Small Business Marketing Budget Example
Let's talk about what is a rational marketing budget for a small business.
This is the kind of conversation that I have with a lot of small business owners and online marketers who are looking to boost their conversions.
The total for a Facebook Ads campaign is in the range of $3,000 to $6,000. I use Facebook Ads because it has the largest audience in the world and has always been very effective to make that small business conversion.
The next tier is to use Instagram Ads, from $250 to $500 per day. I also use this Facebook Ads channel to achieve growth.
Then there are LinkedIn Ads, which I also use for growth and an increase in conversion rate.
But I avoid LinkedIn Ads in general. It is a very expensive advertising channel for very little return.
Of course, there are the more expensive Adwords channels like Google Display Network, which are good for targeting specific audiences but are expensive.
When you consider the cost of the ad space, the conversion rate, and the relationship with your customers, and ROI campaign with Facebook or Instagram ads is the most cost-effective option for your small business marketing. But you need to get creative.
What the heck is a "reasonable" marketing budget?
To be completely honest, most businesses do not have a rational marketing budget.
Some are at the luxury end of the scale and know they cannot spend more than $100,000 per year on their marketing efforts.
On the other hand, many others have small budgets.
So how do you get to a "reasonable" marketing budget for your business? Let's start with the revenue/customer size (if applicable) for your business.
We have covered the above, so just imagine for the sake of argument your business earns $100,000 per year, so $100,000 x 1,000 = $10,000 per month.
That means a $100,000 spend on advertising would buy you a few thousand new customers.
So a very small marketing budget works very well for small businesses, especially if you keep that marketing spends in a manageable range and have a realistic view of your conversion rate.
Once you have the budget, here are some key factors to consider:
Does your business have a steady stream of new customers or does it have an "on-and-off" volume?
The ideal ratio of customer acquisition costs to monthly/quarterly sales is around 1:1, meaning the cost of acquiring a customer is equal to 1% of your monthly/quarterly sales.
That is probably a little too expensive for your business's financial needs, so for most businesses, this is not realistic.
You have to decide how many customers you want to acquire for each $100,000 spend, as this ratio will determine how often you need to run ads.
But what is the maximum number of customers you want to attract per month?
Once you have the maximum number of customers, it is easy to decide on the price range you want to set your Facebook ads at.
The cost of the ads
Once you know the amount of money you want to spend on your Facebook ads and the right price range you want to set your ads, here is a quick guide to getting the best return on your money.
Aim to achieve a 50% return on your money with your Facebook ads. So your Facebook Ads could be running $10,000 per month.
The key to your return on advertising money is to have a clear relationship with your customers (reviews, good reviews, positive feedback, etc.).
That way your ads will be seen by those people and they will click through to your website or download your free sales page app.
The ad copy
The copy of your ads needs to be simple and clear. It should explain what your product does and why they need it, then it needs to convince the customer to make a purchase.
Keep your audience in mind when designing your ad copy. Aim to attract the audience that you want to attract to your website or your app.
For example, if you want to attract customers from the "working man", then the ad copy should be simple and not over-friendly.
Use words and sentences that are not frequently used in conversation and avoid using names of competitors or industry names in your ad copy.
An excessive copy is not good for Facebook ads. If your ad is too long or too complicated, it is not going to get the best engagement.
Keep it short and use the short copy.
There are plenty of tools online that will allow you to design amazing Facebook ad copy for free
Use these free ad writing templates to keep your costs low.
We have not covered many aspects of Facebook advertising in this article, but the ones we have covered should be enough to get you started.
The next article of the series will cover Facebook ads in more detail and talk about how to effectively measure your results and get the most out of your ad spend.
Facebook advertising is one of the most effective ways to get customers in today's business environment.
It is more and more important for businesses to invest in Facebook advertising to grow their businesses.
You can see how your traffic is growing by using Facebook Insights. It is a powerful tool that will help you see which of your ads have worked and which have not.
You can start small and use a low budget and invest in ads to see if they are effective and then slowly increase your budget as you see results.
There is no need to give up after a few weeks or months. Small changes over a long period of time can have a big impact on your business.
If you need help setting up Facebook ads and how to get the best results, get in touch with us today.