Before you start spending money on Facebook, it’s important to know how much you’re willing to spend and how much your advertising/marketing budget will allow. When in doubt, start small! Create a highly targeted ad and monitor it for results. When you’ve fine-tuned it for maximum results, then you can add another advertisement to your campaign or increase your budget.

I always suggest when you start an ad just start with a 50$ for each 3 different ads, so you test those 3 ads and the one who converts more stuck with it.

Once you’ve created your advertisement and chosen your target audience demographics you’ll be asked to set your budget and pricing. Here are the decisions you’ll be asked to make:

Pricing Type, there are two different pricing types on Facebook. They include:

Cost Per Click (CPC) - A type of campaign pricing where you pay each time someone clicks on your ad. This is the best type of campaign to use when you want to drive specific action on your website or Facebook Page.

Cost Per Thousand Impressions (CPM) - A type of campaign pricing where you pay based on the number of people who view your ad. This is the best type of campaign pricing to use if you want to raise general awareness within a targeted audience.

Daily Budget
Your daily budget is the maximum amount of money you're willing to spend on an individual campaign each day. If this is your first advertisement you may want to set a low daily budget so you can monitor results. Once you know your ad is optimized you can increase your daily budget.

Above all else, make sure you’re comfortable with your budget. If you only have $50 a week to spend then your daily budget will be $50/7 days or $7.14 per day. Facebook promises you'll never pay more than your daily budget and they stop showing your ad once you’ve reached your budget limit.

Maximum Bid
Facebook advertisements work on an auction based system. This means that the market sets the price for a click depending on demand for your keywords. You’re going to be asked to set a maximum bid. This is the amount of money you're willing to pay per click on your ad or per thousand views of your ad, depending on whether you have a CPC or CPM campaign.

Your maximum bid competes against other advertisers' bids to determine which ad gets displayed to the target audience and how much you ultimately pay for a click. This becomes important if you are in a highly competitive industry where you’ll be competing for ad space with a number of other businesses. Remember you can adjust your budget at anytime. It’s important to monitor your campaign for the first few days to analyze results and modify your campaign to fit your goals and budget.

Track the Data!

Facebook provides analytics and data so you can test and track just about everything. Split testing is highly recommended. When you split test you can analyze:

• Which graphic works best.
• Which headline works best.
• Which call to action motivates the most click throughs.
• You can even test your audience specifications.

All of this information will help you create the most profitable advertisement possible. You may find that the 30-40 demographic isn’t converting at all but your 40-50 demographic is very responsive. Then you’ll have a decision to make. Eliminate the 30-40 demographic and focus on the 40-50 or rework your ad to the 30-40 demographic to get better results.

Due to the vast number of options Facebook advertising provides, you can generate tremendous results. The key is to have a specific goal and then to create an ad designed to achieve that goal. If your ad campaign is too broad in scope then it’s going to be difficult to get your money’s worth.

Okay, you have completed the five basic steps necessary to achieve success with Facebook advertising. Let’s take a look at the top seven tips for maximizing your Facebook advertising campaigns success in tomorrow's post.