In this Guide, so far, we have covered the basics of Facebook advertising, gotten to know the tools of the trade, learned about the campaigns and how to convey our business goals into campaign objective; learned all intricacies of targeting the right audience and, finally,where to place your ads. In this Chapter, we are moving on to the third segment which is decided on Ad Set level: budgets and schedule for your ads.
In order to understand how the budgets and schedules work, we must start – um – from the end. Well, almost. They both become crucially important once you create and submit your ad. Submitting it, though, doesn’t necessarily mean your ad will immediately start reaching your audience. There’s a whole complicated process, actually, from a point of your submission – to a point of it being seen by the user (see image below). What happens in the above scheme? When you submit your ad, it first goes for the review. This way Facebook makes sure nothing inappropriate gets advertised on their platform. It may take up to 24 hours. Once your ad successfully passes the review, it goes to ad auction which helps get it to the right people. When it reaches the audience, you can gather the metrics on its performance and optimize it to perform better next time. This optimized version of your ad then you send for a new cycle, starting with a review.
An auction takes place whenever someone is eligible to see an ad. The participants in an auction are the ads targeted to an audience that the eligible person falls into. The ad that wins an auction and gets shown is the one with the highest total value. Total value isn’t how much an advertiser is willing to pay to show their ad, but a combination of three major factors:
- Estimated action rates
- Ad quality and relevance
Using the information provided in the ad creation process, the auction shows the ad to the people who are most likely to be interested in it – for the bid price or less, and never higher. In the ad creation process, at ad set level, you set parameters that the auction will use to deliver your ad to people, including:
- Budget: First, set your advertising budget – a total amount to be spent daily or over the course of the campaign. This can be edited at any time. Then, set a bid – the maximum amount to pay when someone sees your ad or takes your desired action.
- Audience: Choose who you want to see your ad (more details in the Audience section of this infographic).
- Creative: This is where you decide how you want your ad to look. Use text, images, and videos to capture people’s attention. Once the ad is created and submitted, it goes to ad auction, where it will start being shown to your audience.
A bid is a number representing how much you value an optimization event from someone in your target audience. It is set automatically in alignment with your selected bid strategy. This may include raising or lowering it on an auction-by-auction basis, which is called „pacing“ of a bid.
Bid strategies are cost control tools which help control your cost per optimization event in the same way that budgets help control your overall spend. Your bid strategy choice tells Facebook how to bid for you in ad auctions. There are two bid strategies:
- Lowest cost tells Facebook to bid with the goal of getting you the lowest possible cost per optimization event while also spending your entire budget by the end of the day or your ad set’s (or campaign’s) schedule. You can also set a bid cap, which tells Facebook the maximum amount to be bid in an auction.
- Target cost tells Facebook to bid with the goal of achieving an average cost per optimization event as close to your target cost as possible. This strategy is only available for campaigns using the Lead Generation, App Installs, Conversions or Catalogue Sales marketing objectives.
Which bid strategy to choose?
When bidding for Facebook Ads, the basic trade-off is between efficiency and stability.
The lowest cost bid strategy may produce costs that fluctuate more but we’ll always get you the lowest cost results available, and make the most efficient use of your budget. If you set a bid cap you have more control over your cost per optimization event, but if you set one that’s too low you may get less delivery.
The target cost bid strategy aims to achieve an average cost per optimization event as close to your target cost as possible over the lifetime of your ad set. It also aims to keep that average cost stable, even if you increase your budget.
In short, if you care more about getting the most value from your budget, recommended is the lowest cost bid strategy. If you care more about having a stable average cost per optimization event, you should go with the target cost bid strategy.
Simply put, the budget is the amount of money that you want to spend on showing people your ads. But it also allows you to control your overall spend for an ad set or a campaign. You can set your budget at the ad set or, as a new feature with Campaign Budget Optimization, at a campaign level. There are two types of budgets – daily (average) and lifetime (over the entire run-time of your ad set or campaign). More on each below.
With a daily budget, you are setting an average budget per day – which means that Facebook will try to get you results that approximately match your daily budget, every day. However, since opportunities for showing your ads fluctuate on a daily basis, Facebook adjusts your daily spending to make it as efficient as possible.
