how much to spend on facebook ads
How Much Should You Spend on Facebook Ads (FULL explanation)hey my name is sydney i'm a facebook ads
Updated on Jan 15,2023
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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How Much Should You Spend on Facebook Ads? Budgeting Steps
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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