How Much Should I Spend on Facebook Ads?

Mike Opera
By Mike Opera

If you’re looking to spend money on Facebook, there are plenty of questions to ask yourself prior to.

The truth is there is no right answer right off the bat on how much you spend. This isn’t Google AdWords where you can actually see an estimate of potential search volume. This is a little more obscure than that.

With that said, the goal of this post is to help you critically think about your business and how it should fit within the Facebook world.

What is the cost of your service or product?

One massive consideration for your Facebook advertising campaigns is to understand the revenue of your product or services bring in. Or if you’re acquiring users, what financial investment are they worth to you?

Just like in sales, when you’re marketing something that will cost a higher financial investment, it typically requires a longer sales cycles and comes less frequent…But when you do close a deal, you could have made your year.

…The same applies to Facebook but unfortunately, instead of cold calling prospects for free, we need to be running ad spend which is more costly. The flipside of the equation would be lower AOVs. They typically don’t require as much spend to turn a profit, but if you stop converting for awhile it’s going to be harder to make your revenue back up.

Here’s a very simple formula to help you think about:

  • Higher Cost Products / Services = Less Conversions, Higher AOVS for Bigger Pops, Typically Requires Higher Budgets
  • Lower Costs Products / Services = More Conversions, Lower AOVs for Smaller More Consistent Pops, Typically Doesn’t Require A Higher Budget (Unless you’re a huge brand)

What is the size of your current online presence?

The next thing to think about when budgeting is the size of your online presence.

The three buckets to think about your online presence when it comes to Facebook ads are:

  • Website Traffic Size
  • Facebook/Instagram Fans Size
  • Email List Size

The more of a presence you have, the more opportunity you have to spend.

Here’s another very simple formula to think about when budgeting your Facebook ads:

  • How much website traffic do you have?
    • If website traffic is high, you have more opportunity to spend on retargeting your audience
    • If website traffic is low, you have less opportunity to spend on retargeting your audience
  • How many fans?
    • If fans are high, you have more opportunity to spend on retargeting your audience
    • If fans are low, you have less opportunity to spend on retargeting your audience
  • How many emails on your list?
    • If the amount of contacts your brand’s email list is high, you have more opportunity to spend on your list
    • If the amount of contacts your brand’s email list is low, you have less opportunity to spend on your list

How aware are people of your brand?

Another consideration when budgeting your Facebook ads, is the relationship between brand awareness and conversion. One way to look at your brand awareness if by looking at the amount of searches in Google’s Keyword Planner.

Again another simple formula to think about:

    • If search volume is high, you will need to spend less on branding efforts
    • If search volume is low, you will need to spend more on branding efforts

When a brand is searched a ton, there’s generally less need to really explain what the brand is and less money could be allocated towards branding efforts

What is the need & how aware are people of the product category you’re in

The fact is your product/service won’t apply to everyone. But some products/services have much more awareness than others.

If you were to take 100 people at random, how many people do you need to convince to eat food? Everyone knows to eat food right?

Now with that same 100 people, how many people need an attorney? Much less.

  • If high awareness/need, then there should be less effort explaining WHY your product solves a problem
    • Requires less ad spend
  • If low awareness/need, then there will be more effort explaining WHY the user has a problem and HOW your product category/product solves it

What is your potential reach?

  • If the potential reach of your ad sets is high and you’ve done a good enough job creating relevant targeting criteria, the more opportunity to scale budgets
  • If the potential reach of your ad sets is low and you’ve done a good enough job creating relevant targeting criteria, there is less opportunity to scale budgets

Your campaigns are only as good as your creative and customer journey 

One of the biggest mistakes I see with budgeting on Facebook is not investing in creative. Too many times will I see people with incredible technical setups but the ad and messaging sucks.

How is this the case?! Facebook advertisers get too caught up in all the bells and whistles within the engine that could “potentially improve conversion rates” but don’t think about the most impactful thing on conversion, the ad itself.

Let me give you a scenario with completely arbitrary numbers:

Let’s say you great technical build but your creativity is poor and the messaging is generic.

If you were to spend $5000 and drive 5000 visits, and you converted 1% of users into purchases, you’d have 50 purchases.

Now let’s say you’re weighing another option by investing in creative with that same budget.

Let’s say you took $1,000 of that $5,000 ad spend and invested in solid creative. More times than not, we can see a huge impact that creative has on conversion rate. If your ad resonates with more people, you’ll convert more people.

If you were to spend $4000 ($1,000 went to creative)  and drive 4000 visits, and you converted 2% of users into purchases, you’d have 80 purchases.

You’d take that improvement all day right?

That’s just a small scale example but the point is creative has a massive impact on conversion, if you invest in a solid creative plan you’ll convert more users and need to spend less.

You could make the same argument for investing in landing pages and cleaning up the whole customer journey.

Wrapping it all up

So if you were looking for a black and white answer on your Facebook budget, unfortunately, you’re out of luck without me looking directly at your brand.

…However, the goal of this post was to equip you with the tools so you can make decisions for yourself when budgeting around Facebook.

The fact of the matter is just spending money on Facebook won’t get the job done. At least not anymore. You’ll need to invest in other aspects of digital to run a successful paid social advertising campaign on Facebook.

Agree? Disagree? Let me know in the comments.

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