how much should you spend on facebook ads

How Much Should You Spend on Facebook Ads (FULL explanation)

hey my name is sydney i'm a facebook ads,expert at vertex marketing agency and,today i want to help you answer the,question how much should you be spending,on your facebook ads per day or per,month i know it can be really confusing,especially going into 2022. i feel like,we don't really know anything these days,but i'm going to help you answer that,question i'm going to break it down into,a couple,considerations or things that you need,to be aware of that will fluctuate or,like affect the amount that you're,spending on your facebook ads but,by the end of the video i'm going to,help you get a ballpark so you can,understand how much you should be,spending on your facebook ads so if you,don't already subscribe to our youtube,channel please do hit that subscribe,button hit that like button if you learn,anything new today or if you finally,figured out how much you should be,spending and turn that little,notification bell so you know when we,come out with new videos which is every,single week and we talk all about,facebook ads now today's video is very,tailored for e-commerce companies who,are using facebook ads and who actually,sell a product mostly because this is,who we're typically working with but you,can still take these elements and apply,them to any other industry that you're,working in okay but you obviously have,to tailor them for your own industry,i want to first start by explaining what,facebook ads are facebook ads is,basically an auction where you bid a,certain amount your ad gets thrown into,an auction and depending on other,advertisers and what kind of content,they have,you are bidding against their other,creators and the other ads that they're,running and this will depend on the,objective that you're using the type of,ad that you're using a format image,video and also the audience that you're,reaching so you're really competing,against a lot of other people and so,throughout this video the suggestions,that i'm giving really are suggestions,there is no exact answer it's like you,can't tell someone who actually goes to,an auction you know if people still go,to those these days i'm pretty sure they,do if they go to an auction you can't,say bring x amount because you're for,sure going to get you know something in,return it's not really like that you're,really competing against other people,and you got to be ready you don't you,know what the value of this product is,you know how much you'd be willing to,spend and so you need to take that into,consideration when you're doing your,facebook ads as well i know what the,value of my product is i know how much i,would be willing to spend to get a,customer but you really need to decide,for yourself based on your experience,how much you will be spending and i'm,going to run you through a few different,ways you can go about determining that,for your business,the first thing you need to consider,when deciding how much you're going to,be spending on your facebook ads is,which objective you're going to be using,for your facebook ads starting from the,left to the right the further right that,you go within these options the more it,is going to cost for you to get a result,each of these objectives are dependent,on the stage of the funnel if we want to,call it that that your customer is in,and so to the left in the awareness,stage that is going to that's for brand,awareness and just like reaching new,people with your ads on facebook that's,all you're asking for is just like look,at my ad this is going to cost a lot,less,than if you were asking facebook show my,ad to someone who is going to convert,and make a purchase on my website or,who's going to become a lead for me so,depending on which of these three stages,of the funnel you're choosing from,the price will differ,i will say in the awareness stage for,brain awareness reach minimum,requirement that i recommend you spend,per day is at least five dollars and,this is really if you're just starting,out you don't have any experience with,it five dollars be the bare minimum for,the awareness stage and this just gives,facebook what it needs to be able to,show your ad or your content to enough,people and to optimize for that now as,you get into the consideration stage,this is going to be dependent on a few,things but again here bear bear bear,minimum i'd say 15 to 20,per day now for the conversions sort of,stage of the funnel here this is really,at the bottom this is like people who,are ready to purchase,facebook is gonna show your ad to these,people for them to actually go and make,a transactional purchase on your website,and so this is going to cost a little,bit more and there really is no set in,stone answer for this so let me run you,through a few criteria that you need to,think about,when you're thinking about how much you,should be spending for your conversion,objective,so obviously everyone is going to have a,budget that makes sense for their own,business and all of these are really,suggestions but it's said that on,average your marketing budget should,allocate about five to twelve percent of,your monthly revenue or your overall,annual revenue five to twelve percent so,let's just say you're making ten,thousand dollars per month you can do,the calculation at seven percent of your,monthly revenue that would be about,seven hundred dollars on your facebook,ads now,just wait a little bit because we're,going to talk about how your industry,may differ and how you,can spend more or less depending on the,industry that you're in but again,another example let's just say your,revenue is fifty thousand dollars per,month at ten percent if you wanna you,know maybe grow a little bit more,aggressively ten percent of your monthly,revenue that would equal out to about,five thousand dollars for your marketing,budget,now,when i say marketing budget to me this,really means what you're spending on,your advertising and not really if,you're like paying an agency or an,employee to do the work for you that,shouldn't be included in these prices,because these are the really the people,who are going to actually put it in,motion so your marketing budget should,be the advertising spend for whatever,channels that you're using again for,this one we're using facebook ads,a second way to decide how much you,should be spending on your facebook ads,is by using this facebook ad budget,calculator which i will just leave you,can go make a copy of this google sheet,it'll be in the description below but,it'll run you through a series of,questions that will help you get a,ballpark of how much you should be,spending on your facebook ads per month,and this again is using the conversion,objective as the benchmark here so if,you're using the conversion objective,this would be,a calculator for that objective this,doesn't really make sense for uh the,reach or brand awareness objective so,just keep that in mind but it'll run you,through you know how much your product,costs how many times a customer usually,buys from you what is your average,lifetime customer value that'll spit out,the answer for you based on how much,your product costs and how many times,they buy,and then i'll bring you into these,questions here which are really,important to consider for your business,what are you willing to pay to acquire a,new customer so let's just say you have,no facebook ad data you could also pull,this number from like your pos system if,you are keeping track of like your,advertising spend and how much people,are getting uh how much revenue you're,getting back and divide those numbers or,if you're using facebook ads or using,something like google analytics for,you could pull