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20 June 2020

How Much Should You Spend On Facebook Ads For Your Business?

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Learn how much you should be spending on your social media advertising based on the type of business you are running.

As a world-class digital agency, we get this question from clients on a regular basis… “how much should I spend on social media ads?”.

Advertising on platforms like Facebook can seem very enigmatic to anyone who hasn’t spent years learning how the ad system works.

You may have experimented with boosting posts on your Facebook page and found some success in driving followers or engagement, but when it comes to driving high ROI results you really need to dig deep into the Facebook Ads Manager portal (que scary music).

Many attempt to learn the Facebook Ads Manager system, but only find success after years of blood, sweat, tears, and thousands of dollars spent on e-courses.

If you don’t have the time or money to spend trying to teach yourself, then that’s where your marketing agency partner comes in.

We can help you take your established product or service, bolt on the proverbial rocket pack of paid advertising, and send you into the stratosphere of high ROI sales. That’s one small step for man, one giant leap for record breaking business growth!

Now that you’ve figured out who’s doing the ad management work, let’s get down to the nitty gritty:

1. Decide what type of Facebook ad you are going to run before deciding on budget

Your landing pages are ready, your ad creative and copy is absolutely FIRE, and you’re ready to pull the trigger on launching your first Facebook ad campaign. How much should you spend daily, weekly, monthly on Facebook ads?

 Let’s start by breaking down what type of ad you should run. It’s most likely one of the following two ad types:

Temporary Ad: A campaign scheduled for a shorter period of time that is driving a temporary promotion and will automatically terminate once complete. With this type of ad, you will need to spend a lot more money over a shorter period of time to get results.

  • Works for promotions that are temporary, i.e. a sale you are running for a short period of time.
    • Pros: Is effective over a short period of time at getting the message out.
    • Cons: Can be less efficient in driving results in a cost effective way.

Ongoing Ad: A campaign that is set to run continuously until turned off manually. You can spend less money over a longer period of time.

  • Best for long-term results where you will be running advertising efforts on an ongoing basis.
    • Pros: Very efficient at driving results at a low cost
    • Cons: Not effective for short term promotions

Temporary ad campaigns are most effective when used to promote  things like selling tickets to a local show, or running a special seasonal menu promotion, or a flash sale.

Ongoing ad campaigns are useful for driving actual product sales which can be done through an e-commerce store. These ads also help drive leads  and promote ongoing traffic, etc.

Once you determine which type of campaign you are going to run, you can then decide what the appropriate budget should be.

2. How much to spend on a temporary Facebook ad campaign

Temporary ad campaigns can be seen as a quick dynamite burst where you spend the budget over a shorter period of time. Since the budget is spent quickly, there needs to be a  sufficient budget available to reach your target audience demographic within the time allotted

In order to identify the required budget, you will need to define your campaign goals.

If your goal is to sell  100 new subscriptions to your gym and you know that you will close 1 new subscription for every 100 people who click to your landing page, then you will need 10,000 clicks to reach that 100 subscriptions goal.

As a rule of thumb, it’s best to calculate your budget based on Cost Per Click.

The average Cost Per Click (CPC) is about $0.35 globally and about $0.28 in the U.S.. So just multiply your goal of 10,000 clicks by an approximate $0.30 per click, and voila! Your campaign budget should probably be somewhere around $3,000 to reach your 100 new gym subscription goal.

Define your goal, estimate your conversion rate, and multiply your CPC times the number of clicks necessary to reach your goal.

3. How much to spend on a ongoing Facebook ad campaign

Ongoing ad campaigns are oriented towards long term, consistent results.

Let’s say you own a t-shirt company and you want to drive consistent monthly sales towards new and past customers. You will need a campaign style that allows you to project what your cost per sale will be so that you can ensure that your ads are driving profitability and not costing you more than you are making each month.

When running ongoing campaigns, the best method for launch is to start with a very small budget – say as low as $20 per day per audience you are targeting.

For example, you might sell t- shirts that are popular among surfers, but within that interest group you can test your ads with different types of surfers. Some surfers are  longboarders, some are short boarders, some prefer stand up paddle boards.You need to find out which ones  are most interested in your product. You find this out by split-testing your ads among various different audiences to see who is most likely to buy your product, and therefore produce more sales at a lower cost. You may run ads for 30 days in this way to find out this information.

Once you have this data, you can then start to spend more on those audiences that you have proven are most interested in your product. You can start with  spending $20 per day, to spending $80/day, and then a week later move up to $150 per day, and  eventually to $1,500 per day, etc..

At some point,  you will hit an audience cap where you are spending more and more money, but the sales are not growing anymore and your cost per sale is going up. This  means it’s time to branch out and find more audiences that might be interested in your product, and even start to diversify the types of products you sell in order to appeal to a broader audience.

If you are selling t-shirts to surfers, you may consider expanding into the skater audience, and then into the generic “beach-goer” audience, continually broadening your brand into new pockets of interest. A great tool for expanding your audience size is called SparkToro.

Interested? Fill in the form and we’ll make sure the right person connects with you.
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