Why Are Your Facebook Ads Burning Money So Fast?

When you run Facebook ads , one of the most important things is to allocate your funds and budget appropriately, so you may need to control the flow of funds from time to time to ensure that you can maximize the returns of your ads. When you monitor your advertising budget, you may find that your advertising budget is quickly spent and it is difficult to find the root cause of the problem. So where exactly is the overspending budget spent?

Over-reliance on account spending limits

A large part of the reason for spending the budget too quickly is a lack of understanding of how the various budget and spending restraint mechanisms work. If you run ads on Facebook and set them to auto-spend, you will be limited to the following three things:

· Single ad spending limit

· Single campaign spending limit

· Single account spending limit

The individual account spending limit is collectively referred to as the Account Spending Limit, which is used to limit the spending amount of all advertising campaigns launched by a Facebook advertising account.

For example, let’s say you set your account spending limit to $100 at the beginning of the month to match your monthly advertising budget. As ads run during the month, the ad spend amount will increase until the $100 limit is reached, at which point all ads will pause. You can also overspend. If you’re running a CTR ad with a cost per click of $3, then at $99 you’ll get 33 clicks, and Facebook will stop running the ad to avoid exceeding the limit. But sometimes Facebook gives you an extra click, bringing the payout to $102. Regardless, Facebook will notify you that you have reached your account spending limit. If you would like your ads to resume immediately, go to your Payment Settings to reset or change your account spending limit.

It should be noted that Facebook account spending limits do not take time into account. If you do not set a time limit such as a daily budget, Facebook will spend your budget unscrupulously until the limit is reached. Therefore, if you rely too much on the monthly spending limit in your advertising budget, the result will be that your ads are paused and then the spending limit is raised again, which will eventually lead to budget overspending or accelerated advertising spending.

So don't rely too much on account spending limits, and once you limit your spending to a certain amount, don't spend more than that, no matter what happens. You can cancel or change your spending limit when you run your ads the following month.

Total budget and daily budget

When you choose a budget for your ad campaign, you generally have two options: daily budget and total budget.

The daily budget refers to the average amount you are willing to spend on an ad set each day . The Facebook advertising system will try to distribute and fully utilize the budget as evenly as possible, but ads on certain delivery days have a greater chance of achieving more results. At that time, advertising spending could increase by up to 25% based on the average daily budget. For example, if your daily budget is $10, the system may actually spend up to $12.50 to deliver your ads as efficiently as possible and use your budget wisely. If the opposite is true, the system will reduce the day's spending. So you don't have to worry about overspending, the system will try to average it out as much as possible.

Your total budget is the total amount you're willing to spend on your advertising. If you use standard delivery, Facebook will spread your budget evenly across the duration of your ad set, but it won’t guarantee that you’ll spend the same amount every day. For example, if your ad runs for 5 days, your total budget is $250. The system would then likely spend anywhere from $50 to $75 per day for 5 days.

These budgets are set at the ad set or campaign level, not at the individual ad level, but you can set budgets at the individual ad level by having only one ad per ad set. This means that if you have three different campaigns, each with a total budget limit of $100, you might end up spending $300 just to reach your limit. If you set a limit of $100 for this month or this campaign, you will go over budget.

There are two ways to solve this problem:

Method one is to set a total budget limit. If you know you only have $100 to spend on advertising this month, but you want to get the most out of those funds from any of your three campaigns, you can set a campaign-level cap of $100 for each campaign and set a total budget spend limit of $100. Your ads will compete for budget until a total of $100 has been spent, and you will be able to compare the total spend on the three ads to see which campaign is spending the most money.

The second method is to allocate the money you plan to spend into a single day budget. 100 divided by 30 is about $3, so you can control your spend for the entire month by simply setting a daily budget of $3 per ad.

So what happens if advertising costs money too quickly? When you set a total budget for your campaign but don't set a daily budget, your ads may spend more quickly until you reach the campaign-level cap you set or any account-level limits you have, whichever is lower.

The better solution here is to set both an account spending limit and a daily budget limit. Your account spending limit is your safety valve, ensuring that even if your ads run wild, you won't exceed your actual advertising budget. The daily budget limit ensures that the budget is distributed more or less evenly over the life of the campaign.

Facebook Daily Budget Flexibility

The more or less even distribution mentioned above means that the daily budget is flexible. This is a target, not a ceiling.

If you set a budget of $10 per day and your campaign runs for 10 days, Facebook will make sure that at the end of those 10 days, you’ve spent an average of $10 per day. Additionally, as mentioned above, Facebook allows certain days to spend 25% more than the average budget, provided that the subsequent spending can reduce the daily average spend to $10 per day.

This is intended to automatically exploit peaks and trends to some extent while still adhering to the overall budget cap. For example, let’s say you’re running an ad to promote an upcoming new product. Your ads may spend more on the launch day due to a spike in interest, but you may spend less on the following days to average out the budget by the end of the campaign cycle.

For some ads and themes, budgets may also change based on the date. If your ad is about a weekend getaway, you’ll see a spike in interest from Wednesday to Saturday, and you’ll likely make up for it by spending less money Monday through Wednesday.

Furthermore, this flexibility also applies to advertising competitions. If your main competitor has paused its advertising and has not yet started a new campaign. This competitive gap means your advertising costs go down, so you can invest more in a shorter period of time to get more results.

If you find that you’re spending too quickly on your Facebook ads, there are a few ways to fix this.

First, you can set a slightly lower daily budget . If you don’t want to spend more than $10 in one day, you can set the daily budget to $8. Even if Facebook spends 25% more, it will not exceed the $10 limit. The calculation method is 8 + (8*25%) = 10, so the actual daily budget calculation method is to add 25% to the set budget.

You should also make sure to avoid pausing or canceling your campaigns early . If Facebook's system decides to take full advantage of the first few days of your ad run, you might think your ad budget is overspent and panic and pause your ads. This means Facebook won’t be able to average out your budget over the next few days, and if you restart your ads, it may reset a new daily limit, causing you to overspend again. Keep in mind that Facebook will not overspend so much that your total budget is exceeded over the life of your campaign.

Manual payment notes

Facebook generally has two payment methods for advertising: automatic payment and manual payment.

Automatic Payment: Facebook's system will automatically charge you when your advertising spending reaches a certain amount (i.e. the billing amount), and automatically charge the remaining amount on the monthly billing due date. If you purchase advertising using PayPal or major credit and debit cards, you will be charged this way.

Manual payment: You need to top up your account first, and then the system will deduct the amount from the top-up amount during the advertising period, at most once a day. If you purchase advertising using a manual payment method (such as PayTM or Boleto Bancário), you will be charged for the advertising using this mechanism. When using manual payment method, there will be no billing credit on the account.

Please note that the manual payment methods available to you depend on your current region and currency. The country and currency of your ad account must match the country and currency of the payment method you want to use.

Manual payment is only available if you are paying with a currency that is supported in the table below. You can find a full list of payment methods and the countries they work in in this Help Center article.

One of the downsides of manual payments is that you must deposit funds into your account before your ads can be displayed. Facebook will continue to run ads based on the budget you choose until the balance is used up. But let's say you added $100 to your account and accrued $97 in charges from advertising, you would have $3 left in your account. It is impossible to spend the $3 without adding more funds, so the $3 is effectively stuck. Unless you live in an area where you're required by law to refund the money, Facebook will still keep the money.

Author: Traffic FB

Source: Traffic FB