicks as low as $0.08, while some of our more targeted campaigns have had costs closer to $3.50 per click.  Compared to search engine marketing, though, this CPC is much lower.

This does not mean that a low or high CPC should be your goal — but it is an indicator of how much you should budget for your campaign in order to get the actions you want.

So, how can you reach a larger or smaller audience? Facebook makes it pretty easy to play around with targeting options and see an estimated reach in real time.

Start by choosing your target audience’s location, age, gender, and language. These targeting options will generally yield large numbers since they are quite basic. Move on to demographics, interests, and behavior to find better targeting options.

facebook ads budget and targeting

Is your audience still too big? Narrow it down even more by marketing to only people who like your page or friends of people who like your page.

For more information on how to target Facebook ads, read this article.

Custom audiences are another great way to create a targeted audience in Facebook. You can remarket to people who visit your VDPs or deliver ads to people who purchased from your dealership two or more years ago. As long as you have a contact’s Facebook email address, the options are early endless.

Learn more about creating custom audiences here.


Like other digital advertising options, Facebook ads are based upon an auction system. You do not pay outright for an ad. You bid for ad space.

Facebook limits the number of ads a person sees, so there are only so many opportunities to show an ad. Competition on Facebook is different from search engine ads, which are based on keywords. In that context, you are competing only with your industry.

On Facebook, you are competing with any and every industry that wants to show an ad to your audience.

Facebook users are not just car buyers. They are bike enthusiasts, Walking Dead cult followers, swimsuit shoppers, and small business owners. Even though your competition is more fierce with Facebook ads than it is with search ads, your ads themselves can also be more fierce.

Take your time when choosing the creative photos and text for your Facebook ads. We suggest using carousel ads instead of single images. Carousel ads allow you to use multiple photos in one ad, giving you a better chance of catching someone’s attention.

facebook ads budget carousel ad 2016

Digital Ad Budget Percentage

Okay, let’s get out of the weeds. What do all these factors lead to when creating your dealership’s Facebook budget?

Start small. You can always add budget later if you need to.

The number of times someone sees your ad — also known as frequency — is one key indicator of a budget being too low for an audience. We suggest a frequency sweet spot of three to five.

Is your frequency below three? Increase your budget. If it’s above five, consider ending the campaign early or widening your audience.

Have a Small Budget?

Facebook ads are a great element to add to a well-rounded digital marketing plan.

If you are working with a very small digital ad budget, consider starting with Facebook ads rather than search engine ads, which typically have a much higher CPC.

Have a Large Budget?

On the other hand, if you are working with a larger digital ad budget, Facebook ads should make up one-third or less of your total budget.

Facebook is not the place to dump a large budget and see results. It’s a great place for a modest budget and a highly targeted audience.

The Facebook Rule of One

To help you come up with the exact right budget for your Facebook advertising strategy, we’ve developed the Facebook Rule of One based on our experience creating Facebook ads for auto dealers.

The Facebook Rule of One is based on three principles:

  • 1/3rd of your entire digital ad budget should be spent on Facebook.
  • $1 per day for every 1,000 people in your audience is an ideal starting budget.
  • 1 ad campaign should showcase your products to in-market buyers.

To learn more, read about the Facebook Rule of One here.

Learn More about Facebook Ads for Car Dealerships

Would you be interested in learning more about Facebook ads strategy? We have a free video series just for Facebook advertising for auto dealerships.

We’re here to make your Internet presence stronger. Get exactly the help you need for your digital marketing efforts.