that number from here,but let's just say you have no,experience whatsoever you can think,about how much would you be willing to,pay,for you to get a customer in return,let's say you had a magic machine put,that number in there then what is your,conversion rate again you can find this,from your your store or from you know,google analytics or your facebook,ads manager again this data could be a,little bit wonky after ios 14 but make,sure that you're always using the same,platform to compare your data because of,course after ios 14 if you're comparing,the data from last year to this year it,will be slightly different so just stay,consistent with what you're comparing,and where you're pulling this data from,and then i'll bring into what is your,monthly new customer or order target so,how many new orders are you looking to,get per month then this will give you,some numbers and again these are,ballparks this is really a minimum,that you should be spending on your,facebook ads so based on these numbers,that you just provided it'll give you,how many new leads or how many new,customers you would need to hit your,goals your ad budget per month and your,ad budget per day so again ballpark but,this can really help you just put some,numbers in here to give you an idea,paint a picture of how much you should,be spending on your facebook ads,now the best way really to answer the,question is actually just by going,through the process yourself create a,conversion campaign work with some,content creators get some really great,facebook ads and just try it out for,yourself like i said you should be,spending about five to twelve percent of,your total revenue on your marketing,budget and so this should not put you in,a position where,you if you don't make anything in return,that it's going to compromise your,business or maybe you won't be able to,put food on the table so you should be,getting sales in your store you know,online in person whatever before you,actually go to facebook to prove to,yourself and to know confidently that i,have a good product and people are,willing to buy and this is called,product market fit so before you even,decide how much you should be spending,you really need to make sure you have a,working product that a market needs to,buy or wants to buy before you try and,sell your stuff on facebook so that's,like my number one recommendation is,make sure you have sales before you go,to facebook and also my other,recommendation is that,if you are looking to hire an agency or,you're looking to have someone do it for,you because you don't have the time,my recommendation is to always go,through the process yourself so you know,what to expect and you know the ins and,outs so you will know if someone else is,doing a good or bad job i actually made,a full video on this about hiring a,marketing agency and what it's like and,your expectations do you want to go,check that out my recommendation is that,before you go and hire someone else to,do it you should be doing that work,yourself so that you can answer these,hard questions for you like how much,would i be willing to spend for a,purchase or for a customer how much does,it cost me to get a lead you can answer,those questions before,you hire someone else to do it for you,where they're going to be the ones,answering the question so that's just a,little recommendation from me,now of course this budget calculator or,calculated based on your monthly revenue,will be totally completely dependent on,the industry and the product that you're,trying to sell and so let's just say,someone sells a water bottle at 15,obviously you're going to need to spend,a lot less,on your facebook ads than someone who,let's say sells wedding rings or jewelry,like high-end jewelry because that,obviously costs more and so you're going,to need to pay more to get something in,return but a really good general rule of,thumb that we like to use for our,clients who maybe aren't sure how much,they should be spending on their,facebook ads is at least two,to three times,your product cost,per day,at the bare minimum really two um and,this just allows you to get data faster,and to see how much you need to be,spending on your facebook ads,to get anything in return if you're,spending less than that,it might take you two three,four days to get a purchase in return,before you get any like data on in your,ads manager like whatever platform that,you're using so by spending at least two,to three times,your product cost,you should definitely be getting some,sales in return and if you're not you'll,know right away rather than waiting two,weeks to spend the same amount,and even though it goes out to less per,day might make you feel better you can,get quicker data by spending just a,little bit more than what your actual,product costs and this will bring you,back to the questions over that we went,through before in the budget calculator,how much are you willing to spend to get,a new customer and this can really set a,benchmark early on and quickly by,spending at least like two to three,times what your actual product costs,and the last thing to consider is,obviously the time of year that you're,advertising and what it's gonna cost for,you so like i said facebook is an,auction system so if you show up to an,auction you're getting ready to bid and,there's 25 000 people,again going against you versus maybe,just you know 500 or 50 people at an,auction,clearly there's there's gonna be more,competition if there's 25 000 people,sitting behind you looking to bid on,something so consider that,christmas uh black friday,independence day canada day,those types of events that happen you,know throughout the world or in your,country are going to affect how much,your facebook ads cost another thing is,like the socioeconomic things going on,in the world so you know after christmas,in january february,less people want to actually buy so,there's actually,less options for you to bid on you know,if these people are like the things that,you're bidding on um then there would be,maybe around christmas so there's lots,of factors that can go into how much,your facebook ads are going to cost so i,really recommend just taking a look at,like what is happening in the world um,what is going on what um holidays are,coming up that can help you decide how,much you should be spending and maybe,how you should adjust your budget,depending on the time of year and that's,really all i have to say for how much,you should be spending on your facebook,ads so i hope this helped you guys if,you have any more questions let me know,in the comments below or if you have any,like calculations you'd like help with,let me know i can help you with that um,if not do download the like there's no,download you can just you know make a,copy yourself of the facebook ad budget,calculator that'll be available in the,description and of course if you are a,ecommerce business running facebook ads,at the moment and spending at least five,thousand dollars per month and you're,feeling like this is just a lot of work,and you'd love someone to come on and,take this over for you and you're,looking to onboard someone who can help,you out and just really scale and follow,the best practices for you to see the,best results with your facebook ads go,ahead and book a strategy session with,me i'd love to chat with you and you see,where you're at and where you're looking,to go and where we can actually play an,important role in your company's growth,so i'd be super happy to have a strategy,session with you,that's it for today's video i hope you,guys found value in this if you did give,it a thumbs up and i will see you in the,next video,thank you

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