Let’s start with an assumption. There isn’t a business owner in Greece who hasn’t heard about Facebook or Instagram ads and isn’t wondering at least one of the following:
1. How much money do I need to spend to get real results?
2. Are Facebook/Instagram ads accurate?
3. With what budget should I start my ads?
4. If I put in X euros, how much will I get back and when?
So the rush to launch ads leads many small business owners to do a boost post (promoting a post within their store profile). And what makes it worse is that there is no clear plan, message and objective for the user who will eventually see their ad. So they end up spending money with no results and no success.
But what does success mean for advertising your business on Facebook and Instagram? Unfortunately, most professionals haven’t thought about it this way and haven’t planned their moves, set goals and requested results that can be measured.
Such goals can be to increase traffic to a website, to increase phone calls and messages from potential customers, to make the existence of a new product or service known to the company’s audience or to increase the views of a video.
Of course, the above objectives always work in combination with the aim of increasing sales or leads received by the company.Therefore, different types of advertising are required to achieve them, which consume a different part of the total advertising budget.
Yes, you read that right, there are different types of advertising, unless you think that with just one ad you can achieve your goals. It’s simple, put yourself in your prospective customer’s shoes, would you buy something from a store you’ve never heard of? Would you trust it if you saw it in front of you for the first time ?
Obviously not, and that’s the logical thing to do! So before you start bombarding your prospective customers with product ads aimed at selling, you should first introduce yourself as a brand, educate them, and then introduce them to your products. This is exactly the purpose of brand awareness and audience building type ads which usually account for 20% of your total advertising budget.
Yes, but you’re right to ask yourself if it doesn’t bring me sales, what does this kind of advertising help me with? It helps you in the long run as it renews the existing audience but also constantly creates new audiences that are potentially interested in your products. So you ensure that neither your business audience will be saturated nor will the cost per action taken by the user skyrocket to unmanageable levels.
Similarly, 60% of the total advertising budget should serve as a direct promotion of your products and services, highlighting their quality features and why the user should prefer them over the competition. So here we have ads of the type of traffic, catalogue sales, instant experience etc.
Finally, the remaining 20% of the advertising budget should be used for remarketing. Because as we said, no one will buy the first ad they see from your store. So we need to remind those who saw a particular product or added it to their cart but didn’t buy it, that our brand exists and the products they chose are waiting for them!
“What should be the budget of Facebook / Instagram ads?“
We answer this burning question through a simple three-step process to help you decide what’s best for your business:
Step #1 – The minimum
The absolute minimum amount one can spend on Facebook and instagram advertising is known to everyone and is 1 euro per day. But even that one euro can make a difference.
The average cost per 1,000 impressions (CPM) for 2020 was €1.15. Therefore, if you spent one euro every day, at the end of the year you would have managed to display your company’s ad 317,319 times!
Let’s be realistic though, you can’t possibly think with such a low budget that you’ll be able to operate Facebook and instagram as an additional sales channel that will bring you back money.
Step #2 – The Adaptation
So the logical step, and what we suggest as a starting point, is to take advantage of Facebook’s very powerful algorithm. According to Facebook itself, an ad set needs to complete 50 conversions in a week’s time in order to get out of the learning phase. So once it comes out of this phase, Facebook has enough quality attributes for the audience who are more likely to complete the conversion we set out to achieve and serve your business’s ad in a more targeted way.
But how much do you need to spend to reach these 50 conversions in a week?
First of all, the positive thing is that we do not define conversion as just selling. It can be adding to the cart, filling out a form, etc. Ideally here we use the funnel that we have created before we start the ads and you optimize the ads at each stage of the funnel until you find that conversion that has value for your business but at the same time has an acceptable cost. Once you identify it, you set it as the target for the 50 conversion threshold.
For example, if you have an E-shop clothing store and you cannot yet configure the purchase, you set the request to add to cart. So if the cost per add to cart is 1,60€ , then the weekly budget is 80€ while the monthly budget just for this ad is 320€.
Step #3 – Configuration
It is now clear that the above analysis has a fundamental problem. Adding to the basket is not a sale. Adding a product to one’s basket is not 100% certain that one will proceed to purchase it.
So the next logical step is to configure the ad to achieve 50 purchase conversions per week. But how much should you budget for this advertising campaign?
For example, if you have a cosmetics e-shop and the average cost per purchase is 2.70€, then the weekly budget is 135€ and the monthly budget for this advertisement alone is 540€.
Of course, here you should always monitor the cost per purchase and the ROAS, the return your business receives for every 1€ spent on advertising. This indicator is particularly important as if you don’t take it into account you may end up “making” exactly what you spend!
But let’s be honest, no business – especially in the current circumstances – can spend the “ideal” budget. Of course, we must not forget that the total advertising budget is influenced by other factors such as your industry and the average price of your products or services. Doesn’t it make sense to you that there is a different approach to advertising for an E-shop clothing with an average selling price of 40€ versus a B2B business selling professional machinery with an average selling price of a few thousand euros ?
At Astrolabs we have the experience and know-how to take on all kinds of business while at the same time we believe that it is very important that you as an entrepreneur get as much as possible from the ads you run for the budget you allocate. How do we do this?
Firstly by constantly monitoring the ads and immediately stopping or configuring those that are not efficient. Similarly, we monitor which ones are performing best and increase the percentage of budget they use to make them even more efficient for your business. At the same time we test many different creatives such as images , videos , blogposts etc. As well as we test all possible placements, with a single purpose. To make your ads as efficient as possible!
