How Much Should You Spend On Your Facebook Ads

November 13, 2017

Show Notes

In this episode we tell you how much should you spend on your Facebook ads by answering these questions:

  • What is your marketing budget?
  • What are your goals?
  • How competitive is your market that you are targeting?


Aaron: [00:00:15] Hello,and welcome to another episode of the Marketing Natives. Today's episode is allabout how much you should spend on your Facebook ads. This is going to be areally fun topic because it's a core competency in our business, and we use ita lot. So I feel like we can really add some value. Some things we're going tocover is what is your marketing budget, what are your goals, and howcompetitive is your marketing compared to who you're targeting. All of theseare factors to consider whenever you're going into your Facebook advertisement.We're going to dive deeper into those.


Christian: [00:00:52] Right.So basically, there's no easy answer or no cookie cutter answer that we shouldtell everyone hey, you should spend this amount of money on ads because thesethree factors, like Aaron said, play, you know, play a role into how much youshould be spending.


Aaron: [00:01:06] Right.I would love to say hey, for $50 a day everyone's going to make money onFacebook.


Christian: [00:01:12] Yeah.That'd be awesome.


Aaron: [00:01:13] Right.So the first thing here is what is your marketing budget? And we're not talkingjust about your Facebook marketing budget, but you should probably think aboutyour marketing as a whole. Just a general business advice, you should thinkabout a marketing budget and encompassing like a year or a quarter. Like hey,this is how much we're going to spend, and then decide what percentage you wantto spend on Facebook, and if it makes sense, then you can do your advertisingon Facebook. If it doesn't, you know, by the end of this episode, you'll findout whether or not it would make sense for you to go out and try it, but don'tjust jump into it without a budget because then you don't really know if it'seffective for your business. Most of the time Facebook is effective for yourbusiness if you're doing it correctly, but if you're not spending the correctamount for your target market, then it may not be something feasible for you.So go ahead.


Christian: [00:02:05] Somethingto take into consideration too if you're hiring an advertising agency or amarketing company like us, in that marketing budget you have to think about,you know, some of that marketing budget's going to go into, you know, designingthese ads and maintaining these ads. And the other chunk is going to go toactually straight to Facebook to pay for those ads. So sometimes, you know,some of our clients are confused on that part, but those are two separatethings.


Aaron: [00:02:38] Right.And actually if you- That's a good point, Christian, but one thing to consideris that if you have a really good video or a really good ad, you're going tospend less money. So you may be able to reach more people by paying more moneyfor a video. So you spend $500 on a good video or a thousand dollars on a goodvideo, and then your ad spend is like $200 when you were normally going tospend a thousand. So it's kind of, you know, goes back and forth, but you havethe video or something or the creative that's always a part of the ad as well.So.


Christian: [00:03:13] Sothe next thing here is, you know, what are your goals? What do you hope toachieve, and what are your measurable numbers that you're looking for whenrunning these Facebook ads? So you have to figure out your goals and then workbackwards.


Aaron: [00:03:29] Right.So we've created a calculator, and I may actually make a note here after I getdone talking to tell Christian to put this in the show notes. And we'll giveyou guys a calculator, and you can put in the average click-through rate. It'lltell you like the average conversion rate for your landing page, and this isgreat for anybody who's starting or if you already know your numbers, you canadjust those numbers so that you know how many people you need to reach and howmany people go to your landing page. So for example, you run an ad and itcosts, you know, I'd say like $5 to reach a thousand people and you know thatyou only get 1 percent of those thousand people to click through to your landingpage, and then of those people who click through, you'll get a really goodlanding page could do 20 percent of those 1 percent. People follow me on thenumbers here. They can actually convert. So the numbers get pretty small. Soyou've got to figure out how many people you need to be in front of whetherthat's 20000 people, 10000 people, and it kind of factors into the targetingaspect which we'll get into a little bit later. But you need to figure out howmany leads you want per day. So is that one lead per day? Is it too leads perday? Could it be website visitors?


Christian: [00:04:44] Right.That's what I was going to say. Like leads could be- I mean, the goals could bedifferent things, right?


Aaron: [00:04:50] Right.You could have multiple leads.


Christian: [00:04:51] Yeah,you can have, you know, leads meaning emails. You can have leads as, you know,visitors to your website. You could have even purchases. I mean, you can havesome ads that go directly to purchasing some kind of product.


Aaron: [00:05:04] Right.And Facebook- What's great about Facebook is it like will set up youradvertising to go specifically for those events. For example, for websitetraffic, for purchases, and obviously, you know, if you're going down to makesomebody want to make a purchase, it's going to cost more money to reach thosepeople. So we're talking in general terms for this obviously, but those arethings to consider that you're going to spend more money for somebody topurchase something than they are to give you an e-mail address. All right. Thenext thing to talk about is how competitive your market is, and this isprobably the biggest factor. If you don't have an audience, so for example, ane-mail list or maybe a Facebook following or a video that you've gotten certainpeople to watch, if you're starting straight from scratch, you're going to needto do a lot of research on your customers and make sure you target themspecifically. So for example, if you know that your target audience is womenbut the only thing you know about them is their age range, say 26 to 40, you'regoing to spend a lot of money targeting those people because so many otherpeople on Facebook are targeting them as well. But if you know that you'retargeting 26, 27 year olds that happen to be interested in yoga, it's going tocost you less money because you're targeting a specific segment of people whoare in that age group. So figuring out how competitive your market is is huge.You can play around with that on the ads manager, and it will kind of give youan idea of how many people you'll reach and the cost to reach those people butdefinitely need to figure out who your target market is.


