how much to spend on facebook ads
Published on: January 31 2023 by pipiads
Table of Contents About how much to spend on facebook ads
- Facebook Advertising Costs In 2023 | How Much Should You Spend in Facebook Ads?
- How Much Should You Spend on Facebook Ads? Budgeting Steps
- How Much You Should Spend On Facebook Ads? (+ FREE Ad Spend Modeling Tool)
- I Spent $1,000,000 On Facebook Ads (What I Learned)
- Facebook Ad Tips: How Much You Should Spend On Facebook Ads
- Minimum Facebook Ad Budget? Here's What I Think...
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. tiknically, 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 tok 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. hypothetikally, 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 notiked 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
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 tok 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 critikally 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.
How Much You Should Spend On Facebook Ads? (+ FREE Ad Spend Modeling Tool)
yo, what's going on guys? welcome back to the channel. my name is nick theriot and today i have an exciting new video for you guys. today i'll be covering a free new tool that i'm giving you guys as a gift- uh, just a little q4 gift for you guys. um, i was also going to release this- another good ecom- but as now that i'm not releasing that course, i'm like i said, i'm giving you guys a lot of free content, a lot of free value. so i hope this new tool helps you guys out to be an ad spend modeling tool, but nothing like you've seen before. we've seen different row ass calculators before, pretty simple, pretty easy and stuff like that, but this is something that uh takes a lot more into account and specifically tailored to ecom businesses. so, with that being said, before we get started, make sure you hit that like button and hit that subscribe button for new videos every monday, wednesday and friday- and i apologize for the look today, look, it's really early in the morning. i typically film later during the day, but we're working with over 15, or close to 15 brands this black friday of running a team- six, seven people- and we are hands down right now for black friday and i just barely had a little bit of time to film, so putting together this video for you guys. so make sure you hit that double like button for that right there. let's get started, guys. [Music]. okay, so this is the free tool i'll be giving you guys, and you can simply just click the link in the description. it'll open it up like this, and make sure you go to file, make a copy- i believe that's what it is- make a copy and, you know, save it to your drive. do not, you know, ask for permissions or anything like that, because it doesn't do anything. uh, file, make a copy and save it to your drive- very easy. and once you get it, uh becomes- you know it's a lot going on right here, but it becomes pretty easy once you uh kind of watch this video to understand how to actually use the tool. so a big problem with econ businesses: they focus purely just on roasts and they don't focus on volume. um, that's a huge issue across all the clients that we, you know, kind of scout before we bring them on when we audit their business. everything like i want a 5x ross whoa, i'm like, okay, cool, and then they're like: but i want to stay like 35 grand a month, or you know, i want a 5x raw ass and then also i'll do three, four hundred thousand dollars a muffin. that's unrealistik sometimes. so sometimes you actually have to show them, uh, what, what a modeling tool of exactly that might look like in different, various ways. so, with that being said, this tool right here takes account your rash, your ad spend and stuff, but it also takes account your gross margins. it takes and count your cogs and shipping and handling, which is big right there. so a lot of, a lot of these calculators. they don't take into account your cogs and your shipping and handling, so that is really big right there. day one profit, your aov, your cpa. but the cool thing about those is that you can actually edit your aov to get various different like- essentially like- revenue numbers as well in here. uh, then another one that's huge that i never see ever is your 12 month ltv. how much is a customer worth to over a period of 12 months? so a lot of calculators. they just show ross adsman revenue, and some of them may even show aov and cpa, if you get good about that. but one that we never see is ltv and the reason why we focus so much on ltv is because as an ecomm brain grows, you know you need to be able