They are capable of doing it because Facebook Ads have a built-in machine learning that helps to maximize your return on ad spend, by showing the ad to the best people in the audience based on recent conversions. This algorithm, called conversion optimization, includes powerful optimization options which optimize for a certain goal and make your ad spend go further by giving preference to the best performing ads within an ad set. This optimization is based on the learning phase which happens at ad set level. Facebook’s delivery system determines to whom, when and where they show the ads. During ad set creation, you chose a target audience and an optimization event. After it wins at the auction, Facebook shows an ad from your ad set to people in that target audience who are likely to get you that optimization event.
If your ad set has multiple ads, at the beginning of a campaign all of them are shown equally, to determine the performance of the individual ad. Later, the highest-performing one is being shown more than the others. The longer the ad is being shown, more metrics it creates which allows for better delivery performance. With the daily budget option, it can happen that some days only a portion of your daily budget is spent, while on the others, when there are better opportunities, Facebook can spend up to 25% over your daily budget. If the mere thought of going over budget makes you uncomfortable, maybe you should look into lifetime budgets. But, to mitigate overspending, Facebook makes sure that the money spent meets the average budget you have set over a course of one calendar week (Sunday to Saturday).
With lifetime budget you set the amount of money you are willing to spend over the entire runtime of your ad set (or campaign). With this option, you cannot go over budget, as the amount set is an absolute maximum to be spent on the ads. Facebook then tries to spend that budget evenly over your ad set’s or campaign’s lifetime. However, in this case too can happen that due to ad delivery amount of money spent won’t be exactly the same every day, as the delivery gets more and more optimized for conversions. Therefore, allocating different portions of the budget to maximize the results.
You can buy Facebook Ads on any budget. The minimum spend on Facebook Ads is just $1 per day.
This is, well, technically true. The actual minimum budget will depend on several factors. Facebook requires you to provide a minimum budget in order to deliver the ad consistently. Minimum budget is calculated as a daily amount, regardless if you opted for a daily or a lifetime option. It is listed in USD and depends on your bid strategy and charge choice.
With charge choice, you can determine what event you want to cause money to be removed from your budget (like whenever someone clicks an ad link or watches a certain percentage of a video). The choices you have depend on what objective you choose.
Also, the currency you are using plays a role, as shown in the table below.
Note, you can pause running an ad at any time. Once the ad is paused, you may still receive a bill for the time it has been running, but it will stop further charges from/for the time it has been paused.
When scheduling your ads, you can control what dates and times ads are to be shown. Ad will be eligible to start running after it is reviewed and approved. If you want an ad to start running on a specific date in the future, you can:
- Create your ad in advance and turn it off, then turn it on when you want it to start running
- Set a schedule while creating your ad set
Ads are not delivered outside of the set schedule. However, it’s possible that a small number of people could see them outside the schedule because the delivery of ads is independent of when people actually see them.
Pacing is a mechanism that ensures your budget is being spent evenly over the schedule of your ad set; as well as to meet the cost goals of your bid strategy. It may be useful to think of it as the intersection of your budget and your bid strategy. Pacing spreads the delivery of your ads throughout the day or time frame of our campaigns. Without pacing, your ads would be shown as quickly as possible when you launch an ads campaign.
There are two aspects of pacing that work together – budget and bid pacing. In practice, they make for one process. Based on how much budget and time are left for your ad set, Facebook picks the auctions and adjusts the bid. A portion of the budget to be spent is automatically increased or decreased, depending on the number of available optimization events with costs aligned with your bid strategy. In order to get the most from your budget, Facebook paces spending across the schedule set in the ad set; so it doesn’t happen that you run out of the budget before the schedule ends. Facebook offers two delivery or pacing options when launching your ads campaigns standard and accelerated delivery. The main difference between the two is that standard delivery is paced by default and accelerated is not (see below image).
Standard delivery is the default delivery option when you launch Facebook ads. It will try to deliver your ads in a way that is evenly distributed throughout the day. In other words, your campaigns will be paced.
With standard delivery, there are some things to keep in mind:
- Your entire budget might not be used as Facebook is trying to maximize your opportunities to get conversions at optimal levels.
- Facebook will use its algorithm to determine optimization. Therefore, the bidding strategy will be determined and changed (lower or increased bids) through the course of the campaign automatically.
- You can always set budget caps in order not to over-spend.
Accelerated delivery means there is no pacing! The ads will be shown as frequently and quickly as possible as soon as you launch your campaign’s start date and time.
