How to Create a Cost Effective Facebook Ad on a Small Budget

62% of small business owners believe that Facebook Ads are ineffective. The largest reason behind this belief is because Facebook Ads are seen as too expensive. While it is true that advertisers with a larger budget drive up costs, there are a handful of ways that local businesses can actually reduce their costs and avoid being outbid by the larger companies. Here’s our quick step by step guide on how to create an effective Facebook campaign on a small budget.

You can run effective Facebook Ads for $50 a day, $20 a day, even $5 a day with the right strategy.

Facebook Ads are very complex and are easy to get overwhelmed by, but in this article we will discuss the Top 5 important elements to creating a cost effective Facebook campaign.

1. Reducing costs and maximizing ROAS with cost control bidding strategies

2. Targeting customers that are ready to buy NOW with micro-niche targeting

3. Choosing the right objective

4. Finding the right audience at the right time with scheduling and placement

5. Optimizing budget spend with ad sets and split A/B testing

How to run Facebook Ads on a small budget and choose the right strategy.

Bid Strategies

Choosing the right bid strategy can help you optimize your ad spend to reach affordable costs and maximize your return on ad spend. There are a few ways this works.

1. Lowest cost - This option is automated and will drive as many results as possible for your budget. This option will spend your budget as quickly as necessary to produce results, and will not be outbid by competitors as it has no cost cap. That means it can drive your costs insanely high, but will produce results as quickly as possible.

2. Cost cap - This option allows you to set a limit on your desired cost per action. If you do not want to spend more than a certain amount to obtain a result, using this option will help you reach that goal. This option may cause your ad spend to slow down, as it will often get outbid by larger budgets if your target CPA is too low.

3. Bid cap - This option allows you to manually choose how much to bid in each auction. If you know that you are not willing to spend more than a certain amount on each impression and believe that you can still drive results, this option is for you. This option is rarely used due to the level of management required to maintain efficiency.

There are other options that allow you to target ROAS, but your pixel needs to be attached to a monetary value for each event to perform efficiently. With that being said, targeting ROAS or a cost cap will be the best way for a small business to get the most out of a small budget campaign.

Audience Targeting

Choosing the right audience is essential for finding customers that are actively searching to purchase your product or service now. You can make Facebook audiences more effective by using custom audiences and lookalike audiences, but if you don’t have a massive source of data for your ideal customer, there are three categories you need to be aware of.

1. Demographics - Choose relevant information about your ideal customer such as income, family, marital status, residence, geography, age, work, and more.

2. Interests - Choose what content your ideal customer interacts with most on Facebook. What pages do they like, videos do they watch, and hashtags do they use or follow? Note: This category does not include ad interactions.

3. Behaviors - What behaviors does your ideal customer display on Facebook? This is great to use if they are a Facebook Page admin, frequent shopper, use a particular mobile device, and much more.

Narrowing your audience with interests and behaviors is a great way to find customers that are actively searching for your product or service. Excluding characteristics is also a great way to avoid showing your ads to users that you know will not take action on them such as competitors, employees, or low intent groups.

Choosing Your Objective

Knowing how to choose the right objective is essential for creating an ad that works. Identifying the ultimate goal of your campaign and how it aligns with your overall marketing strategy will help you get the best results and keep your costs low.

1. Conversions - Great for producing instant sales but is the most expensive objective. Using a target CPA is vital for success with a small budget.

2. Traffic - Great for driving users to a landing page and building a retargeting audience. This is a cost effective strategy that works well when educating warm audiences that are not yet ready to buy your product or service.

3. Engagement - One of the best objectives for building a social media following and a retargeting audience. If used correctly, you can gain a lot of traction with your organic content down the road.

4. Reach - The most affordable objective. A reach campaign allows you to retargeting custom audiences with a tailored offer for as little as $5 a day. This campaign objective is also very effective in driving awareness if your content is engaging enough.

Ad Scheduling and Placement

Knowing when and where your audience is most active will help you reduce wasted ad spend in areas that don’t produce results. If you know that your audience is only online during certain hours of the day or certain days of the week, you can limit your campaign to run only during those times.

If you know that your audience is more engaged on Facebook than Instagram or vice versa, you can limit the placement of your ads to those platforms. You can also limit the placement of your ads to certain channels within those platforms, such as only in the news feed or only on stories.

Knowing when your audience is most engaged and what channels within each platform they are most engaged on will help you create an ad that is tailored to their exact interests and will gain the most exposure.

Budget Optimization

Allowing your campaigns to optimize your budget will prevent underperforming ad sets from spending too much money. It is also a great way to automate a manual split A/B test. If you create multiple ad sets to test out different audiences or creative elements, your campaign will shift your ad spend to the better performing ads over time.

This can, however, affect your performance. If one ad set has significantly more audience members, the campaign budget will automatically focus more spend on that ad set and will neglect the others. Also, if one ad set begins to perform better than the others right off the bat, Facebook will assume that ad set is the better performing one without allowing enough time for the others to fully optimize.

If you are not great at checking your ads several times a day or knowing when to reduce spend for certain ads, optimizing your campaign budget will generally help you increase your campaign’s efficiency.