In this video, teach you how important the size of your Facebook advertising budget is and the impact it can have on your cost per purchase.
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hey guys thought heads now want to talk about why ad budgets are so important and why really small budgets can literally destroy your chances of getting results for your clients and I'm not just talking about spending a little bit of money meaning you get less customers through the door but actually how a small budget can impact the cost per new customer acquired as well so first of all I'm going to be announcing the competition winner from last week's video in this video I'm to be doing this that midway through and I'll do that live for you guys so you can see exactly how I choose who actually win so that's going to be wicked and yeah let's get into the bottom of this video so I get asked this a lot and I see it pop up in my Facebook groups all the time people take me on clients with very very small budgets and wonder why they're not getting results and a massive massive misconception in Facebook advertisement an Instagram advertisement that is that if that's a it costs one pound together new customer let's say you're working with a restaurant and it's costing you five pounds to get a table booking now that's about the table that's a bigger I've just plugged out my ass so let's just say for argument's sake that this is costing you five pounds per table booking and you're spending a hundred pounds okay so you're getting twenty bookings for that hundred pound now if you've spent then spend fifty pounds that means that you're going to get ten bookings okay where have you spent 200 pounds that means you're going to get forty bookings that's what people think and that's how people think it works and it's not at all and I want to explain today why smaller budgets why little budgets can actually mean that you spend a hell of a lot more to acquire a customer than on at larger budgets okay doesn't just influence the amount of customers to getting through but it massively influences the cost per customer as well because it takes much longer for Facebook to find your ideal customer and optimize your advert and actually first of all I think it'd be really valuable if I go through what kind of budgets you should be looking for with your clients because I've seen people take on part of the most Pony of adverts spend and they're not getting any results and they're wondering why and enough enough you need to be working with clients who are prepared invest money who are prepared to spend money on guessing new business who are prepared to invest in themselves to get a return on the investment okay I'm fed up the same people Chuck like 50 pounds a month into Facebook adverts that think it's gone away that's not how it works at all okay so let's just say you're working with a client and you sign them up for 1,000 pounds per month regardless of the industry you absolutely at the minimum should be aiming for 50% of your service charge to be spent on advert additionally okay so the service charge and your adverts then are completely separate this is another common misconception people think oh do I take the end of the ad spend out of my service charge no your service charge is your service charge that's accurate separate and your ad spend comes directly from your clients bank account charged from Facebook okay so they your client bank account details their card details are set up on the Add Account they get charged every month automatically by Facebook your service charges your service charge you should not be paying for clients adverts out of that charge okay so if you're selling someone up for point one thousand pounds you should be saying to them you're going to be spending a minimum of five hundred pound a month on adverts right but you really really want to kind of assert yourself on seventy five percent or hundred percent or more because the more money that they spend on adverts the easier it is for you to get a return on investment the more money you're going to be making them the better you're going to look because you're going to be making them more money and they're going to be profiting more okay because you need to subsidize for your service charge you can't be charging someone a thousand pounds a month and have them spending about 100 pounds a month on adverts because you need to get ten fold your app spend before you have even broke even with the climb okay that's not even considering their profit margins so you need to pay for an absolute minimum of 50% week of service charge but ideally 75% a hundred percent or even more than that okay you get a card who's spending more ads than your service charge they're going to be the easiest client in the world to get results for okay now as a rule of thumb let's say you're working with a restaurant they need to be spending a minimum of five hundred pounds a month if you're working with an e-commerce business they need to be spending a thousand pounds a month if you're spending with dentist needs to be again about 500 to a thousand pounds a month minimum generally speaking I will not work with any business unless they are willing to spend five hundred pounds a month in fact nowadays I won't work of any business unless they're willing to spend at least 1,000 pounds a month an advert but when I first started it was 500 pound a month minimum in adverts because you've got enough money to test and you've got enough money to fully optimize your advert and make sure that you are getting the best bang for your buck for your clients anything below that you're gonna be getting service charges under a thousand pounds it's not really worth the time that you have to put into it that's my personal opinion you're more than welcome to but trust me when I say I'm speaking from experience it is not worth working with anybody who wants to spend less than 500 pound a month on adverts now what I want to