In this episode we tell you how much should you spend on your Facebook ads by answering these questions:
Aaron: [00:00:15] Hello, and welcome to another episode of the Marketing Natives. Today's episode is all about how much you should spend on your Facebook ads. This is going to be a really fun topic because it's a core competency in our business, and we use it a lot. So I feel like we can really add some value. Some things we're going to cover is what is your marketing budget, what are your goals, and how competitive is your marketing compared to who you're targeting. All of these are 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 should tell everyone hey, you should spend this amount of money on ads because these three factors, like Aaron said, play, you know, play a role into how much you should be spending.
Aaron: [00:01:06] Right. I would love to say hey, for $50 a day everyone's going to make money on Facebook.
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 talking just about your Facebook marketing budget, but you should probably think about your marketing as a whole. Just a general business advice, you should think about 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 want to spend on Facebook, and if it makes sense, then you can do your advertising on Facebook. If it doesn't, you know, by the end of this episode, you'll find out whether or not it would make sense for you to go out and try it, but don't just jump into it without a budget because then you don't really know if it's effective for your business. Most of the time Facebook is effective for your business if you're doing it correctly, but if you're not spending the correct amount for your target market, then it may not be something feasible for you. So go ahead.
Christian: [00:02:05] Something to take into consideration too if you're hiring an advertising agency or a marketing 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, designing these ads and maintaining these ads. And the other chunk is going to go to actually 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 separate things.
Aaron: [00:02:38] Right. And actually if you- That's a good point, Christian, but one thing to consider is that if you have a really good video or a really good ad, you're going to spend less money. So you may be able to reach more people by paying more money for a video. So you spend $500 on a good video or a thousand dollars on a good video, and then your ad spend is like $200 when you were normally going to spend a thousand. So it's kind of, you know, goes back and forth, but you have the video or something or the creative that's always a part of the ad as well. So.
Christian: [00:03:13] So the next thing here is, you know, what are your goals? What do you hope to achieve, and what are your measurable numbers that you're looking for when running these Facebook ads? So you have to figure out your goals and then work backwards.
Aaron: [00:03:29] Right. So we've created a calculator, and I may actually make a note here after I get done talking to tell Christian to put this in the show notes. And we'll give you guys a calculator, and you can put in the average click-through rate. It'll tell you like the average conversion rate for your landing page, and this is great for anybody who's starting or if you already know your numbers, you can adjust those numbers so that you know how many people you need to reach and how many people go to your landing page. So for example, you run an ad and it costs, you know, I'd say like $5 to reach a thousand people and you know that you only get 1 percent of those thousand people to click through to your landing page, and then of those people who click through, you'll get a really good landing page could do 20 percent of those 1 percent. People follow me on the numbers here. They can actually convert. So the numbers get pretty small. So you've got to figure out how many people you need to be in front of whether that's 20000 people, 10000 people, and it kind of factors into the targeting aspect which we'll get into a little bit later. But you need to figure out how many leads you want per day. So is that one lead per day? Is it too leads per day? 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 be different 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 have some 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 your advertising to go specifically for those events. For example, for website traffic, for purchases, and obviously, you know, if you're going down to make somebody want to make a purchase, it's going to cost more money to reach those people. So we're talking in general terms for this obviously, but those are things to consider that you're going to spend more money for somebody to purchase something than they are to give you an e-mail address. All right. The next thing to talk about is how competitive your market is, and this is probably the biggest factor. If you don't have an audience, so for example, an e-mail list or maybe a Facebook following or a video that you've gotten certain people to watch, if you're starting straight from scratch, you're going to need to do a lot of research on your customers and make sure you target them specifically. So for example, if you know that your target audience is women but the only thing you know about them is their age range, say 26 to 40, you're going to spend a lot of money targeting those people because so many other people on Facebook are targeting them as well. But if you know that you're targeting 26, 27 year olds that happen to be interested in yoga, it's going to cost you less money because you're targeting a specific segment of people who are 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 you an idea of how many people you'll reach and the cost to reach those people but definitely need to figure out who your target market is.
