how much should i spend on facebook ads 2021
How Much Should You Spend on Facebook Ads? Budgeting Steps- How much should I spend on Facebook ads?
Updated on Jan 19,2023
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 Ad Tips: How Much You Should Spend On Facebook Ads
Facebook Ad Tips: How Much You Should Spend On Facebook Ads
how much should you spend on facebook,advertising this is a big question that,we get asked a lot and i think the,reason why is because there isn't always,a clear-cut answer you hear about how,it's different for every business an,industry et cetera but today i'm going,to give you a different way to think,about your facebook ad spend and a,formula that any business can use to,calculate exactly how much you should,spend on facebook advertising,what's up everybody welcome back to the,channel i'm brandi with life marketing,the digital marketing agency with a,mission to help small businesses grow,before we get into today's video please,go ahead and like this video for me,subscribe to the channel if you want to,grow your business and hit the,notification bell so you don't miss out,on any of our weekly videos alright so,how much should you spend on facebook,advertising the answer to this question,will be different if you are a newer,business and have not significantly,marketed on any channel yet versus if,you have marketed on other channels,successfully but you're just new to,facebook ads so i'm going to show you,how to approach your facebook budget in,both scenarios let's start with the,first one the formulas we often hear,around how much you should allocate to,advertising are usually directly tied to,our cac or customer acquisition cost but,what if you don't have many or any,customers yet how can you allocate a,marketing budget based off of data that,you don't have for this reason newer,businesses may not only find it,difficult to know how much to allocate,towards facebook ads but also are,usually working on a smaller budget to,begin with and that doesn't help cushion,the blow of what i'm about to say next,but in these cases the majority of your,initial facebook advertising investment,is going to result in brand awareness,and audience building before sales in,sherman's facebook ad cost video he said,that you need to be ready to not make,money back on your initial facebook ad,investment and that's a reality i think,many business owners don't want to hear,but before you tap out totally deflated,here's the flip side of that reality in,your initial period investing in,facebook ads you are laying a solid,foundation for a profitable sustainable,outcome later all of the facebook,results you've seen me share on this,channel where we're getting hundreds of,thousands in revenue from facebook ads,for our clients started by using an,initial period to test and figure out,who and where their most profitable,audience is on facebook and we give all,of our new clients in this situation the,same budget recommendation that i'm,about to share with you so are you ready,this is how much our agency recommends,you spend on facebook advertising if,you're totally new to it and don't have,any customer data six hundred dollars a,month for six months straight at a,minimum a minimum if you can do more do,more it'd be better if you could spend,closer to five to seven thousand dollars,over six months but we just try to be,mindful and realistic with new business,budgets so that's the minimum just to,start acquiring some facebook specific,data don't hear me say 600 a month for,six months and go running thinking,that's all you got to spend on facebook,to make millions you have to note the,amount of time testing and budget that,went into those campaigns i showed,earlier so having said that here are,three huge things allocating a budget,for initial facebook advertising will do,for you number one it will show you how,much of your audience is on facebook and,what adverbiage content and creatives,resonate with them best which will be,helpful to know as you go on to hone in,your facebook ads and explore other,marketing channels down the road number,two it will show you which specific,demographics interests or behaviors,within your target audience are most,likely to convert thus maximizing your,profit at minimal cost and again helpful,to know in general as an entrepreneur,growing your business and number three,it will start the traffic flow of,fueling your advertising funnel you,can't start getting conversions at the,bottom of the funnel if nobody is in,your funnel to begin with so you want to,use what we call the testing period,effectively and before we move on i want,to list out a couple things to take note,of but before i do,here's a quick message from sherman hey,we just helped a small business make,over 1.5 million dollars through,facebook advertising and after managing,millions of dollars in ad spend for,thousands of different small businesses,we have decided to give away everything,we learn to you in a special program if,you want to learn the blueprint to,success the best practices from some of,the fastest growing companies in the,world and all the different tools you,will need then sign up for our social,ads training program today all right,some things to know as you start your,facebook ad testing period the lower the,price of your product or service the,faster this testing process will go,usually because there are less,objections to overcome on the buyer side,you always want to build brand consumer,trust but usually consumers don't need,to build as much trust with a company,selling a ten dollar scarf compared to a,company selling a fifteen hundred dollar,piece of furniture or a monthly service,this is why a lot of low-risk e-commerce,businesses can start seeing sales,quicker the caveat to this is if you,have lower prices it's going to take,more sales to cover your expenses and,make a profit in general we usually see,businesses with higher priced products,and services come out a little bit more,profitable in the long run it just takes,them a little longer to start seeing,initial conversions so if you're a new,business new to facebook ads and have no,customer data put six hundred dollars a,month towards it for six months straight,at a,say it with me minimum allocate more if,you can now let's talk about how much,you should spend on facebook ads if,you're a business that already has some,customer data but are just new to,facebook and even if you fell into,category 1 keep watching because a lot,of what i'm about to talk about is going,to apply to you once you start gathering,customer data if you have existing,customer lists of a thousand people or,more you can upload them into facebook,to a retarget them and b create,look-alike audiences out of them i cover,what those audiences are and how to set,them up in my facebook ads targeting,video so i'll link that in the,description if you need to watch that,next but in a nutshell these audiences,produce conversions at a lower cost,because the retargeting audience is a,warm audience and the look-alike,audience is a group of new people who,look like your existing customer base so,if you've been successful on other,marketing channels or if you've already,generated some purchases you can put all,of that to use on facebook to start out,ahead of the game you'll still want to a,b split test different ads and audiences,to a degree to fine-tune what ad,combination is going to produce the most,results at the lowest cost on facebook,but you'll be leaps and bounds ahead,than if you were just starting from,scratch you'll just want to optimize,your ads and ad sets and turn off the,ones that are not generating profitable,results and reallocate your budget to,the ones that are morgan has a whole,video on facebook ad optimization so,i'll link that in the description as,well but once you've got a pretty good,rhythm going on facebook you've done,some initial a b split testing and,you're seeing some study conversions,coming in you can transition your,testing budget to a formula based budget,in sean's marketing budget video he,shared that your marketing budget equals,cac times customers and even though he,was talking about your marketing budget,as a whole we can follow a similar model,with your facebook ads so here it is,your facebook budget equals your cost to,acquire a customer on facebook times the,amount of customers you want from,facebook so for example if you know it,takes 30 dollars to produce a sale from,your facebook ads then multiply that by,the amount of customers you want which,let's say is a hundred then you need,three thousand dollars to see a hundred,new customers from facebook or you need,to lower your cost per result in ads,manager and i share seven ways to do,this in my how to lower instagram ad,cost video all of which can be applied,here to facebook too so i'll link that,so you can give that a watch and looking,back at the funnel you want to keep,fueling that funnel right so within your,facebook ad budget you can generally,distribute your budget 25 towards,audience building 60 towards offer,promotion and 15 towards retargeting,overall you just want to get to a point,where this is a well-oiled machine and,that the budget you are allocating,towards facebook ads is a number pulled,directly from how well facebook ads are,serving you and producing sales for you,so what questions do you have i know,budgeting can be a tricky thing,especially when real life ads fluctuate,over time the cost per result doesn't,always stay the same so leave any,questions you have for me in the,comments and i will get back to you,there otherwise that's all i have for,you today don't forget to like subscribe,and hit the notification bell on your,way out and i'll see you in the next,video
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