How much should a small business spend on Facebook Ads?

According to Facebook, the platform reached over 2.8 billion users at the end of 2020, making it the largest social network globally. Statista reports that Facebook will reach 2.91 billion active users by end the end of 2021. A recent report published by Pew Research Center shows that 69% of adults use Facebook.

So, Facebook allows businesses to improve their online presence, reach their target audience, engage them with valuable content, increase sales, and achieve higher returns on investments (ROIs). Facebook plays a crucial role in boosting a small business’s bottom line through ads.

Facebook ads are pain advertisements that allow small businesses to target a specific demographic using various formats. These ads are an integral part of your overall digital marketing strategy. Many small business owners ask: Are Facebook ads expensive? The short answer is “Yes” and “No.”

It primarily depends on how much you want to spend. Another critical question is that how much should a small business spend on Facebook ads? In today’s article, we will answer this question and give you relevant details. Read on!

How Much Should You Spend on Facebook Ads?

Although spending on Facebook ads depends on your requirements, user engagement levels, brand growth, and budget, experts recommend small businesses to allocate at least 5% to 12% of their marketing budget on Facebook advertisement.

Small businesses that quickly want to reach their target audience spend nearly 12% of their marketing budget on Facebook ads. Once a company has a stable reach and achieves desired engagement levels, it spends 5% to maintain the growth. Budgeting for Facebook advertisements requires careful planning and preparation. Consider the following factors:

Define Your Sales Goals

The amount of revenue you want to generate from Facebook ads per month is a crucial factor to consider when setting an ads budget. Therefore, it is vital to define your revenue goals and calculate the number of products you want to sell.

For example, if your goal is to make $20,000 per month, if the product’s price is $2,000, you would need to sell at least ten units to achieve your monthly objective. Perform thorough research to ensure you develop clear and S.M.A.R.T goals.

Focus on Lead Generation

After determining the number of units you want to sell per month, it is time to calculate the number of landing page views you wish to generate from advertisements. We recommend focusing on your average sales conversion.

Divide the number of sales by sales conversion to know the number of leads you want to generate via Facebook ads. For instance, divide ten units by 5%. So, you need at least 200 leads from Facebook ads to achieve your objective.

Calculate Landing Page Views

Most small businesses want to get the most out of Facebook ads to maintain a stable and consistent cash flow. In that case, you need to run ads with a direct call-to-action (CTA) to your landing page to increase the likelihood of product purchase.

Remember, this requires you to calculate the number of landing page views. For example, if 10% of all the users who visit your landing or sales page purchase your product, you need to dive into the sales goal by 10%. Let’s continue with the same example given above. You need to sell 10 units per month, right?

Similarly, 10% of people visiting the sales page on your small business website buy your product. So, when you divide 10 by 10%, you get 100 page views. Moreover, focus on measuring your Facebook ad budget by multiplying the number of leads by cost per lead.

On the other hand, you can also determine your ad spend budget by multiplying the number of landing page views by cost per view. For example, if you spend $1 per lead and have 100 landing page views, the total cost of Facebook ads is $100.  

Final Words

Undoubtedly, Facebook offers small businesses unique and effective opportunities to reach their target audience via customized and targeted ads based on demographic data, buyers’ intent, behavior, interests, etc.

Although Facebook ads are a powerful tool for brand growth, increasing sales, and achieving the business bottom line, it can cost you a lot of money if you fail to create a budget plan. Follow the tips and tricks given above to streamline the entire process.