How much you need to spend
Facebook ads have been hailed as the latest advertising tool to bring in leads and grow the bottom line for business. Have you wondered how to do it? And more importantly, what you need to budget to see a good return?
While you can spend just $5 or $10 to boost a post and get awareness, there is far more finesse and work required to bring in leads who will actually spend money with your business. For an introduction to getting started, read our post on deciding on your ad goal, how to set an ad budget and what will affect the cost of an ad, and the types of ads to create. In this article, we talk specifically about the budget needed for lead generation.
Using Facebook for lead generation
Lead generation is all about getting interested people to show they are considering your business, and helping them to take action to become a buying customer. To test out Facebook ads, a good starting budget is around $1000. Why is this a good amount? It allows you to collect enough data to test the ads, audience and offer, refine them, and pick the best performing options. What performs best is where you want to put your money. Then, you will want to scale it.
What impacts your budget?
How long you test depends on the budget, cost of leads, and how many items you are testing. Expect to run every test for three days so Facebook can optimize them. It could take you several weeks or several months to fully test all ads, especially if you have a series of related ads. You could easily spend the $1000 in just over a week if you are spending $100 a day. If you start at $30 a day, you will need to test for longer to get the same amount of data.
It also depends on how much revenue these leads bring you, to evaluate whether it is worthwhile or not. If it costs you $25 a lead, and they spend $20 with you, then it does not make sense. If a lead costs you $75 and you sell them something worth $3000, then it does makes sense. If your market is competitive, expect to budget more to achieve your goal.
Doing the math
Not everyone who is interested will spend money with you. You will need to calculate how you will achieve your revenue goal. Start by working backwards. What is your revenue target? How many people need to buy from you to reach that? That answer is your target amount of customers. How many of those do you typically convert? Is it 10, 20, or 50 percent? That’s how many people you need to express interest. Now you need to reach them. Think about how you can reach them on Facebook, by interest, behavior, job title or another targeting option. If you are sending people to a landing page, typically 10-20 percent will convert. Factor that into how many people you need to interact with your ad. How big an audience do you need to achieve that?
This is the starting point for advertising on Facebook and getting leads. After the testing phase, you can scale up or down, depending on your business goals.
Need help optimizing your Facebook ads? Contact Danielle on 760-440-5494 or firstname.lastname@example.org
Tip of the Week: Allocate enough budget to properly test your Facebook lead generation.