do is I want to jump onto the Mac and I want to explain this to you by by drawing something out for you because I always explain this to people visually okay I want them to visualize this in their mind I always explain that our Facebook audience if you imagine a Facebook audience and the way Facebook works our Facebook audience is like a lake it's like it's like a big fishing lake okay the bigger the audience the bigger the lake and the app budget is the net that Facebook are throwing out into that Lake and the potential customers are fish that they are trying to catch okay so you see where I'm going with this what I'm gonna do is on the jump onto the Mac right now and yeah I'll explain this week okay so I'm just over on sketch to IO it's just a really simple website that I use to to demonstrate things visually for you guys so what I'm going to do is I'm gonna draw out free like this so as we said Facebook ad audiences are like Lakes okay in the larger the audience the larger the lake sighs okay so here we have a small audience we have a medium audience and we have a large one I'll just label these for you so small Indians let's just say for instance right from say this is like 50 K audience this is an audience of around 50,000 people it's a pretty small audience get rid of that let me just copy this so this one's a medium audience and this one is a large audience okay so mid let's just say this is sold UK this is under 200 K and then we have a large audience as well so a large audience which is let's to say is 1 million plus ok ok so inside these audiences we have our potential customers lots of little fishes ok so here are our little fishes that's it's a good awful fish but what we'll do is we'll take that fish there and I am going to load a fish okay so we got loads of potential customers all over the place all in these lakes and what I'm going to do right now is I'm just going to finish filling out these fishes in these lakes okay so we've got our fishes we've got our potential audience and and obviously the the larger the audience the larger audience the more potential customers there are inside this lake now what you need to understand now as well and sort of change this color here what you need to understand is that a Facebook ad budget right it's like a fishing net okay so let's say this is a small ad budget this is a medium ad budget this is a larger budget okay and for argument's sake again let's just say I'm making us off of the top of my head let's just say this small budget is like 100 pounds or like yeah so this is this is this is $100 okay and let's just make this a little bit smaller if we can okay $100 then our medium budget is let's say $500 and our large budget is over $1000 so it's 1k plus okay now obviously budgets can range anything up to like 20,000 40,000 hands depending on the business but we're just doing this for demonstration purposes so you can understand this now if we're working on a small ad budget and a small audience size what Facebook's do every day when you allocate your five pound a day adverse event when you're testing out advert does they even cast this net into your bed there they're like and they will try and find a fish okay so let's just say that costs are now on the first day this is Monday they've cast the net they've caught no fish so what they then do is they cast the net again and they've caught no fish and then they've caused custom there again they found a fish okay but I by this time you've already spent three days worth of advert budget okay because they're constantly casting and they don't cast once a day they're casting multiple five times throughout the day okay they're throwing your adverts out there to these audience but your budget and your net isn't possibly big enough on a hundred pounds a month to cast out and reach the whole audience there okay so you're just casting out this small little net hoping to get a fish and when your Facebook get a fish when Facebook a potential customer or they've actually made a sale for you that you will carry on casting in that similar place okay so they're going to cast here they're gonna cast a little bit here they're gonna cast here catch another one and then they're going to come across this nice pool of fish and this is when the ad is fully optimized okay they have found this pool of fish and they're gonna carry on casting in this area because I know this is where the top fish like to hang out this is where the top customers like to hang out but I have wasted a lot of money doing this casting all over the place which means your cost per acquisition is going to be pretty expensive so let's just save argument's sake again your cost per acquisition here is five pounds and I hope you're with me hey guys this isn't pretty advanced stuff for you to understand so let's just say the cost per acquisition here is five pounds cost per acquisition okay so this is how much you are spending to get a customer because you've wasted a lot of money casting in the wrong places now let's just say we had our small ad budget and we are on a medium audience or on a large audience do you imagine how hard it is for Facebook to find these fish how much longer is it going to take for Facebook to find these fish and optimize the advert and again with the large audience now you can see why it is so hard do you have a small budget and a large audience even a small budget in a small audience is hard enough right but let's just say we have a larger budget let's say we are spending $500 a month okay and we wanted to cast that into our small audience we're gonna find them fish a lot quicker okay we're gonna find them and optimize in much less time okay so that 5 pound cost per acquisition could actually end up being 3 pounds for example $3 on our medium on our medium sized budget okay because we have a larger net to cast out okay and then we have our lot of really large budget pick and then get them fish straight away because we're got a very