how much should i budget for facebook ads
How Much Should You Spend on Facebook Ads? Budgeting Steps- How much should I spend on Facebook ads?
Updated on Jan 20,2023
How Much Should You Spend on Facebook Ads? Budgeting Steps
- How much should I spend on Facebook ads?,I'm gonna be walking you through a series,of steps that you can take to effectively determine,the right advertising budget for your specific business.,(upbeat music),The first thing that we're gonna talk about,is really understanding your numbers and your goals.,The second thing is understanding your industry data,and your own personal business conversion data.,And then finally I'm gonna be sharing some,steps that you can take to distribute that budget.,Finally, I'm gonna be sharing,some mistakes that you really want to avoid,if you want to profitably spend on Facebook,and Instagram ads.,Step one, first of all you really need to understand,the numbers that are related to the marketing,and sales of your business.,For most of my clients, the goal is to make money,,which means that you're focused on getting leads,and making sales.,Typically a marketing budget,for any business could be anywhere,between five and 12% of revenue.,Some newer companies may wanna spend closer to that 12%,because they want to grow aggressively.,If you're a company that's been around,for a while, you've got great revenue coming in.,You want to maintain or just grow incrementally.,You might be closer to that 5%.,What if you're a business that is brand new,or you've never spent money on marketing,,you've only focused on word of mouth and referrals.,If that's the case you really need to seek out,some additional information.,The first place you can find this information,is industry research.,There is a lot of information online,and in industry organizations on some of the numbers,that I'll be sharing with you.,There's also a lot of opportunity to reach out,to other people in your field and find out exactly,what they're doing to get a good idea,of the direction you should be going in.,So those very important numbers,that you wanna find are number one,,what is an appropriate cost per lead for your business?,So a lead is not a sale but it is what we need first,in order to make a sale.,However, the most important number that you can focus on,is your cost per core event.,If you're in any type of business that a conversation needs,to be had before a sale is gonna be made,you've got to have a number on what,you can profitably afford to spend for that key event.,What you're gonna find when you start doing this type,of advertising, is that the lowest cost,per lead ad campaigns may not be producing,the lowest cost per core event.,If you sell a low dollar product or service,,you're going to have to figure out that maximum number,that you can spend to remain profitable.,If you're selling something high dollar, it's very similar,but you actually have a little bit more wiggle room,as long as your conversion rates are good.,Finally, you wanna look at what is a strong cost,per customer acquisition for your business.,So how much money did I have to spend,in order to acquire this new customer?,Again that number is gonna be different for every business.,If you have different products and services,,it may be different,for those different products and services.,I would also really look into your conversion rates,,whether that's a sales team,or maybe you are selling something directly online,,those numbers are going to show you how many leads,you're gonna need to get on the phone,,or get to an appointment to make that sale.,I get a lot of questions on what is that magic number,but ultimately that magic number,in terms of ad spend is heavily dependent,on what your expectations are, and what those goals are.,If I'm a new business and I want to grow,to a hundred thousand dollars in the next few months,,that's a very clear goal.,We can reverse engineer that goal to determine,based on past industry data,,how many leads we're gonna need,,what that costs per core event is gonna be,,and how much we can spend to acquire one customer.,The last step is taking that monthly ad spend,and properly distributing it based on the types,of ad campaigns you're gonna need to use,to really see results.,There really the three categories,,about 20% should really be dedicated,to that education engagement and audience building,type of advertising.,What I see happen far too often is that business owners,will either produce nothing but lead generation focused ads,or nothing but content focused ads.,And ultimately you have to have them both to really succeed.,So you want that 20% to really be creating,this audience for your business,that you're gonna be able to leverage longterm,so that your results do not dry up,or skyrocket in terms of costs.,About 60% of your budget is going to be focused directly,on promoting your offer and generating those conversions.,You also wanna dedicate about 20%,to your retargeting efforts.,Retargeting is an amazing way to get a lot,of bang for your buck, but ultimately,if that's all you do, your audience is gonna be so small,that you're not gonna see those financial