How much do you really to need spend on Facebook Ads?

[Watch the video here]

You can spend as much or as little as you want on Facebook ads. Want to run an ad for $2.50/day? Go for it. $1,000/day? You have that freedom.

It’s really a matter of how much you’re making on an ad.

There are really just 3 things you need to know and remember when trying to determine how much you need to spend on Facebook Ads.

#1 - Know Your ROI (Return on investment).

This is everything. In short, ROI is the foundation of ALL marketing. You spend money hoping to get money in return. It’s that simple.

When you know your ROI, you know how much spending $5 gets you in return. If you get $100 of revenue for every $5 you spend on Facebook advertising, you’re making a 2000% ROI. Whereas if you made $10 for spending $5, you’ve made a 100% return on your investment.

This is important.

When you know your ROI, you can quickly determine how much you can ultimately keep spending in advertising. As long as your ROI stays consistent, you can keep putting money into ads and continue to make the same return on investment.

But you should calculate your profit margin % before accurately determining ad spend.

What’s your profit margin?

Lets go with my first example. You spend $5 and make $100. If your profit margin is 20% on every dollar, then you have $20 left over in profit to spend on whatever you want. That $20 can be re-invested in growing the business (advertising), or it can be saved, or used for buying assets, etc.

Now, if you decide to use half of all profit to invest in growing the business (advertising), you know you can spend $10 in advertising AND make $200.

This is the nature of marketing and ROI. And If you spend $15 in advertising, you (in theory) will make $300, and so on.

Your needed ROI percentage depends on your business, your cash flow, and how much you’re comfortable with. The key is to max out your ad spend an ROI your comfortable with as long as possible. But with Facebook and any ad spend, that won’t last forever. You have to be creative.

#2 Be Creative

Being creative with Facebook Ads ultimately will drive down the cost of your ads.

When people find certain content more engaging and relevant, the cost of getting that ad shown more times becomes less, because your ad just performs so well in the marketplace.

You might be spending $20 for every conversion action you want, and then find that changing the creative variable of the ad to something better drops that number to $10 or even less.

The power of creativity in every ad gives you the opportunity to spend less for every result you’re trying to get.

#3 Start Small

This should come as a relief, especially if you’re new to Facebook Ads. It is not necessary that you start with big budgets.

In fact, if you’re new, you are sure to waste a lot of money on ads if you just start throwing money at them.

Start with $5/day. Once your ad reaches over 1,000 people (that will probably happen day 1), you can begin to draw broad conclusions on how your ad is performing, and if it’s worth it.

Start looking at the fine details of your ad in the Facebook Ads Manager. Your ad might have some good copy and a compelling offer if you’re getting a high click-through ratio or low cost per click. But the ad result you want might still be performing poorly. This likely has to do with your web page or another part of your conversion funnel.

Starting small will enable you test out the different parts of your funnel until you find something that works - and you don’t have to spend an arm and a leg to get good results.

The important thing is that you start.