Christian: [00:06:42] Now that we've talked about these three things, what it is, you know. We're talking about how much you should spend, but we haven't really given them a solid number. So you know, once you've determined, you know, the answer to these questions, 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 work backwards kind of like we said earlier. So say, let's do this example. They have - we'll make it easy - $5 a day on Facebook, $150 of just ad spend, what you do there is take that budget reverse that and say okay, we can get in front of a thousand people. We'll make the numbers easy. And of those thousand people, we're going to get 100 people to our landing page or 100 people to get over to our website, and our goal here is to have people give us an email address. 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 of those thousand people, and we split, like I said, $150. Well, you would just divide that. If I had my calculator up here. What is that, Christian?
Christian: [00:07:54] I don't know.
Aaron: [00:07:54] It is... Let's see here. Seven dollars and fifty cents per lead. So depending on your 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 can go back to the drawing board. For example, we've done this with like an oil change 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 convert on the landing page, and it roughly gets into about $8 for a lead for an email address. Now for that $8, they're oil change is about $50. So you'd spend $8 to make $50 all day. However, it's a local business so you have to factor in that some people are not going to show up even though you get the e-mail address. So for example, it's $50, but you only get 20 to 30 percent of them to show up. Is that profitable for your business? And when you figure out all the steps, then you can really figure out how much you want to spend and scale up. So we usually say hey, if this is your first time starting out, try $5 a day, and what can $5 a day do for you? If you have a high product or if you have, I'd say, I don't know, a high item. Say we're selling microphones online. $150 a microphone. $5 a day honestly may not do you- Might not be feasible for you to do that.
Christian: [00:09:28] So yeah. Basically, the cool thing about Facebook is that, you know, once you have your ad figured out and you know that, you know, with that amount of money you're spending, you can get, you know, X amount of conversions, and it's actually being profitable for you. Then you can start tweaking that ad and say and think about okay, you know, if this is converting at 20 percent, I want it converting at 30 percent. So what can I change in this ad or once they click on this ad and they go to the landing page, what can I change in this landing page to make people, you know, convert? To make people purchase. To make people do the action that you want to do. That's a cool thing, and you know, once the ad is working and all that stuff is gone then it's a matter of tweaking and fixing things, little things here and there to make that conversion rate go higher.
Aaron: [00:10:16] And I would also say that if you're going to do this, you want to test it over, you know, 60 to 90 days because you're going to do a lot of what Christian's talking about, the tweaking and changing to really optimize and say hey, is this effective for us? Just some general numbers to go B to C. So business to consumer, leads going to run you anywhere from like $3 if you're really, really good to $8 on average for a lead, a lead being quote/unquote defined as like an e-mail address or clicks to your website or some kind of acquisition that does not include a purchase. And then if you go in business to business, you can expect to pay anywhere from $10-15 per lead. So those are some averages to kind of think about, and for business to consumer, B to C, you know, you can start out at $5 a day. For B to B, you probably do want to start out a little bit higher because if you don't have enough ad spend, you're probably not going to reach 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 before spending 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 to target?
Aaron: [00:11:32] Right. And so Christian and I were actually looking at- And this is kind of completely off Facebook ads here. We do want to thank you guys for listening to the podcast. Make sure you do subscribe, and we do have a specific group to shout out that Christian mentioned. Who is the- We have a large audience somewhere.
Christian: [00:11:50] In Japan.
Aaron: [00:11:51] In Japan. So shout out to all the people in Japan. That's cool.
Christian: [00:11:57] Thank you for listening.
Aaron: [00:11:58] And for those of you who are, you know, from somewhere else that aren't in Texas because 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 give us 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 of generalizing, but make sure you share this episode with a friend. If you are not on a desktop, go ahead and click those three buttons on the right hand corner and share this episode with a friend. If you are on a desktop, grab our URL and posted it on your social media, and we will talk to you guys next week.
Christian: [00:12:46] Bye.