It’s a question that I get asked A LOT. Like, a lot a lot. How long is a piece of string comes to mind but get my take on it here!
TLDR: It depends where you are now and what you’re trying to achieve. However, generally, you should spend as much as you can afford to spend 😬
So, whenever I talk to business or agency owners, I often get asked is ‘What sort of budget do we need to advertise on Facebook or Instagram?’. It’s an obvious question for someone to ask of course but one that isn’t always as straight forward to answer.
It is often informed by lot’s of things. Things like where you are right now in your business, your goals and objectives for advertising, the size of your audiences, your previous advertising activity, your previous success without ad spend, your creative or even the time of year.
So, how to find out how much ruddy budget you need?
Step 1 – Assess where you are right now
Here are some questions I would ask….
- What advertising activity have you done before?
- Were those campaigns perceived to be a success?
- What sort of CPM and Cost per lead or sale did you get for your budget?
- Are the circumstances similar to this campaign? i.e. location / audience / product
- What conversion rates do your pages get now without an ad spend?
- Did you get any learnings from that previous activity?
I would gather all that information together and get really clear on what has happened previously.
Not advertised before? You won’t be able to answer many of those questions but that is OK. In that instance, you are on an exploration to get that information and that my friend, is a GREAT place to start. Keep going to the bottom to get my advice on what to do in that exact situation.
Step 2 – Get clear where you are trying to get to!
Some other things we would need to get clear on….
- What would be the ‘ideal outcome’ for you? What is a ‘good result?’. It’s different for everyone.
- How long will this campaign run? 365 days a year or just short bursts?
- What exact results are you hoping to achieve? Results for a certain cost? A certain volume? Or just the most results you can get for a fixed budget?
- If you are already getting results, do you just want x% MORE sales/leads or are you just trying to find a way to spend the same budget but get cheaper (and therefore more) results?
- Do you just want more awareness / followers?
- Do you just have a really kick *ss piece of content that you want to get in front of as many people as possible?
- Are you trying to branch out into new territories?
Step 3 – Run the numbers
If you have a certain outcome in mind, we will run the numbers with that outcome in mind based on your previous advertising activity or industry benchmarks and let you know exactly how much budget that you need to achieve that. Now, this will be an estimate that has been informed by data. Either yours or more generic industry standards. The more advertising you have done in the past, the more reliable that estimate will be for YOUR business.
If you don’t have a certain outcome in mind or you haven’t advertised before but just want an idea of a good budget, a good rule of thumb is to allocate a MINIMUM of £10 per day per audience you want to test (But honestly, £20 is even better). Now do treat this as an absolute minimum as even on that budget, you will be limited in what you can do in the account.
When I say per audience, I mean if you want to test an audience of cat lovers vs dog lovers, you would need £10 per audience. The same goes if you want to try custom and lookalike audiences.
The more audiences you want to test, the more budget you need.
If you want to test ways to bring down your costs, the more budget you need.
If you want funnels, you need waaaay more budget.
The more results you want, the more budget you need or you need to bring your cost per lead down.
The more eyeballs you want on your business, the more budget you need or you need to bring you CPMs down.
Step 4 – Agree a budget
We use alllll of that info to agree a budget. We will generally cover….
- If you have a fixed budget in mind, let you know what results you can expect from that.
- If you have a fixed result in mind, let you know what budget you need based on your ad accounts data or industry benchmarks.
- If you have neither in mind, we will figure out a plan and cost that up but it comes down to what you can afford.
So in summary…..
So in summary….Yes, I can pull a figure out of thin air but the truth is, it’s much more complex than that and it is really linked to your unique situation. If we’re able to use data to inform our choices, that’s amazing. We will take that data and discuss the options with you. If there isn’t data, your budget should be as much as you can afford to spend and be realistic for your goals (remember those minimum spends I said above). We can help manage those expectations.
One thing that is for certain though, the more budget you spend, the more results you will get. The more results you get, the faster you learn.
Has this helped? If anything, I hope it helps to understand why your friendly media buying team can’t always give you an on the spot answer 🙈.
p.s. to get the most out of working with an ads manager, you need to be spending a minimum of £1000 a month on your ads and this is considered a low budget. Got less than that? There is a sticky middle place where people need to DIY it until they can eventually outsource it. If that’s you, head over to The Small Business Ad Club.
Updated 15th March 2023
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