HOw much money should I spend on Facebook ads?
2020 for me, was the year of the Facebook ad.
I’ve had more enquiries about Facebook ads than I ever have in my entire career! Marketers and small business owners are definitely starting to see the value of Facebook ads and might even be feeling like they are missing the boat because they haven’t started already. If you’re working in house, you probably have a concern about building up your own portfolio as well, if you don’t get to grips with social advertising now, it could affect your job prospects in the future.
So just because you’ve noticed that you need Facebook ads, doesn’t mean your director, CEO or other stakeholders have. I get quite a few marketing managers calling me with the same questions…
- How do I get my boss to see the value in Facebook ads?
- How much money should we be spending on Facebook ads? Can you advise a budget I can approach my boss with?
Good questions. But they’re starting down the wrong path. I can’t make your boss see the value in Facebook ads just because I’ve done a good job with other businesses. Nor can I recommend a budget. That’s like advising you on how much money you should invest in shares. It just depends on so much. Every business is different and truthfully, Facebook ads might not be the right avenue for your business to go down. (But you might not really know until you try.)
Here’s what I suggest you do if you’re in this situation:
How to get your boss to see the value in Facebook ads
- Tell your boss why you think you need to try using Facebook ads and why they could potentially bring in new customers. (Or support another activity.)
- Ask them for a test budget, whatever they are willing to gamble to see if this product can work for the business. You can probably get some good test results for £150, depending on the business. But if they’re only willing to put on £30 you can potentially still experiment with that (I often do initially).
- Set up some test ads with different variables. Try A/B testing with different creative, copy, offers, audiences and platforms (maybe Facebook vs Instagram).
- Measure which are performing the best and refine them further. Combine the A/B test features together. Take the winning features from different ads and combine them into one mega-super-well performing ad.
- You can measure performance by checking sales conversions, traffic, cost per click and impressions. You’re a marketer, so you’ll probably be able to identify what good stats look like on something and go with your gut feeling about that.
- At the end of the testing period, you should have a good idea what your cost per result is. Whether that be traffic, sales, signups, leads etc.
- Present the information to your boss in a boss friendly format. “I’ve been running some tests with Facebook ads, and from the results I’ve been getting I am very confident that we can get 1 shop visitor per penny. Or one lead for £5.” You’re confident that this traffic or these leads will be relatively good quality as the audiences you’ve used have been highly targeted – remember to point this out. Ask them if they would like to commit to a further budget, to see what can happen if you bring in lots more of this type of prospect or web traffic. You’ve given them a figure (you might have to do a bit of maths for them and put some figures in their head). If you want £500 – try saying ” for £500 I could get you 100 leads, then we can test how much business we get from that.
- Then spend that money in a more involved way. Set up ads for the buyer awareness, consideration and decision-making stage. Use Pixel to advertise to your previous customers. With more testing you should be able to get your boss to commit to a decent ad budget once you’ve shown them that you can get them results with it (and how much each customer is costing them to acquire – now they can compare this with other methods of acquisition).
It’s more long winded, but I think it’s a more secure process than just asking them for a £800 a month ad budget just because everyone else is doing it. If you screw it up, you risk getting fired.
It’s also worth considering that, even though you may well be an equally talented marketer to a consultant – the consultant is used to looking at many different ad accounts. During this process, you may be unsure about whether the results you’re getting are great – or terrible! You’ll have nothing to compare it to. A consultant will be able to tell instantly ‘this ad isn’t working, let’s kill it and set up another test’. (If you want that person to be me, well, it’s such a coincidence that we got to chatting about that huh? Here are my packages 😉
How much money should you spend on Facebook ads?
Cost per acquisition = Total spend/ total customers you got from the campaign
I find marketing budgets quite strange. Even if your marketing is working extremely well – you’re going to cap that spend at 2 grand per month just because it’s what you decided with the board?
Nonsense. A marketing budget should not be static but adapting to market activity. Advertising may work better at certain times than others. I’ve had ads do extremely well over specific periods during lockdown, but frustratingly, I’ve not been able to apply extra budget due to being capped by the marketing director at the same figure each month.
If Facebook ads are working really well, say your cost per acquisition is just a pound – why wouldn’t you put on as much money as you can access? Providing you can cope with the business growth.
Personally, I wouldn’t be able to cope with more than one good lead a week as it takes me time to onboard new clients. So consider your entire business structure and it’s operations carefully. Usually, when I ask people how many leads they actually want they say ‘as many as possible’. But unlimited growth is not possible for a business, and not every business is able to grow quickly (it’s a common reason people go out of business, actually.)
Once you know what your cost per acquisition is for Facebook ads, you can understand what a sensible budget for it would be. Then it becomes a case of: ‘well, how many leads would we like this month?’
Want 10 and it’s costing you £5 per lead? Use a £50 budget.
If your CPA for Facebook ads is cheaper than your CPA for Google ads (or the local paper *shudder*) then the director may wish to take their budget away from that and whack it on FB ads.
But remember, this effectiveness may change. If you’re getting an unbelievably good result from ads – strike while the iron is hot. If it’s underperforming, don’t keep plodding along with it. Continue to test, try something new, or give it a rest.
I wish you the best of luck on your journey to bring your boss with you into 2021! And please do let me know if you’d like me to take a look at your (ad account) back end.