to accept the lower row s on the front end. maybe a 1.8- 2x on the front end, but you're spending 3 400 grand a month on facebook ads and then your ltv is so high you make up those additional profits throughout the year. so let's take a look at this tool and start playing around. uh, first things first is the yellow cells are edible at, edible that's. i don't think that's right. edit a bowl: um, that's your input cells right here. so you go ahead and just input whatever numbers you want. so let's just say, for example, scenario number two, and again, you can, you can do a few different scenarios as well. uh, to whether to just kind of look at a few different numbers, maybe what? which? like your target one, your breakeven one, like what does it look like at a breakeven return on ad spend? so let's say your break even row ass is 1.7. one point four, eight. let's do one one divided by seventy. one point four, two. boom, okay, cool. let's say you do a hundred thousand dollars in ad spend. boom, your gross margin is 70 percent. okay, uh, day one profit. so actually we lost a little bit money. let's say our aov is around 80 bucks, okay, so obviously we lost ronnie up front, right there. um, but let's just keep working it. so you hit your breakeven. or else on your ad spin, and then what is your 12-month ltv? so let's say, for example, you're breaking even on an offer upfront, your aov is 80 bucks. but let's say, customers come back and purchase from you two to three times again after, purely from your email marketing, your sms and stuff like that, and let's just say, yeah, let's say two to three times, let's just say two and a half times. uh, realistikally you can't do that, but let's just be. you know kind of services on that in right there. so, um, that'd be about 200, and oh, yeah, 200 bucks two and a half times of 80, and then all sudden your profit completely changes. so you can see, right here your profit is much different and that's because all these customers, these 1775 customers required, come back and purchase over that year, spend about 200 bucks with you. so you have your 80 bucks right there. so they spend about 920 bucks with you, 120 times 1775.. that's 213 000. so that's perfect, that's right on the money, cool. so that's what it looks like at breakeven return on admin and i highly recommend you look at what it looks like at breakeven rs, where it looks like as your target rest and what it looks like at maybe the rash you're getting now. so it's big right there. and if you want to know your 12 month customer ltv, i do have a video on the channel for lifetime value and how to calculate that, as that's really important to understand for scenarios like this, because you might be breaking even up front. but then all of a sudden you see that you do over 12 month period about 248 000 in profit for that partikular um, for a lot of those. so you actually are still profitable in the 12 month term. you're just not profitable right now. but let's just say, hey, you know you can't come in. you start improving things. you're eating a three extra ass, or let's just say a two and a half extra os. you're spending 100 grand a month. let's just say more or less. let's say 25 000 per month. uh, gross margin seventy percent um. aov is i don't know. i should say it's forty five dollars very, very small. uh, you can see right there: your day one profits eighteen thousand seven hundred fifty dollars. um, that is including excluding shipping and handling. so, like this has already taken out shipping and handling and ad spend to get your day one profit right there. so that's not, um, you know, just ad spend minus your revenue or just cogs and shipping again. i don't think that's adsman and cogs to be. get you this day one profit right here. you can see, right here you have an aov of 45 dollars again. you can change this. so let's say, if we added a booster, aov booster, that completely changes right there. let's draw that now. let's say, for example, your ltv. let's just say it's 60 bucks, uh, your 12 month ltv. so you see, right there, you'll still profit some more on that end. so that sixty two thousand dollars right there in revenue is actually gonna look at about eighty, three thousand dollars over the course of 12 months and that profit margin obviously be a little bit higher right there. that's really important to understand of what these look like, these different scenarios. and let's just say, let's just do one that's more crazy. uh, so 4x. let's say you do a four x rouse at 60, i don't know. let's just say, even at 200 grand spent, boom, your gross margin is, i should say 50, something, a litt.
