Your company has spent countless hours researching and developing a gripping social media marketing campaign, and now it’s time to launch. Determining the proper Facebook ads budget is critical in order to achieve your goals and effectively grow your brand. Here are a few key steps for successful Facebook ad budgeting for a strong return on investment.
Step 1: Establish Your Goals
The first step for any effective Facebook ads budget is determining how much you are willing to spend based on your goals. Generally, it is recommended that companies allocate anywhere between 5%-12% of revenue for marketing. What percentage of revenue your business allocates within that range depends entirely on your specific goals. Of course, spending closer to 12% will yield more rapid growth while spending closer to 5% will yield steady/incremental growth.
Step 2: Assess the Numbers
Once you establish your goals and expectations, you need to understand the numbers as they relate to how much you can spend on these four elements:
Cost per lead – Consider your overall goals and determine a suitable cost per lead. Leads are a necessity when it comes to successfully making sales and determining your audience.
Cost per event – Your cost per event is perhaps the most important number to consider when defining your Facebook ad budget. In other words, if making a sale requires you to have a conversation or interaction, then you should establish how much you are willing to spend on that event.
Cost per customer acquisition – This number can vary greatly depending on your type of business and type of product or service. Either way, it is important to consider how much you have to spend in order to gain a new customer.
Conversion rate – How many leads did it take to make the sale? Understanding this number will ultimately help your business determine an effective budget and refine your strategy.
Step 3: Distribute Your Monthly Ad Spend
Next, consider which type of ad unit will best help you achieve your goals and distribute your spend accordingly. Essentially, there are three categories to distribute your monthly ad spend: audience-building, promotion, and retargeting.
Audience-building should receive about 20% of your total ad spend. Keep in mind, a common mistake many businesses make is targeting either the wrong audience or targeting audiences that are too broad or too specific. In order to get the most out of your budget, you should be confident that your audience consists of potentially motivated buyers.
Furthermore, utilizing only lead-generating ads may not positively affect your overall conversion rate. Launching content-based ads with no leads won’t yield much, either. You have to focus on both in order to develop the right target audience that will, in turn, result in more sales and more repeat customers.
The next 60% of your ad spend should go toward actually promoting your business, product, or service.
Finally, dedicate the last 20% of your budget to retargeting. Retargeting (also known as remarketing) helps to build a more robust and responsive target audience by focusing on those who either previously interacted with your ad or visited your site but did not initially convert.
Request a Facebook Ad Budgeting Consultation
If you are looking to solidify an effective Facebook ad budget for your campaign, these steps, along with an understanding of your goals, as well as industry and personal conversion data, will help. If you want to learn more about how our professional social media marketing team in Denver can help make the most of your business’s Facebook ad budget, then contact us today.