What is a "meaningful" budget

Hey there,

Let’s understand a big reason often ignored by businesses that causes bad facebook ads performance.

The budget they place on a facebook ads campaigns.

Your budget will affect the campaigns performance,

if you want to live in denial - so be it.

In a real time test done on our internal brands we deployed two strategies:

Strategy 1: The classic baseless strategy -

In this strategy, we setup facebook ads with a “meaningful” budget.

In our case a meaningful budget for us was ₹500 ($6).

We received 1 conversion after 7 days of starting the campaign.

Basically to a layman - these ads did not perform.

Strategy 2: The Technically sound strategy

Ps: I learned this technique from the CMO of Obvi who send a detailed newsletter about how they calculate daily budgets for their campaigns.

In this strategy we took in account 3 factors before deciding the daily budget for the ads.

1. AOV of our product

2. Attribution setting used

3. Desired ROAS

The each one was as follows

1. AOV - ₹350

2. Attribution setting - 7 day click; 1 day view

3. Target ROAS - 2x

When we divide the target ROAS by the AOV,

we get ₹175 as our derived CPA.

We decided the budget depending on the attribution setting and it’s effects on the learning phase.

As in the case we were using a 7-day based attribution settings we had to generate 50 or more conversions in 7 days to exit the learning phase.

So our budget should be - Derived CPA x 50

In this case that is - 175 × 50 = ₹8,750

₹8,750 is the budget we have to deploy in a 7 day period.

Which means our daily budget should be (₹8,750 ÷ 7) ₹1,250.

We started running ads with this new budget,

Day 1 - 2 conversions
Day 2 - 2 conversions
Day 3 - 3 conversions

And the saga goes on.

We all conveniently ignore the fact that Facebook ads is an auction based platform.

We conveniently blame everything else except for the budget we are investing in Facebook ads.

If we do everything right but set-up a very low budget - there are very few instances when that auction will go in the favour of your brand.

Putting efforts in creative is a must but low spends can result in all that effort going in drain.

To help you avoid making this mistake - I have created a daily budget calculator you only need to add the numbers in it according your brands AOV and target ROAS.

Ps: The doc is not editable you will have to make a copy of it to start using it.

If you are a brand that deals in USD/AUD
Click here to get your daily budget calculator

If you are a brand that deals in INR
Click here to get your daily budget calculator

Want to work with my Facebook ads agency?

Book a strategy call today - getdiskovered.com

If you made it till here,

I really appreciate your time.

Thanks for reading,
Kaustubh