Setting your Facebook Ad budget -
A guide for eCommerce business owners
One of the things I’m most frequently asked about Facebook Ads is, ‘how much are they going to cost me?’
That’s not an easy one to answer, because every business is different. But it’s an important question, because you don’t want to spend more on ads than you’re getting back.
So, before you even think about investing in Facebook Ads, there are a few things you need to know and think about.
My tips below will give you a good idea of where to start when working out your budget, but if you need more help, I’d be happy to advise you.
Your customer value
In order to set a sensible Facebook Ads budget, you first need to know exactly how much a customer is worth to you.
For example, what’s the average order value on your website? And what percentage of your customers keep coming back for more?
If a new customer spends an average of £10-15 on a first visit – and this is the only number you look at – it could be hard to see how you can make money on advertising.
But if half your customers purchase three or more times a year, that puts an entirely different spin on things.
Once you know what a customer – or lead – is worth to you, you can start to calculate what it’s worth paying to get them. And that helps you decide what you can afford to spend on ads.
The amount you decide to spend will depend on your goal.
If your aim is to grow your presence on Instagram and Facebook – get more people to follow, like, comment on and share your content – you can get great results on a low level of ad spend.
The same applies if you have a new shop or café and want local people to find out about you.
In both cases, a minimum budget of £10 per day is a good place to start.
If you can spend £20 per day, you’ll have a lot more room for manoeuvre. You’ll have greater scope to test running your ads to different audiences as well as testing the ads themselves.
However, if you’re after big sales figures – or a whole heap of high-quality leads – you’re going to have to spend a lot more.
In short, the harder your ads have to work, the more you’ll have to pay. If you have a brand new product or service for example, a budget of £1500 – £2000 per month is more realistic.
In the eCommerce niche, an industry guideline is to budget 3x your average order value per audience you advertise to so you can test your ads effectively. This budget is not always feasible for small eCommerce brands just starting out.
However, if your products sell for £1,000+, it will take more than £10 a day in ad spend to generate sales for your business. You will first need to raise awareness of your brand and then nurture your audience and build trust. This can be done via retargeting ads or with email marketing and organic social media.
If you sell a subscription box, be prepared to make a loss on your first sale. Your business value relies on the life time value of your customers. Analyse how long your customers subscribe with you so you can calculate your margin on each customer. This will dictate your ad budget.
How to get the best results
Whatever your budget, there are a few things you can do to give your ads the best chance of success.
- Be creative. Great images and strong copy not only appeal to your target market, they also encourage Facebook to prioritise you in the bidding – and that helps keep your costs down.
- Be active on your Facebook page. Post at least a few times a week – Facebook likes advertisers who are using the platform.
- Make sure your website and landing pages provide a great customer experience. No slow-loading pages or broken buttons, please – you’ll be wasting your ad spend if your site doesn’t work for people once you’ve got them there.
- Test, test, test. The quicker you find out what works best for your target customer, the quicker you can adapt your ads and get the results you want.
- Hire an experienced ads strategist. They’ll be able to spot opportunities to scale when they happen, or act quickly when things don’t go to plan. You’ll need to factor the cost of hiring a pro on top of your ad spend.