how much to spend on facebook ads 2020
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 Advertising Costs In 2023 | How Much Should You Spend in Facebook Ads?
Facebook Advertising Costs In 2023 | How Much Should You Spend in Facebook Ads?
all right so how much do facebook ads,cost it's a question that we get every,single day,as a facebook ad agency and i'll be,honest it's a little tricky,and different for everyone primarily,because facebook lets its advertisers,choose their own budget,you can run ads for as much money as you,want and,for as long as you want but still how,much money should you really be spending,on facebook ads,today you're gonna find this out and so,much more,oh,hey everybody my name is sherman with,life marketing a digital marketing,agency that helps small businesses grow,today i'm going to fully explain,facebook advertising costs to you,and help you determine what's the best,amount to invest into your facebook,advertising campaign,i mean there's campaigns that we've ran,where we've just spent four thousand,dollars and generated over one hundred,and thirty thousand dollars in revenue,for our clients,but does that mean that you need to,spend four thousand dollars in facebook,ads not exactly so let's go ahead and,break facebook ad,costs all the way down and then,determine what works best,for your business okay first and,foremost how does facebook add costs,work like how much do facebook ads,actually cost well according to facebook,you can buy facebook ads,on any budget well that was very helpful,wasn't it,when i tell my clients this they're kind,of like no but seriously sherman how,much do i need to spend,in order to really make this work and if,that's you don't worry,i got you covered here the first thing,you need to understand is how facebook,advertising costs really work,technically facebook charges you to,reach people on facebook,so for example if you spent five dollars,you might reach 500 people,and if you spent 10 dollars you might,reach 1 000 people,and so on this costing format is,referred to,as cost per thousand impressions or cpm,every time you run an ad on facebook,there will be an associated cpm related,to it and as you can see,these cpms vary based on the,advertisement that's running which,actually brings me to my next point,which is,why do facebook cpm costs vary there are,a few things that influence your,facebook ad costs,so let's go ahead and discuss this and,then we'll talk about how to set,your monthly budget for facebook ads,alright the first thing that influence,your cost,number one is add relevance the most,significant factor is this little thing,called relevance inside of facebook,businesses that have the most relevant,advertisements are rewarded with lower,cpm costs and businesses that have,crappy ads will,have higher cpm costs you see facebook,measures,every ad shown for quality engagement,and conversions,ultimately they do this to help show,their users the best advertisement,this way they can keep people on,facebook longer and continue to serve,more advertisements to them which makes,facebook so profitable for example let's,say that business a,spends one thousand dollars in facebook,ads and earns a 20,cpm hypothetically this would mean they,would earn 50,000 impressions for just one thousand,dollars on the other hand let's say,business b,spends about one thousand dollars in,facebook ads as well and earns a ten,dollar cpm,this would mean that they would earn one,hundred thousand impressions for just,one thousand dollars that's double the,amount of impressions for the exact,same ad spend you'll increase your,chances of getting lower cost clicks to,your website,and most importantly lower cost,conversions by having relevant ads,okay let's move on to point number two,audience size your audience size will,also,influence your facebook ad cost in,general,the broader the audience the lower the,cost and the more narrow the audience,the higher the cost here's a very simple,example to illustrate this,let's say you have a niche business and,you only want to target about 1 000,people,because the audience is so small you'll,probably be,very limited in reaching them on a daily,basis and that's if they even use,facebook on a daily basis,and even if they do it might just be for,a small period of time,but there's likely hundreds if not,thousands of advertisers on facebook who,want to reach,that same exact person for that period,of time,so why would they reward your business,in reaching them,well it's probably because you're going,to reward facebook by paying higher cpm,costs,on the other hand an advertiser only,targeting 1 million people will have no,problem taking whoever becomes available,within their very broad,audience that they've selected because,of this they will likely see,lower cpm cost overall this is true,across,our agency to be honest with you we've,noticed that larger audience sizes tend,to have,lower cost across the board and more,narrow audiences like small,towns or very niche markets have higher,cost on facebook all right point number,three,add competition your facebook,advertising costs might also vary based,on competition,there are some audiences that are more,competitive than others for example,it may cost you way more to reach an,audience of c-suite executives than it,would to reach the average person,different audiences have different,levels of competition amongst,advertisers,which may require some level of,creativity on your part,to determine the best way to reach your,desired audience,alright now let's answer the magic,question how much should you really,spend,on facebook advertising like right now,before i say anything,let me give you a general rule in,general the more you spend,in facebook advertising the more people,you will reach,and ultimately the better your chances,are of increasing your business leads,or revenue so if you're stuck in between,spending just,a little bit and a little bit more then,i choose a little bit more,every time if it fits within your budget,with that said let's try to nail down,exactly,how much you should expect to spend in,facebook advertising costs here are the,big things you need to consider,number one do people know your business,exists if no one knows your,business exists you're likely going to,have to spend more money to see,sales from facebook advertising the,reason why is because people buy,from businesses they know and trust and,if they don't already know you,and trust you you're likely going to,have to make some deposits into them,first before you can expect a deposit,back from them,one of the most effective ways to,generate sales from facebook ads is,through retargeting which is,advertising to people who recently,visited