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I Spent $1,000,000 On Facebook Ads (What I Learned)
in the last three years, i've spent over one million dollars on facebook ads and in this video i'll be sharing with you the four most important things that i learned along the way. these are the things that i wish i knew before i started running facebook ads, and if i had known them, i would have saved thousands of dollars in testing and found my first success much quicker. but first let me jump into my account and show you some proof. this is my facebook dashboard, so let's take a quick look at how much i've spent over the last couple of years. i know you guys don't care that much, but i just want to show you this so you know it's all legit. on account number one, i spent 22 000.. on account number two, i spent 21 000.. on this account, i spent 122 000. on this account, i spent 268 000. on this account, i spent 17 000. on this account, i spent 60 000. and lastly, on this account, me and a partner spent around 1.1 million. so i don't know the grand total, but i've spent a lot and i've learned a lot along the way. so let's get started with the first and one of the most important lessons that i've learned so far. this might be a hard pill to swallow, but you need to hear it. your strategy it doesn't matter. there are so many different facebook ad strategies out there and many beginners get caught up in trying to decide which is the best one. and if that's you, i hate to say it, but you are completely focusing on the wrong things. out of all the facebook strategies that exist, there's one thing that stays constant amongst all of them. i like to call it the big three. well, i guess that would mean there's three things anyways. the big three are your product, your creative and your offer. let's break each one of them down. there's simply no way that you can force a bad product to sell on facebook, so here are some things to look out for when trying to find a great product. find something that is already selling well on the platform. you don't have to reinvent the wheel and find the next big thing. you can simply look at what's already working and figure out how to do it better. try to find products that have been launched somewhat recently, so you can jump on the trend as it's happening and not after it's well passed. and lastly, look for a product that's somewhat evergreen. you don't want to find stuff that's only hot for a month. you want to find those products that can sell for months, even years. those are the ones that you'll be able to make millions off of. next up is the creative. now i can make a whole video about creatives themselves, and i actually have in the past, so we're not going to dig too deep into this topic. but even if you have the best product in the world, if you have a bad creative, the product is not going to be able to sell at all. a great creative can actually save a mediocre product, but it doesn't necessarily work the other way around. being able to create a high quality video or photo ad for your product is the number one skill that you need to be a successful marketer on facebook or any other platform. lastly, you need a good offer that allows you to profitably scale your product. you can do all kinds of stuff with offers like bundles, upsells, subscription models, but for the most part i try to keep it as simple as possible so it's easy for the customer to understand, and if you're able to combine these three things, you'll be able to find success with facebook, no matter what strategy you're using. this brand is called the ocean project and basically all they're doing is selling simple jewelry, but because they've combined the big three, they're able to scale this product really high. the product is really simple. it is this turtle necklace, but the big selling point is that with every sale, you can track a turtle, you can help save the turtles, and every dollar goes to funding ocean cleanups. so not only are they buying the necklace, but they're buying the peace of mind that they're giving back to the earth. in regards to the creative, they've done a good job by keeping it simple and straight to the point. they show the product, they show the benefits in the actual copy, they give a review from somebody that has ordered, they give the main features and benefits of ordering from them: money back guarantee, high reviews, 50 000 customers, the perfect gift. it is really simple, but it gets the job done and, as you can see, it has a ton of engagement. people are really pleased with the product. let's see here they say: i got mine, i love it. you get the idea here. my son bought this as a gift for me. people really like this product and, lastly, i think the best thing they have going for them is their offer. so you see that they are selling just one at a time, but every single purchase allows you to track a turtle. so instead of just saying, hey guys, we're gonna sell you this necklace that you can wear, we're gonna sell you this necklace and allow you to donate money with your purchase and allow you to track a turtle with your purchase. so the value of spending 25 has now gone up tremendously, making for a great offer. let me say one last thing about their offer. so, as you can see, they put it at 50 off and it's 25 for one necklace. conveniently, they put free shipping over 49. so if you bought two necklaces, you get free shipping. so what do you think the average consumer is going to do with a brand like this? they can target these simplest audiences and run a basic strategy and beat everybody in their market because they