How to get the best from your social media and Google AdSense advertising budgets
What Are Your Goals? We are too often ask, “What should the budget be?” prior to establishing goals.
It’s the goals that should help determine the budget. Let’s say, for example, that you had the following goals:
- 1 50,000 New Facebook Fans
- 2 10,000 New Email Subscribers
- 3 100,000 Website Referrals
- 4 5,000 Trackable Product Sales
Before you price out anything, and assign monetary values for each of these things. Let’s first ask a few more questions…
What Is Your Current Facebook Presence?
Building from nothing to 100,000 highly engaged fans who will buy from you is hard. Particularly if you’re looking to do that in a short period of time.
It will help you a lot if there is already an established Facebook presence. There are fans established ready to engage, click and buy.
Also important is the resources dedicated to this. Is anyone in charge of community management? How skilled are they at creating useful, helpful content that the target audience wants to engage with and share?
Without an established presence, proper expectations need to be set. If you will not be building a community, you will only be reaching non-fans to sell, drive traffic and get installs. That is simply less effective than targeting fans who expect to see your content.
If you are also tasked with establishing this presence, You need to understand that this will take time. Building a community does not happen overnight. And costs will be higher as social proof is being built.
What Is Your Niche?
Companies in the entertainment industry have an advantage on a social network. You can expect costs per conversion (page like, link click, email address, install and sale) to be lower.
On the flip side, companies in non-social or “boring” industries will have a tougher time. Think law firms or insurance companies, for example.
The niche should be considered when setting your budget. If it’s a boring niche, adjust accordingly.
What Is Your Product?
If you’re selling a product, many factors will contribute to your success in selling it. We’re going to assume that you can easily target an audience likely to buy.
Is your product a high value item? Is it something people are unlikely to buy online? Are multiple steps needed to complete the purchase?
All of these things contribute to efficiency of sales with Facebook ads and should be considered when establishing a budget.
What Is Your Website?
Does your website currently get solid traffic? Is it well designed? Is content being published on a regular basis? Is it mobile friendly? How is the landing page set-up and copy? These things are crucial!
By having established traffic, you have a built in audience to target. If there is no traffic and very little content on a poorly designed website, you are sending people to a wasteland. A well-designed and established website can make advertising infinitely easier. On the flip side, a bad one can make it impossible.
Adjust your budget accordingly.
What Is Your Customer List?
The number one factor contributing to success or failure of Facebook advertising is the relevancy of the audience being targeted. Do they want to see what you are promoting?
A key to this is the customer list. If your business has a list of 100,000 paying customers, that gives you a solid foundation to start with of people likely to like your page, click your link, install your app or buy your product.
Without it, you will be reliant on a quality fan base and established website traffic… If those things don’t exist, you will be using interest and behavioural targeting as your main methods of reaching potential customers. You’re behind the eight ball. Adjust your budget accordingly.
What Is Your Time Window?
Let’s say a one-year engagement. We have moderate goals and minimal obstacles (good website, established fan base, solid customer list, etc.). One year is plenty of time to test and adjust, refine and optimise to get to your goals.
But let’s say that we have a tough niche with aggressive goals. Do not have an established fan base, good website or anything else that makes achieving our goals easier, and want to do everything in a month. Good luck!
You should build testing and optimising into your plan. You should also build in campaigns to accomplish specific goals. Your most aggressive time period should be the final quarter after you’ve already established a fertile foundation (fan base, traffic, customer list, community) for sales. I'd spread out your budget (and expectations) accordingly. The first month will be the toughest. The final should be when everything comes together.
Budget: Facebook Fans
As a rule of thumb, I say you should expect to spend anywhere from £0.50 to £1 per Facebook fan. Now, this will depend on many factors, including niche, brand recognition, established presence and country. You could spend more or you could spend less.
Some will tell you that you can get fans for far less. Maybe insanely less. Remember that quality matters. It matters a lot!
You can expect to spend between £25,000 and £50,000 to increase the fan base by 50,000. To set appropriate expectations, I’d start with a £50,000 budget.
Budget: Email Subscribers
Again, there is no set price here. Several factors will contribute to this cost. Are you building your list with an attractive giveaway? Does the landing page convert? Are you looking for subscribers or leads (leads may be much more)?
I set an expectation of £1 per email address. I’ve found that it can be as low as £0.50 if targeted appropriately (fans convert!), but it can also be higher.
With an expectation of £1 per email address, you should budget £10,000 for those 10,000 email addresses.