When using accelerated delivery, be mindful of the following:
- Facebook will prioritize speed over efficiency and spend your budget as quickly as possible.
- You can choose how often your ads will be shown and how quickly your budget is used.
- Accelerated delivery can make the average cost-per-impression, click, action or conversion higher than your metrics with standard delivery.
- You have to manually pick your maximum bidding costs.
- Facebook recommends running your ads for at least 2 hours.
Accelerated delivery might sound scary, but there are certain cases when it is a better option, as seen below:
Campaign Budget Optimization
In November 2017, Facebook introduced Campaign Budget Optimization (CBO) which allows advertisers to set one central campaign budget for all of the ad sets. It is available for any campaign objective but best suited for campaigns with multiple ad sets. The main difference between CBO and „the usual way“ is that instead of setting the budget on the ad-set level and fine-tuning each segment’s budget, you simply set the daily or lifetime budget for the whole campaign. After that, Facebook takes over and automatically distributes the budget in real time to the top-performing ad sets. The goal is to help you spend the budget more efficiently without the need to manually shift budgets between ad sets (see image).
This tool has been rolling out to advertisers for a while now; it has been optional and therefore ignored by many Facebook advertisers. However, in February this year, Facebook announced that starting September 2019 they will be moving budget to campaign level for eligible accounts; for their new and existing campaigns. At first, CBO was announced to be a fixed default option which cannot be turned off. But soon after, Facebook backtracked and allowed for the budget to be controlled at the ad-set level, by using ad set spend limits and bid caps. If you set a minimum spend limit, Facebook will try to spend at least that amount; and with maximum spend limit, Facebook will not exceed the set amount. To be able to track the results of CBO and understand how campaign budget optimization distributes your budget, you should track the total number of optimization events for your campaign and the average cost per optimization event at the campaign level, instead of each ad set.
The budget you set for Facebook ads is not necessarily the amount you’ll actually spend. There is a difference between the budget and the spend:
Budget is The amount of money that you are willing to spend on your ad to run.
Spend is the amount you actually pay for your ad to run.
The pricing of Facebook ads is based on an auction system where ads compete for impressions based on bid and performance. When you run your ad, you’ll only be charged for the number of clicks or the number of impressions that your ad received. When you’ll pay for your ads depends on your chosen method of payment. When you create your first ad on Facebook, you’ll add a payment method to your ad account, and that payment method determines your payment setting. There are two main payment settings for Facebook ads:
Automatic payments: if you use PayPal or most credit and debit cards to purchase ads, the amount is automatically charged whenever you spend a certain amount (billing threshold) and again on your monthly bill date for any leftover costs.
Manual payments: if you use a manual payment method (like PayTM or Boleto Bancário) to purchase ads, there is no billing threshold. Money is pre-paid to your account first and then deducted from that amount up to once a day as you run ads.
If you want to see how much you are spending on your ads, you can see an estimated daily spending limit in the Billing section of Ads Manager. There you can find all your final charges, including the specific ads and conversion goals that you’ve paid for.
Full information about billing, taxes and payment methods, you can find at Ads Help Center.
Finally, we have covered the theoretical part of budgeting and scheduling Facebook Ads. Let’s see how it looks in practice!
STEP 5: Set your Budget and Schedule
In this step, you will determine your budget and schedule you want your ads to run. Whether you’re launching a new brand or looking to increase awareness of an upcoming film premiere, it’s important to consider which buying type best meets your overall business goals. There are a couple of different buying types for Facebook ads:
Reach & Frequency buying
Reach and frequency buying lets you plan and buy your campaigns in advance, with predictable ad delivery and more control over your frequency settings. Ads can be placed across Facebook, Instagram and the Audience Network (for Video Views objective).
Auction buying offers more choice, efficiency, and flexibility, with less predictable results. Ads can be placed across Facebook, Instagram, Messenger and the Audience Network. Below image explains each segment of auction buying.
We have compiled all the relevant data from this article to an infographic which you can download below.
In the next article, we will talk about the content of the Facebook ads, and show you how to make your ads beautiful. Next up: Create Ads.
- Complete list of references for this Guide
- References specific to this article (further read):
- Facebook Business: Introducing an Easier Way to Maximize Campaign Results
- About Campaign Budget Optimization Controls
- Campaign budget optimisation
- Facebook Ads guide
- Facebook Blueprint Courses