focused on what truly matters the most. so stop looking for that secret strategy. focus on becoming a better marketer and finding a great product. that is how you're gonna truly have success with facebook ads. let's move on to tip number two. here's the truth about facebook: the person that can spend the most will always win. now wait, don't freak out just yet, because i'm not toking about the person that has the most money or the highest budget. i'm toking about the person that can profitably spend the most to get a customer. let me explain. we have two stores, store a and store b. store a buys their product for five dollars and sells it for twenty dollars, which means they can afford to spend fifteen dollars to get a customer. store b buys their product for ten dollars and sells it for forty dollars, which means they can spend thirty dollars to get a customer. considering that facebook is an auction based platform, if store a and store b are running ads to the same audience, store b is going to win all day long. they're going to be able to consistently outbid store a because they can afford to spend more money per customer. so what can you do to be more like store b? well, it's, it's simple really. first, find products with above a 25 profit margin. this is going to make advertising so much easier. let's say your profit margin on your product is ten dollars. that means you're going to have to be consistently getting customers for around five dollars, which is almost impossible on facebook nowadays. secondly, use upsells and bundles to massively increase your average order value. this will make it so much easier to advertise on facebook because you're going to make more money per visitor that comes to your site. just find products that complement the main one that you're selling, and use an app like one click upsell to maximize your profits on each sale- and no, this video is not sponsored by them. i actually use their app and it's pretty good. and lastly, use email and sms marketing to get your existing customers to come back and buy again. this is called lifetime value. after you run a product for a long time, this becomes your most important metric to focus on. it's a lot more expensive to acquire a new customer than to just take care and sell more to the existing customers you already have. by focusing on these things, i've been able to out scale all of my competition and keep my product running longer than any of them, and the reason is simple: it's because i can spend more to get a customer. as more people jump onto facebook and instagram ads, they're only going to contin.
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. [Applause]. 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 realistik 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 practikes 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 tok 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 tok 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 toking 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
Minimum Facebook Ad Budget? Here's What I Think...
hi guys, it's ben heath from lead guru and in this video i'm going to tok about your minimum facebook ad budget. what's an acceptable and appropriate minimum facebook ad budget, something i get asked about all the time, partikularly with new facebook advertising. i'm going to cover some some things around: what i would recommend and also how you should think about the starting facebook average and how that should change as as time goes on. before i get into that, trying to very quickly ask you to smash that like button, please click that thumbs up button and, of course, subscribe to my channel if you are new and haven't done so already. so i'm in an example facebook account right now and i'm at the campaign level in an example campaign um. if you follow my stuff, you know i'm a big fan of campaign budget optimization, so i'm usually setting budgets at the campaign level, which is what you can see right here. if you're not familiar with campaign budget optimization, i'll include a link um in the video description below to another video that toks all about that and how to use it and all that sort of stuff. okay, first question to sort of address is: is it okay to start with a really small budget? now? i've put in here five pounds a day. you know it could be five dollars a day, something like that. could you start with that sort of budget- 150 a month? and the answer is yes. you can start with a very small budget. the most important step to getting good at anything- facebook advertising, like anything else- is to get started to get your feet wet, to give it a go, to make mistakes, to learn all that sort of stuff right. so absolutely, you can start with a small budget, but don't think that a budget of five pounds, five dollars a day, something like that, is gonna do incredible things for your business. a five pound a day, five dollar a day budget is for testing, it's for experimentation. it's very, very unlikely to be a needle mover for your business, and that's because you just have to think about how any sort of marketing uh platform, any advertising platform like facebook, works right. a 10x return on ad spend is really good for most businesses. now, some businesses, partikularly service ones with high average customer values, achieve a much higher um roast than that return on ad spend. but a 10x roast, 10x return on ad spend is is is pretty good, right, um, from a lot of e-commerce, to be very good if you're spending five dollars a day and you're getting a 10x return on your ad spend, you're generating 50 a day in revenue. for the vast majority of businesses, even if it's just you, that's probably not hugely exciting. 