Budget: Website Referrals
Some content will be more attractive than others. It will be easier to get people to click on a popular, viral article with an engaging headline and photo than it will be to get people to click on a link to a boring informational article about the history of your company.
I consider anything close to £0.10 a very good cost per website referral. You could go lower, but it’s more likely you’ll need to spend more. Depending on the referral, I wouldn’t spend more than £0.50 per link click.
Many questions need to be answered prior to having a better feel for whether the cost will be closer to £0.10 or £0.50 (that’s a wide variance!), but let’s play it safe for now at £0.35. It would cost £35,000 to drive 100,000 website referrals at that rate.
Budget: Product Sales
As you can imagine, results here will be across the board. Cost of product is going to be a huge factor, as is relevance to the user targeted. But let’s assume the product is £100.
While I and others have seen huge ROI on product sales, let’s play this conservatively and assume a cost of £30 per conversion. You need to determine based on margins their acceptable rate.
We can budget £150,000 to drive 5,000 sales at a £30 per conversation rate.
The sum of costs associated with all goals for this example hypothetical is £255,000. This should now be broken up monthly depending on length of engagement, making sure to build slowly and account for bigger campaigns where additional spend will be necessary.
Our recommendation for establishing a process for Facebook ads budgeting.
Google AdSense - How much to spend?
Start with a Test Budget. When you’re just starting out, you’ll want to contain your costs, because you don’t know what’s going to work. You’re in testing mode. It’s possible that your initial test campaign will be profitable, but you may only break-even, or you may lose a little money. I’ve created campaigns that were profitable right out of the gate, but you shouldn’t expect this to happen. Instead, your mindset should be that you’re investing in market research.
With your initial testing, you’ll gain insights into what ad messages are resonating with your target market, and you’ll also learn what keywords are converting into qualified leads and customers. Plus, you’ll be able to test which messages on your landing pages are working best for converting clicks into leads and customers.
What should your test budget be? You can roughly calculate your test budget by multiplying the number of keywords you want to test by the cost per click and by a minimum of 100 clicks. As a general rule, you’ll want to get at least 100-200 clicks on a keyword to determine whether it converts for you.
So, for example, if you’re going to test 10 keywords with a cost per click of £1, we’d recommend you plan on a test budget of £1,000 to £2,000. Most likely, you’ll have a mix of winning and losing keywords, ads and landing pages from this initial test. As we see the results come in, we’ll “prune” your campaign — keeping the winners, dropping the losers — to bring your campaign to profitability. …Then, Ditch the Budget. Once your campaign is profitable, you should ditch the budget. The most successful advertisers don’t cap their budgets. They know that effective advertising is one of the best investments you can possibly make in your business.
Think about it: If you’re investing £1 into AdWords and getting £1.25 or £2 or £3 or £5 in return, why would you want to put a cap on that? Assuming you want to grow your business, you should want to make that investment as many times as possible.
Focus on ROI, Not Cost: If you want to be the dominant advertiser in your market, you can’t just focus on managing costs — you must focus your energy on maximising your return on investment (ROI) from advertising.
example, a private client who spends more than £100,000 per month with Google AdWords. And he’s happy to do so because he earns a healthy profit on that advertising. In fact, every month, he’s asking for ideas for how he can invest MORE money into advertising!
Focus on EPC, Not CPC: You can’t just focus on cost per click (CPC). Many advertisers just focus on getting their CPC down. They try to write better ads to improve their AdWords quality scores so they can get cheaper clicks. But that’s only half the equation. Of course, you should always be looking for ways to make your advertising more efficient. But minimising CPC is NOT where the real leverage is located. Instead, the real leverage in Google AdWords is in increasing your earnings per click (EPC).
If you have the highest EPC in your market, you can outbid your competitors and gain more clicks, more leads, and more customers. That’s how you really win the AdWords game.
How To Calculate Your EPC: It’s simple. Just multiply your conversion rate (the percentage of people who click you become paying customers) by your customer value (the amount of money you earn, minus fulfilment costs, from 1 new customer).
Here’s the equation: Customer Value X Conversion Rate, For example, if an average customer generates £100 and you have a conversion rate of 1%, then your EPC is £1.00. That means you could advertise profitably on keywords with a CPC under £1.00.
But what would happen if you increase your EPC to £1.50 or £2.00? Well, you’d be able to profitably increase your bids and gain more market share. In our experience, when you can increase bids by 50% or 100%, you typically will gain much more than 50% or 100% more traffic (typically it’s a multiplier effective where you can get a TON more traffic). So if you really want to dominate your competitors in Google AdWords, you need to focus on maximising your EPC.