results either.,So all three pieces of this puzzle really,need to go together and be working together,in harmony to maximize the impact of your budget.,So as promised, these are some of the biggest mistakes,that local business owners or online business owners,are making when it comes,to their Facebook advertising campaigns.,Number one is not giving it enough time.,This time is so crucial to be able to get that initial data,,analyze what the data is telling you,,and then make the appropriate adjustments from there.,You also do wanna go back and revisit,that customer buying cycle,and the length of time that historically,it can take someone from that initial lead,until the sale closes.,If you're in a business,that has a very short buying cycle, that's great.,You're gonna be able to track that data a lot faster,and adjust your budget based on what you're seeing.,If it could take six months,for the average customer to close,,you at least need to give it six months,so that you can really see the return on ads spend.,The next thing is gonna be not spending enough.,You've got to understand that the size of your audience,and the cost of your product,ultimately will dictate what you can expect to see,in terms of those costs per lead.,If you don't spend enough money per month,Facebook's ultimately going to distribute that budget,in such a thin way that you won't even be able,to generate at times a single lead per day.,Whereas if you had just bumped up the budget,,you would be able to see amazing results potentially.,The next thing that I see is,that people are choosing the wrong types,of campaigns and objectives.,So we did mention those three different types,of ads that you should be using in your strategy.,Ultimately, the objectives do correlate to those,,but if you're really looking for leads,,don't focus on a brand awareness objective,,don't focus on reach necessarily.,You need to make sure that you're,telling Facebook exactly what it is you want to see,so they can help you achieve those goals.,Finally, really not understanding how to read,the data in ads manager.,If you go to the customize columns option in ads manager,you have the ability to rearrange and organize,,add and remove the pieces of data,that are critically important for you,to make those decisions and see very clearly,which campaigns are producing leads and which are not,,which campaigns are producing scheduled calls,,and scheduled appointments and which are not.,So I know I just gave you a lot of information,but I want you to click here to explore my next video,on those three different types of ads that we covered,,diving into much more detail,so that you can really understand,how to do this the right way.
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Facebook Ads Budgeting: How to Forecast Your Costs
Facebook Ads Budgeting: How to Forecast Your Costs
- How much do Facebook ads even cost?,And where do you start with setting your ad budget?,In this video I'm gonna walk you through my exact process,for defining an ad budget based on your sales goals.,And at the end, I'm going to share an example,of a few different funnels,,and the different conversions,you should expect with each effect.,(upbeat music),First step in determining your ad budget,is to define how much revenue you wanna generate,with your Facebook ads in the next 30 days.,And then we will work backwards from there,to achieve that revenue goal.,Once you have that sales goal, (air whooshing),you need to figure out how many sales and actual units,you need to sell.,So that means that total revenue goal,divided by the cost or the average cost of your offer.,And that will tell you how many units you wanna sell.,For example, if I wanted to make $10,000,in the next 30 days running ads, and I had a $1,000 product,I would need to sell 10 units of that product.,So I would know my goal is $10,000 and 10 different sales.,Now, once we have the number of units,we wanna sell to achieve our sales,,we need to define either how many landing page views,we need from our ads or leads.,And the way we do that,is we figure out our average sales conversion.,So I'm gonna walk you guys,through a couple of industry averages.,If you have data on your own,from anything you've previously done,,absolutely use that and plug this into this formula.,So first, if your business is set up,where you get email leads and then you sell to customers,through a webinar or through a video series,,something like that,,you're defining how many email leads you need,to achieve your sales goal.,And we need to come up with a sales conversion,of those leads.,We're going to just use 5% to make it easy.,If you have a really expensive product,,you will have a lower sales conversion.,If you have a really inexpensive product under $300,,you might have a higher sales conversion.,Feel free to adjust this for your business.,So then we take the number of sales we just defined,and we divide that by our sales conversion we've chose.,So we would do 10 divided by five,and we will multiply that by a hundred.,That equals 200.,So I need 200 email leads.,Now, if you run ads straight from the ad to a product,,we have to calculate