1500 a month in revenue, you've got costs coming out of that. i can't imagine you'd be very excited about that. i certainly wouldn't be. so you need to keep that in mind now. if you want to start running a campaign on five dollars a day and you are seeing a 10x return on that spend, you should be very excited, not because of the money that that's generating, but the fact that you can very quickly and easily scale that budget. and if you're already generating a 10x roast at a 5 a day budget, you should be able to generate really very good results with them. with with higher budgets that actually do mean something. instead of generating 1500 a month to revenue from it, you could be generating 10, 100 higher than that. times that, um, these things are are certainly possible. so it when you get started, you need to think about this. it's the most important thing is not necessarily the number, it's the mindset right. so i've given a five dollar a day as a minimum that i think is appropriate to start with um, to sort of the average person who's perhaps got a one-person company. um doesn't have much money to play with, potentially certainly where i started, and i don't think that would be a terrible place to start, bearing in mind that that's for testing. you need to work it out, that it works at that level before you then scale, et cetera, as i mentioned. but of course, your starting budget or your minimum budget should depend somewhat on your circumstances. so what i would always recommend is that you start with something small, start with something that you can afford to lose. no one should ever go broke because of a facebook ad campaign. you should not be spending your rent money, your whatever, on a facebook ad campaign. don't do it, um. but you equally need to spend something that actually means something to you. so i i've mentioned five dollars a day minimum. there are many people and many businesses where five dollars a day, um 150 a month, means absolutely nothing. there's no point in them doing it. they're not even gonna bother checking it. it's just not interesting. you know a business of any sort of size. this is not gonna mean anything to them, right? if you've got a seven-figure business even spending. you know, 50 a day is almost certainly going to mean absolutely nothing. so you need to start with a number that you actually going to care about, that you're going to check. you know, if i ran a five dollar a day budget, i just i'm not interested, it's not even going to bother me in the slightest. okay, i have to spend something that means something, because if it means something, then i'm going to go and put time and effort into improving the campaign, into working it out, into doing all these various things. so for a minimum budget, you're looking at sweet spot where i can afford to lose it. it's not going to hurt me if i lose it, i'll be absolutely fine, but i'd rather not lose it and i do care about what i've invested. okay, so perhaps for a small business that might be, you know, 300 a month, you might be like: i can afford to spend 300 a month. and let's say you set aside six months worth of budget to test this and make it work. so you've got 1800 as your budget over a six-month period and going. i don't want to lose 1800, no one wants to lose 1800. but if i do lose 1800 over six months, it's not the end of the world, um, and that might be an appropriate starting budget. 300 a month would also be double five dollars a day. it'd be ten dollars a day, um, but that might be an appropriate starting budget for someone to go with. that, as i mentioned, meets that sweet spot and, of course, no one wants to lose the money. when i'm saying it needs to be something you can afford to lose, you're thinking: but am i going to lose the money? you may do? you may not set up campaigns, right, it may not land with your target audience. there's all sorts of reasons why you may lose that and it's important to go into a budget decision with that in mind. going i could lose this. now, a lot of people book. if i say, look, you might lose the eighteen hundred dollars over the next six months testing, a lot of people think, oh, okay, well, i won't do it. then you go, yeah, but you've got to think about the risk versus reward here. um, is it worth the risk of losing 1800 to test an ad platform that could be a consistent generator of clients and customers for your business? in the vast, vast majority of cases, the answer to that question is going to be yes. it's absolutely worth the risk. it's still a risk. you could lose it, just like any marketing venture could always lose the money. um, but is it worth it? i would say so for the vast majority providers. you can afford to do that. i would say for the vast majority of businesses, absolutely worth the risk because if you come out of that six months with an advertising platform, a marketing channel that can consistently and reliably generate customers for you, it's going to be worth many, many, many, many times what you've, what you've invested in, what you've risked there. so certainly worth doing. but that's uh, that's what i wanted to discuss. so just a quick recap: yes, you can start with it. that's five dollars a day. that is okay. just be aware that's for testing. that's not gonna do anything for your business. long term you will need to scale and then try and find a minimum budget that's appropriate for your circumstances. it should be something you can afford to lose. it should also be something that actu.