Want to ensure you set the right Facebook Ad budget before you start? Then read the post below.
When starting with Facebook advertising, it’s better to set a plan of action, so that you know how much you are willing to spend and how much you can expect in return.
Without a budget plan, you will not have a clear idea on how much you can spend on Facebook ads. Determining how much to spend on Facebook ads and how much you are willing to test on advertising performance will be tricky.
How to calculate your Facebook Advertising Budget:
Let’s start of with the first question:
What is your revenue goal for the next 30 days?
Use this formula to determine your revenue goals from the Facebook Ads:
Revenue Goal / Cost of Offer= Units to sell
Now we need to figure out how many leads you will need from your Facebook ads to get a sale.
Question:
How many landing page views will result in 1 sale?
If you run Facebook ads that take people directly to a landing page. We need to estimate how many views it will take on this landing page to get 1 conversion.
So let’s for example say that you convert 8% of the people that land on your sales page from Facebook – the calculation will be the following of you want to sell 10 units in 30 days.
The Calculations will be as follows:
10 / 8%= 124 landing page views
Now that we have an estimated number of landing page views you will need to complete the sales objectives for the month. We need to estimate how much we will need to spend on Facebook Ads to get the required amount of leads.
Calculate: number of leads x cost per lead= Ad spend budget
If you do not know your average cost per lead from Facebook- the range could be anywhere between R2- to over R100.
Your cost per lead will depend on:
- Your industry
- Your offer price
- Your landing page
- Brand awareness
- Target audience
For example: if you love the Iphone, and see a new product advert, you are more likely to convert than say when buying a I-Mac ( as its more expensive) or another electronic product that you never heard off (no brand trust).
Note:
When planning out these metrics, you need to consider a few thing:
The average conversion rates between business-to-consumer (B2C) marketing is very different from business-to-business (B2B) marketing.
Cost per lead will also be impacted by
- the location / area
- the type of audience
- how well you know your audience
Using this budget formula, will guide you in what to expect from your Facebook Ads.
Remember to always test theories and ideas and type of ads to improve on the results
The amount of time you spend on analysis and testing will greatly improve your overall performance.
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