large budget and a very small audience so we can actually get our cost per acquisition down to let's say 2 pounds okay and again this is just throwing figures out in the air okay now let's just go on this again if we're using a medium budget and we're casting a medium audience sighs we're getting pretty good we're going to be getting fish there's not many places where we've got playing spaces medium budget on a large audience is not ideal okay now we're starting to to fill the gaps a bit we're going to be wasting money it's going to cost us more to get a customer but a large audience on a large budget we've got a large net cast out we're going to be finding this sweet spot this is the Holy Grail we want to be finding this this is when I act and are fully optimized okay so I hope this is making sense for you guys what I'm trying to say here if small budgets are no good okay small budget just even on small audiences are no good you're gonna if you're spending a hundred two hundred pound a month on adverts you are never gonna reach your full audience good enough you're not gonna reach them in enough time to get a good cost per acquisition the larger the budget that quickly you are going to find your fish and the smaller your cost per acquisition is going to be so it is not the case that you spend $100 on adverts and you get let's say you're spending $100 in adverts and it's going to cost you the same amount of money to get a customer as it is with $1,000 okay $1,000 at that budget it's going to cost you much less to acquire a customer so you're going to get more customers and they're going to be cheaper so it's an absolute no brainer with a small budget you're going to get less customers and they're gonna be more expensive because it takes longer for Facebook to find the fish for Facebook to find them so a larger budget will always win okay and I hope this is making sense to you guys I hope this you're following this video and make sure that when you're working with your clients you are always aiming for the medium to large audiences the larger the budget but medium to large budgets the larger the budget the better do not accept anything less than 500 pounds $500 because you are not gonna be having a big enough net to find the fish okay and this is also the reason why some adverbs you could launch five adverts which are exactly the same going to the exact same audience but some of them would perform better than others only because Facebook have cast their net in the correct place out of chance okay there was a lot of charge for Facebook first you could have a 500 pound advert budget on a month and you could have this is your net okay and this is this exact same audience and you can have five advert of the exact same nature go into the exact same audience with the exact same net size but you are getting better results on one or two of the advert because of luck because Facebook managed to cast the net in the correct place in the first place okay and that is why some advert performed really well and some adverts don't even though they have the exact same copy and exact same audience okay guys what we're going to do now is I'm going to announce the winner of our YouTube competition so YouTube's comment to pick up I think there's a there's an app I've used before so let's just find app and random comment picker here we go so we're gonna go over to the video and I'm gonna take this link and I'm going to copy that kinda guides here with a paste that in get YouTube comments 105 153 people enters start that raffle and here we go Joe Vaughn nice work his goals are to land his best suit clients in April Network learn more and learn some more okay wicked Joe I'm gonna find you on the the video and I'm gonna comment on your comment right now here you are you post with one day going I swear plan I am gonna comment on your video right now congratulation congratulations and I'll carry on that's in a moment okay you guys I'm gonna take you back to the camera one moment okay guys we are back I hope you've got loads value from this video congratulations Joe and so load this up again and I just want to quickly recap on this because it's really really important that you understand this and you understand a small budget on no good okay because small budgets do not even compete with larger budgets it doesn't just mean you're then you're getting less customers it means that you're going to get in more expensive customers as well because Facebook's net is too small to throw out in that light and catch fish quickly ok larger budgets are going to optimize quicker they're going to catch fish better because I can throw a big net out into the lake they combined the best straightway and start casting in the same place and start optimizing very very quickly and this is crucial when you're working with clients you need to add votes to optimize very quickly because if you're working on even a 500 pound a month budget okay you're spending five dollars a day five pounds a day on testing adverts okay you can't be waiting a week or two weeks until they find the fish because you'll have spent half your ad budget you need to get them optimized quickly which means you need appropriate budgets for your appropriate clients service and now appropriate audience okay if you're working with an e-commerce applied this is why you need a thousand paddle my budget plus because the audiences are large the audience is our 1 million plus ok notions are very big with brick-and-mortar businesses generally speaking your audiences are going to be around their 150,000 marketplace so medium budget under 500 pounds is going to be about right if you're working with anything less than that I would advise you wasting your time ok I hope you've got loads of value from this video guys please do share it with somebody you need to see this who's being confused about the matter you've got any questions please do drop them down below and I'll be happy to help you out Cheers