Christian: [00:06:42] Nowthat we've talked about these three things, what it is, you know. We're talkingabout how much you should spend, but we haven't really given them a solidnumber. So you know, once you've determined, you know, the answer to thesequestions, you know, where exactly should they start?


Aaron: [00:07:00] Right.So first thing they should start with is their budget. So you've get to workbackwards kind of like we said earlier. So say, let's do this example. Theyhave - we'll make it easy - $5 a day on Facebook, $150 of just ad spend, whatyou do there is take that budget reverse that and say okay, we can get in frontof a thousand people. We'll make the numbers easy. And of those thousandpeople, we're going to get 100 people to our landing page or 100 people to getover to our website, and our goal here is to have people give us an emailaddress. Once you know those numbers, then you can actually figure out okay,how much is each lead worth for me? So say for example, we got 20 leads out ofthose thousand people, and we split, like I said, $150. Well, you would justdivide that. If I had my calculator up here. What is that, Christian?


Christian: [00:07:54] Idon't know.


Aaron: [00:07:54] Itis... Let's see here. Seven dollars and fifty cents per lead. So depending onyour product or depending on the value of your customer, is it worth it to pay$7 and 50 cents per lead? If it is then you can continue to do that or you cango back to the drawing board. For example, we've done this with like an oilchange company where it costs us $3 to have them click through to the website.It cost us another four, no, three and a half dollars or so for them to converton the landing page, and it roughly gets into about $8 for a lead for an emailaddress. Now for that $8, they're oil change is about $50. So you'd spend $8 tomake $50 all day. However, it's a local business so you have to factor in thatsome people are not going to show up even though you get the e-mail address. Sofor example, it's $50, but you only get 20 to 30 percent of them to show up. Isthat profitable for your business? And when you figure out all the steps, thenyou can really figure out how much you want to spend and scale up. So weusually say hey, if this is your first time starting out, try $5 a day, andwhat can $5 a day do for you? If you have a high product or if you have, I'dsay, I don't know, a high item. Say we're selling microphones online. $150 amicrophone. $5 a day honestly may not do you- Might not be feasible for you todo that.


Christian: [00:09:28] Soyeah. Basically, the cool thing about Facebook is that, you know, once you haveyour ad figured out and you know that, you know, with that amount of moneyyou're spending, you can get, you know, X amount of conversions, and it'sactually being profitable for you. Then you can start tweaking that ad and sayand think about okay, you know, if this is converting at 20 percent, I want itconverting at 30 percent. So what can I change in this ad or once they click onthis ad and they go to the landing page, what can I change in this landing pageto make people, you know, convert? To make people purchase. To make people dothe action that you want to do. That's a cool thing, and you know, once the adis working and all that stuff is gone then it's a matter of tweaking and fixingthings, little things here and there to make that conversion rate go higher.


Aaron: [00:10:16] AndI would also say that if you're going to do this, you want to test it over, youknow, 60 to 90 days because you're going to do a lot of what Christian'stalking about, the tweaking and changing to really optimize and say hey, isthis effective for us? Just some general numbers to go B to C. So business toconsumer, leads going to run you anywhere from like $3 if you're really, reallygood to $8 on average for a lead, a lead being quote/unquote defined as like ane-mail address or clicks to your website or some kind of acquisition that doesnot include a purchase. And then if you go in business to business, you canexpect to pay anywhere from $10-15 per lead. So those are some averages to kindof think about, and for business to consumer, B to C, you know, you can startout at $5 a day. For B to B, you probably do want to start out a little bithigher because if you don't have enough ad spend, you're probably not going toreach your audience, and it's just going to waste money.


Christian: [00:11:19] Yes.So just a recap here. The three questions that you need to answer beforespending any money on Facebook ad is, you know, what is your marketing budget,what are your goals, and how competitive is your market that you're trying totarget?


Aaron: [00:11:32] Right.And so Christian and I were actually looking at- And this is kind of completelyoff Facebook ads here. We do want to thank you guys for listening to thepodcast. Make sure you do subscribe, and we do have a specific group to shoutout that Christian mentioned. Who is the- We have a large audience somewhere.


Christian: [00:11:50] InJapan.


Aaron: [00:11:51] InJapan. So shout out to all the people in Japan. That's cool.


Christian: [00:11:57] Thankyou for listening.


Aaron: [00:11:58] Andfor those of you who are, you know, from somewhere else that aren't in Texasbecause that's where our biggest audience is, we would love for you to tweet us@BitBranding and just say hey, we came over from wherever. Just to kind of giveus a shout out. All right. And remember sharing is caring. So thank you, guys.If you got a lot out of this, we will probably do a follow up to this episode.Maybe more of an advanced one so we could really dive deeper into it instead ofgeneralizing, but make sure you share this episode with a friend. If you arenot on a desktop, go ahead and click those three buttons on the right handcorner and share this episode with a friend. If you are on a desktop, grab ourURL and posted it on your social media, and we will talk to you guys next week.


Christian: [00:12:46] Bye.

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