Online paid advertising is integral to any business, but knowing how to do it right is a challenge.
One question we always hear is ‘How much should I spend on ads?’
The real answer is that there’s no right answer.
Confused? Well if you are, stick with us and let us explain.
We’ll talk through a few helpful ways you can decide if you’re spending too much or not enough.
Running ads is like investing in the stock market. The more money you put in, the more money you could get back.
However, if not done correctly or without education, you could lose it all.
Forgive us for the doom and gloom vibes, it’s just the cold hard truth.
Anyway, without further ado, let’s shift the talk to a more positive note and share some juicy tips on getting that ad budget correct!
Why Are You Running Ads?
There could be a number of reasons you want to run ads for your business. They are important to get your brand noticed and persuade customers to do business with you.
Here are a list of reasons that you might want to run ads for your business:
More Impressions & Engagement
If you just want more eyes on your business or a bit more engagement on your posts, then we’re talking brand awareness and your budget should be – put simply – however much you are willing to spend.
There usually isn’t an immediate monetary return on investment for brand awareness ads, so we suggest looking at it more like a billboard.
Would you pay £200 a month for a billboard in a residential area with a small stream of people looking at it every day?
Or can you pay £150,000 monthly for a billboard in Times Square?
Let’s face it, a billboard in Times Square with your business on it would be pretty darnn cool.
Sales & Leads
Aiming for sales or leads is different to the billboard scenario.
Instead of buying a billboard and hoping some people might remember you, think of an ad platform instead e.g. Meta, Google, TikTok etc.
They hand-select users they think might be interested in being a customer of yours based on the targeting information you give them.
Adverts are then deployed based on data that they collect and shown to these audiences!
The Sweet Spot
Our team runs thousands of ads each year, and from the data we collect and analyse, we see a common spending bracket that delivers the best results.
Keeping in mind how much you’re willing to lose, we suggest doing the following:
Calculate your average product or service price, and multiply this by 3-5.
This is the sweet spot.
(Average Product Price) x 4 = Good Starting Spend for New Ad Campaigns
This spend usually gives you, your ads manager and/or the platform enough budget to test what works and what doesn’t – whilst not risking too much.
Of course, this is a rough estimate as this may not work for all businesses.
But give it a go!
Just be careful, we don’t want you blowing that budget like a shopaholic with an Amex gold credit card!
Ad Expenses To Remember
When running online ads, you’ll more than likely run into other expenses along the way including;
- Content marketing – photography, graphic design, videography.
- UGC content.
- Landing page creation.
- Sales team expenses.
- Paid Media specialist retainer.
Things to Consider
Whether you’re running ads for the first time or making some changes to an evergreen campaign, your ads will enter the dreaded zone of ‘the learning phase’.
This is a time where your chosen platform will test your ads to see which audience it resonates with the most amongst other things.
Depending on which platform you use, this could last anywhere from a few hours to over a week.
In this time, you could see your ads spend your full budget and get 0 results.
Don’t fret, this is completely normal.
Unfortunately, you just need to hunker down and wait it out before you make any optimisations to your ads.
What’s This Got to Do With My Budget?
Generally, the higher your budget is, the more people get to see your ad, this means that your ads platform can do all the testing it needs to, in a shorter time.
If you spend £20 a day, you could end up spending 8 days in the learning phase but if you’re spending £200 a day, it could be 2 days.
There are many variables out of our control when it comes to the learning phase, but this generally works on most accounts and on most platforms.
Which Ad Platform Should I Use?
The budget advice above tends to work best on social ads, however there are now hundreds of ad platforms to choose from…Google ads, Meta ads, LinkedIn, TikTok, the list goes on.
But, it’s important to note that all platforms may cost you different amounts.
Before choosing which platform to use, it’s best to research where your target audience is and which you can afford.
Different platforms may charge you in different ways so it is best to decide your budget first, then see which one fits best, while also considering which platforms your target audience might prefer.
As a digital marketing agency that runs many successful ad campaigns for a number of different businesses, we kinda know a thing or two when it comes to ad spend.
So, if you’re a business owner and want to know more about advertising your brand online then please reach out to us today.
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