how many landing page views you need.,So let's say 7% of all the people,who land on your sales page, buy your product.,We'll take that sales goal,,let's use 10 again as an example,,divide it by seven, times 100.,So we'll need approximately 143 people,to land on our page to then buy our product.,Once we have these numbers,,we can determine our ad spend budget,by multiplying either by the cost per lead,or the cost per landing page view.,Don't worry if you don't know your average cost per lead.,It can range anywhere from two to $10,depending on your industry,,depending on how much your offer is,,and depending on what you're sending them to.,Let's start with the lead example.,Now I'm gonna use an average cost of $4 cost per lead.,In order to get 200 leads, we'll multiply by four.,We need to spend $800 in ad spend to get those 200 leads.,Now look at the landing page view example.,The average landing page view costs 50 cents to $3.,So if we took 143 times a dollar,we would need to spend $143.,Now this is the question most people will have,at this point, what if I get to this step,and I don't wanna spend that much money on my ads?,What you'll have to do is just use this formula,and go back and adjust it until your sales goal,matches a reasonable ad spend goal.,And that's one of the most important reasons,that you do this before running ads.,This is what stops people from boosting posts,or throwing things out there and hoping they work,because we're going to go into this very intentionally.,I'm gonna spend $800 to make $10,000.,So let's say instead of selling 10 of those courses,,you put your goal as 100.,You wanna do $100,000 in the next 30 days,selling those courses.,You would say, I wanna sell 100 courses,at that 5% sales conversion.,Means that you need 2000 leads at that $4 cost per lead.,Our ad spend would then be $8,000.,And you keep playing with these numbers,until your budget aligns with your sales goal,,and it's something you're willing to spend,based on where you're at today in your business.,If your budget is feeling too high,,then you can decrease your sales goal,,or you can play with your conversion numbers,to get it to a place where it matches,what you're willing to spend today.,Now, if you get here and your budget is too low,and you're actually willing to spend more,,then increase that budget,and you'll also be able to increase your sales goal.,I do have some general rules of thumb,when planning out your budget.,The first one is I recommend having a minimum of $500,to put towards your Facebook ads.,I feel like anything less than that,,it's not really worth it and you don't get the traction.,The other rule of thumb,comes with that average conversion rate.,Business to consumer marketing is very different,from business to business marketing.,Generally in the business to consumer space,,you're gonna have a lot less cost per lead,and cost per landing page view,,you'll be on that lower end of the averages.,But your sales conversion will be a little bit lower.,The consumers usually need a couple more touch points,with your brand, and they're a little bit harder to sell to.,But in the business to business space,,you'll probably pay higher cost per lead.,You might be on that higher end of the industry averages,but then if you actually successfully,get someone to your landing page or to your webinar,,your sales conversion will be higher.,So those are a few things to take into consideration,depending on your business and your industry,when planning out these metrics.,Before I get into the next tip,,do you mind hitting the like button?,It really helps our channel out.,Now let's look at what these numbers look like,with a few specific funnels.,Let's start with the webinar funnel.,So with a webinar, an average cost per webinar registration,is anywhere from $3 to $10.,If you are in an industry targeting consumers,,again you'll probably be at the lower end.,And targeting business owners,,you'll probably be at that higher end.,Let's look at a high ticket sales funnel,where you would be selling people through a call,or an application into your higher level service.,In this sales funnel usually about one to 3%,of your leads will actually purchase.,And it might vary how you're getting them to that call.,So if you're using a webinar,,you'll fall within that three to $10,average cost per webinar registration as well.,And finally, let's look at an e-commerce funnel.,This would also be relevant,to a self-liquidating offer funnel,if you have a very low priced digital product,and you're going straight from your ad to your product,,you will pay an average of 50 cents to $3,for that landing page view,,and you should be converting anywhere,from five to 10% of that traffic.,Now I know that was a ton of numbers.,So feel free to go back and screenshot that chart,and come back to it any time.,Now it's time to build the funnel that is right,for your business and your unique goals.,This is the first video in my complete Facebook ad process.,Click here to watch the playlist of all the rest of them.,Or here's another video that I think you might like.
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