your website or,engage with your business on social,media now if you're like many businesses,and you don't already have an audience,to retarget,for your facebook ads then you're going,to need to build that audience up first,you should aim for a retargeting,audience of at least 10 000 people for,optimal results,if you don't have this then you need to,spend whatever it takes to build a,retargeting audience,up that is how most people are winning,through facebook ads if you're starting,from scratch then you should expect to,spend at least two to three thousand,dollars to build,awareness for your business this amount,of course can be split up over a period,of weeks or months,okay number two what kind of media are,you using in your facebook ads it's no,secret that facebook favors video,content,and their news feed over other types of,content and in general,video content has lower cpm and,conversion cost,than other alternatives with that said a,facebook ad with video,is more likely to reach more people at,lower cost,allow you to spend less overall or just,get more bang for your money and if you,don't have video,don't worry you can still develop,effective ads with high quality images,or graphics that get your point across,we run several campaigns that perform,very well without video,but i'd be lying if i said video doesn't,help so aim the ad video whenever,possible to minimize your overall,facebook advertising costs,number three how much does your products,or service cost the more expensive a,product is,the more resistance people will have to,buying it so if you're selling a product,that costs one thousand dollars don't,expect to spend 500,and generate 25 sales that's like a 12,times return on aspen,which we've seen before but it's very,rare and i wouldn't count on it from the,beginning,i'd rather set your goal to breaking,even initially,and then working yourself up to the two,to three times return on ad spin range,and as time goes on you continue to,optimize your campaigns to see more,results,and higher returns so in short your ad,spend should be correlated to the price,of your solutions,you can simply take your average sales,price times the amount of sales you,desire,as a minimum ad budget okay number four,how much,cash do you have available to invest the,amount of cash you have available to,invest,into facebook ads is very important as,much as i'd like to sugarcoat this,and give you a fairy tale ending i can't,it's very possible that your campaign,does not perform the way that you wished,it would so,you need to be prepared to lose the,money you invest into a facebook,advertising campaign,i would not put my last dollar into a,facebook advertising campaign to,determine if my business will survive,or not so make sure that you can,comfortably step your foot into facebook,advertising to determine,if it will work for your business and be,prepared to pivot,if it doesn't alright let's go ahead and,get to the bottom line here how much do,facebook ads really cost,or in other words how much should you,really invest to see if this will work,for your business or not,as stated according to facebook you can,use any budget but setting any budget,won't change your business,you need valium in order to win at,facebook ads,you need to reach a mass amount of,people make them aware of your business,and convince them to purchase from you,to do this i recommend that you budget,at least,five thousand dollars to determine if,facebook ads will work for your business,or not,and if you can get that amount up to,seven thousand dollars or more,that'll be even better this should give,you enough fuel in the tank to build,necessary awareness for your business,and begin using more advanced features,like retargeting,and look-alike audiences and by the way,i don't recommend spending this amount,of money in one week,or one month whatever your total budget,is divide it by six,it takes at least six months to build an,effective facebook advertising campaign,this is because you will rarely build,a profitable campaign on day one the,truth is it takes,weeks and months of reviewing,performance data and making proper,changes to your campaign to,increase performance so if you have a,set budget,of five thousand dollars that equates to,a monthly budget of around,8.50 or if you set a seven thousand,dollar total budget that equates to,close to twelve hundred dollars a month,in facebook,ad spend so a question i get all the,time is are there any,extra costs associated with facebook,advertising not necessarily but there,are some things that you may decide to,buy,to improve your overall results like for,example,investing into a quality website or,video to help you convert people into,buying customers,or you may decide that you want the best,hands to take care of you so you might,decide to hire a facebook ad,agency like life marketing it all,depends on where you are in your,business,if you don't have a lot of money in the,tank your only option might be,to take a stab at this yourself but if,you're juggling managing your business,and customers it might be best to hire a,partner to devote the necessary time to,do this correctly,if that's you we'll be happy to help if,not we hope this episode helps you,create a booming facebook advertising,campaign to grow your business,with that said let's go ahead and recap,today's episode,alright so today we talked about,facebook advertising costs remember at,the end of the day,facebook charges you to reach people the,more people you want to reach the more,money,you will need to spend now with that,spend your facebook advertising costs,will vary,based on a number of factors like your,ad relevance,audience size and overall competition,now while understanding facebook costs,are really cool and everything you,ultimately need to determine,how much money you are going to spend on,it when setting a budget you need to,think about your overall,awareness in the market media you will,use in your campaign,your pricing and cash reserves available,to invest,into a facebook advertising campaign and,as a very general recommendation,we suggest that you spend at least five,thousand dollars over a period of time,to determine if facebook ads is a good,avenue for your business,but at the same time if you have very,ambitious goals like some of the people,i've talked to,the budget needs to match it the more,the merrier all right i hope this helped,guys,if it does be sure to subscribe to our,channel because there's much more,content like this on the way to,help you grow your business and if i,helped you out all today help me out by,hitting that like button below,thanks everybody i'll talk to you soon
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