Running a Small Business Facebook Ad Campaign on a Tight Budget

Globally, there are around 1.79 billion monthly active Facebook users. In case you had any doubts if Facebook is a good ad medium for SMBs, it is too big to ignore! Apart from managing your social content strategy, the best way to tap into the Facebook user base is to use Facebook Advertising. In 2015, Facebook revealed that over 2 million Small and Medium Businesses use Facebook Ads – one more reason to consider using Facebook Advertising.

But, doesn’t it cost much to advertise on Facebook? Yes & No.

There are a lot of factors that decide the Facebook ads cost. From your bidding plan to an audience, a lot of parameters affect how much you are going to pay.

If you are a local business, Facebook is an ad medium that you should definitely explore. Most of the times, your marketing budget will be stretched, leaving little room for experimentation. If you are running your marketing activities on a tight budget, here are a few hacks that will help you run an effective Facebook campaign without having to spend much.

  • Understand your Target Audience

When it comes to Facebook Ads, you can target people who have expressed interest or have liked other topics or pages. You can target people based on behavior (purchase behavior, device etc) and demographics under the detailed targeting category. Browse through the detailed targeting section of your Facebook Ads settings, you will understand that there are plenty of interests to target.Usually, interest targeting will point to a large audience. So, it is advisable that you combine detailed targeting with other targeting methods.

Not only that, you can also target based on location, age, gender, language. Under locations, you can include or exclude a particular city or area. You can target people who live in the specified location, people who have recently traveled to the location and people who are traveling to the specified location.

Facebook targetting

The point is, choosing the target audience can become extremely costly if you don’t know how a potential customer for your business looks like. The audience you choose will have a direct effect on how much you are spending for Facebook Ads. Also, you must know your competition because the cost for your Ad will be affected by who else is targeting your audience.

Key Takeaway #1 – Know who you are selling to! Understand your typical customer and that of your competitors. The audience you select is an important part of the cost, but it is not the only factor.

  • Pay Attention to the Relevance Score

When deciding what adverts to show a person, Facebook considers how relevant the advertisement is for the audience. When the relevance score is high, your ad will be displayed than other ads targeting the same audience. This means you will have to pay less to reach your target audience.

In a study conducted by AdEspresso, two similar campaigns were run in a split test. While one ad had a relevance score of 2.9, other had a relevance score of 8. The ad with the 2.9 relevance score had an average cost of $0.14 per click and the second ad with higher relevance score had an average cost of $0.03 per click! While this might seem like a small amount of money, the difference adds up pretty quickly!

facebook relevance


After your ad is displayed more than 500 times, Facebook assigns a relevance score from 1 to 10 based on the feedback it gets from the people seeing it. Check this score and refresh your ads if the relevance score falls low.

Key Takeaway #2 – To increase the relevancy of your Facebook ads, be specific with your audience and learn from testing (read more below!), Make sure the ad’s message, video & image resonates with your audience.

  • The Quality of your Advert

While this seems like an obvious thing to pay attention to, this is where many people fail. The quality of your Facebook ads can bring down the costs or increase it. There are two parameters that you must pay attention to when you are analyzing the quality of your ads – the click-through rate and the relevance score. The relevance score and ad costs are directly related, as explained in the previous point. The click-through rate basically the number of clicks on your ad divided by the total number of impressions. 

Facebook Ad Quality

When your ad has a high click-through rate, the relevance score improves and the overall spend will decrease.

Key Takeaway #3 – Focus on the ad quality. Have a clear CTA and feature high quality images/videos.

  • Are your Bidding Right?

Bidding options let you choose how you pay for Facebook Ads. There are 4 different ways in which you can pay for ads. These include –

  • Impressions (CPM) – You will have to pay for every 1000 impressions if you choose this bidding method. The cost per impression is lower than the cost per click. So, when you want a lot of people to notice your ad and if you are not very focussed on conversions, CPM is the right option.
  • Cost Per Click (CPC) – You will have to pay for every click your ad gets. You will have to pay if a customer clicks on your advertisement, doesn’t matter if they complete a purchase or sign up for your newsletter! Remember, you are not paying for users who just viewed your ad but did not click.
  • Cost Per Like – If the objective of your campaign is to gain likes for your page, this type of bidding will allow you to pay for each like that is generated from your ad.
  • Cost Per Action (CPA) – You are bidding on and paying for a specific action. While this might cost more than just clicks, CPA will give you a better ROI.

facebook ad cpc

Bidding options influence cost a great deal as you are deciding what you want to pay for.

