Solved: Facebook Ad Budget Error for SMS Objective

Hi there,

Thanks for reaching out! Happy to give you some initial thoughts on this. That budget error message is a really common point of confusion, and tbh, it points to a much bigger conversation about how to make platforms like Facebook actually work for you instead of against you. It's less about a hard rule and more about the platform trying to save you from wasting your money.

Let's get into it.

The truth about Facebook's "Minimum Budget" warning...

Right, first things first. To answer your direct question: no, Facebook isn't setting your minimum budget based on your previous campaign. It's not that personal. The platform is looking at your current ad set's targeting, placement, and performance goal and making a simple calculation: "How much money do I need to even have a chance of achieving this goal for this user?".

Think of it like this. The Facebook algorithm needs data to learn. Its job is to find people within your target audience who are most likely to perform the action you want (in your case, click a link). To do that, it has to show your ad to a bunch of people, see who clicks, and then find more people like them. If your budget is only $13 a day, and the cost to reach 1,000 people (CPM) in your target audience is, say, $20, you're not even going to reach a meaningful number of people in a single day. The algorithm gets starved of data, can't learn, and your campaign just fizzles out, having wasted the little money you gave it. The warning is basically Facebook's clumsy way of saying "You're setting me up to fail, and you're going to blame me when it doesn't work". It's a protection mechanism, for both you and them.

This definately applies to other objectives, especially higher-value ones like Lead Generation. Generating a lead is much harder (and more expensive) than getting a simple link click. Facebook knows this. It knows the likely cost per lead in your industry and location. So, if a typical lead costs $15-$20, it's going to tell you a $13 daily budget is pointless because you might not even get one lead every day. You'd just be burning cash for impressions with no results to show for it.

The core issue here is a misunderstanding of the objective. You've chosen a performance goal of "maximise number of link clicks". When you tell Facebook to do this, it does exactly what you ask: it finds the people in your audience who are most likely to click on anything and everything. They are 'click-happy'. They are not necessarily people who are interested in your service, want to message you, or will ever become a customer. You're paying for cheap, low-intent traffic. This is a classic mistake I see all the time. It feels good because you see a low Cost Per Click, but it rarely translates to actual business results. It's a vanity metric.

I'd say you need to switch your thinking from cost to value...

This brings us to the most important shift in mindset you need to make. The goal isn't to spend as little as possible. The goal is to profitably acquire customers. To do that, you need to stop asking "What's the minimum budget?" and start asking "How much can I afford to pay for a new customer?".

The answer lies in a metric called Customer Lifetime Value (LTV). This is the total profit you expect to make from an average customer over the entire period they do business with you. Once you know this number, everything else becomes clearer. Suddenly, paying $20, $50, or even $200 for a qualified lead doesn't seem scary if you know that each customer is worth thousands to your business.

Let's do some back-of-the-envelope maths. You need to know three things:
1. Average Revenue Per Account (ARPA): How much does a customer pay you per month on average?
2. Gross Margin %: What's your profit margin on that revenue? (Revenue - Cost of Goods Sold) / Revenue.
3. Monthly Churn Rate: What percentage of customers do you lose each month?

The formula is: LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

A healthy business model often aims for an LTV to Customer Acquisition Cost (CAC) ratio of at least 3:1. This means you can afford to spend up to a third of your LTV to acquire a new customer. This is the number that should guide your budget, not some arbitrary minimum set by Facebook.

To make this tangible, I've built a little calculator for you. Play around with the sliders to see how small changes in your business metrics can dramatically change what you can afford to spend on ads.

You probably should focus on who you're talking to...

So you know how much you can spend. But who are you spending it on? This is the next piece of the puzzle. Most businesses I see have a very vague idea of their Ideal Customer Profile (ICP). They say something like "small business owners" or "marketing managers in the UK". This is basically useless for effective advertising.

A powerful ICP isn't a demographic; it's a "problem state". It's a nightmare. Your customer isn't just a job title. They are a real person with an urgent, expensive problem that keeps them up at night. Your job is to understand that problem better than they do and show them you have the specific solution.

For instance, in one campaign for a B2B software client, we focused on reaching very specific decision-makers. Instead of broad targeting, we identified the key job titles and industries that experience the exact problem their software solves. By tailoring our messaging on LinkedIn to these specific pain points, we achieved a $22 cost per lead for highly qualified prospects—a result that would be impossible with a generic approach.

You have to do the work. What podcasts do they listen to? What newsletters do they actually read? What software do they already pay for? What influencers do they follow? Who are the competitors they already use? These are the interests you should be targeting on Facebook, not broad categories like "business". Your targeting should be so specific that when someone sees your ad, they feel like you're reading their mind.

You'll need a proper campaign structure...

Once you know who you're talking to and what their problem is, you can build a campaign structure that actually works. Forget optimising for link clicks. You need to align your campaign objective with your actual business goal. If you want people to message you, your campaign objective should be "Messages". If you want them to fill out a form, it should be "Leads". If you want them to buy something, it's "Sales".

This tells the algorithm to find people who don't just click, but who have a history of actually completing these more valuable actions. Yes, the cost per result will be higher than a simple link click, but the quality of the person you're reaching is exponentially better.

A typical structure we implement for clients follows a funnel approach, even if it's all within one platform like Meta:

1. Top of Funnel (ToFu) - Prospecting: This is where you reach new people. Your ad sets here would be based on your detailed "nightmare ICP" research. You'd test different interest groups, lookalike audiences of your best customers, or even go broad if your pixel has enough data. The goal here is to get initial conversions (leads/messages) and feed the algorithm data.

2. Middle of Funnel (MoFu) - Engagement Retargeting: Here you target people who have shown some interest but haven't converted yet. This could be people who have watched 50% of your video ad, visited your website, or engaged with your Facebook/Instagram page. The message here is different, maybe overcoming a common objection or showing a case study.

3. Bottom of Funnel (BoFu) - Conversion Retargeting: This is for people who got very close to converting but didn't. They added a product to the cart, initiated checkout, or visited your contact page. These are your hottest prospects, and you should be hitting them with a strong call to action, maybe a limited-time offer or a reminder.

By optimising for a real conversion event from the start, you are training the algorithm to find you customers, not just clickers. I remember one B2B software client where we drove 4,622 registrations at just $2.38 each on Meta. That was only possible because we optimised for the registration event directly and built very specific lookalike audiences from their existing user base, rather than chasing cheap clicks.

This is the main advice I have for you:

As you can see, the initial problem of a $15 minimum budget is really just the tip of the iceberg. It's a symptom of a strategy that isn't aligned with how these advertising platforms are designed to work. By shifting your focus from minimising cost to maximising value, defining exactly who you're helping, and using the right campaign objectives, you'll find that budget becomes a lever for growth, not a frustrating limitation.

This stuff can get complex pretty quickly, and it takes experience to know which levers to pull and when. A lot of our work involves auditing accounts, finding these kinds of strategic misalignments, and restructuring campaigns to get them profitable. It's very easy to burn through a lot of money learning these lessons the hard way.

If you'd like to go over your specific situation in more detail, we offer a free, no-obligation initial consultation where we can have a look at your account together and map out a more concrete plan. Sometimes a 20-minute chat can save months of frustration and wasted ad spend.

Hope that helps clear things up!

Regards,

Team @ Lukas Holschuh