Key Takeaway #4 – Choose your bidding type carefully! Cost per Action might be expensive that CPM, but if you are looking for users to complete an action, it makes sense to choose CPA or CPC style of bidding.

  • Use Tools to Manage your Ad Campaign

Even if you have an unlimited marketing budget, advertising on Facebook is easier said than done! If you are not sure of what you are doing, you can easily spend a lot of money, with no results! While you can use Facebook Ad Manager to do a number of things related to your Ad like setting budget and tracking results, there are also other tools you can use. Here are our picks –

  • Qwaya – For A/B testing and scheduling
  • AdEspresso – For customizable dashboards and detailed metrics
AdEspresso for Facebook
  • Hootsuite Ads – For managing paid and organic content from a single location
  • Social Ads Tool – For automatic ad optimization and conversion tracking
  • AdStage – For tracking all your social and search ads in one place
  • Driftrock – For creating, automating and triggering Facebook ads
  • Perfect Audience – For Facebook retargeting

Key Takeaway #5 – Once you create a Facebook Ad campaign that gives a good ROI, you can scale up accordingly. If you think you need help managing your ads, you can invest in one or more tools.

  • Select the Objective Clearly

Facebook lets you select the marketing objectives for an ad that ranges from app downloads to clicks to a website. Your advertising objective is basically the action you want people to take when they see your ads. The objective you choose must align with your business goals. You can choose from –

  • Conversions – objectives that lead people to a purchase
  • Awareness – objectives that create interest in your business
  • Consideration – objectives that make people consider your business and look for more information (lead generation, engagement, app installs, traffic etc)

facebook ad objectives

Set your objectives clearly before you create an ad. As your business grows, your ad campaigns goals change. Initially, you might focus on building brand awareness but at a later point, you would want your ad to bring more conversions.

Key Takeaway #6 – Under local awareness, you can choose to promote your business to people in your local area. You can choose from ad formats like video, slideshow, carousel and photo.

  • Measure the Results

While creating a good & relevant ad is important, even important is measuring the ROI and CPA. Only by measuring these factors, you can determine the worth of your Ad campaign

Let’s say you are paying $2.00 for every mobile app install and the customer pays $4.00 to actually install the app. If you get 100 downloads that way, you spend $200 but you make $400 in return. You should monitor your Ad performance to ensure that the costs are not more than the ROI. But when the costs increase, see where you are going wrong. Maybe the target audience is very narrow or some elements in the landing page doesn’t work!

Key Takeaway #6 – Even if you are running an ad campaign with an objective of engagement, you must evaluate the campaigns the same way as other campaigns for conversion. That way you can decide what campaigns to run again.

  • Keep Testing

To optimize costs, you must first gauge what’s working and what’s not. That’s why split testing is important. A lot of people make the mistake of creating a good Ad and leaving it there. Sometimes, it is hard to determine what works until you test a couple of ideas.

It is always advisable to start with a small budget, see if the ads are giving a good ROI and predict a trend. This way, you won’t be spending a lot of money to experiment and you can also find out if the ads are working.

Use Facebook A/B test to find out which ad headlines, images, body copy and call-to-actions work best for your audience.

Key Takeaway #8 – While testing might sound like an easy thing to do, you can easily lose your way. There are countless opportunities for testing Facebook Ads – texts, titles, age, links, gender, locations etc. If you want to test five ad titles, five images and five links, you will have to create 125 ads! So, create smaller experiments with less than 5 variations and use an external tool for A/B testing.

Getting results from your Facebook ads with a small budget is not a tough thing to do. But, the costs should not be lowered by compromising on the quality of your ads.

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