How Much Should You Spend On Ads?

How Much You Should Actually Spend on Digital Advertising in 2021

A special edition of the CMO survey from June 2020 shows a strong focus on how brands put the customer experience first in a difficult year. Companies have adjusted their investment in the customer experience from 16.7% of marketing budgets to 15.2% in the February 2020 survey.

A 2019 Gartner study reports that marketers plan to spend 26% of their marketing budget on marketing technology in 2020, up from 29% in 2019, making it the largest investment area for marketers, followed by labor, agencies and paid media. Investment in training and development has taken a hit in this difficult year, but an August 2019 CMO Survey showed that planned expenditure on marketing training and development has reached a five-year high with 58% of marketing budgets being spent on training and development. A June 2020 survey estimated that 86% of revenues would be marketing on average, with spending rising to a whopping 114%.

The higher your profit margin, the more you can afford to spend on marketing and advertising. Determining the best advertising budget for your business depends on your industry, firm size, history, existing digital presence and business goals. The level of competition will help you determine how much you spend per ad dollar.

If you are a brand that makes a lot of money, I recommend you invest 10-30% of your sales in advertising. If your business earns $100, you should spend 10% to 30% of that $100 on paid advertising. When you spend money on Facebook, you don’t spend money to buy anything from customers. For this you can choose to hire a growth hacking agency for your business.

If your average purchase cost is $11, you would have to spend $550 a week or $2,360 a month on Facebook ads. This requires stage three (instead of stage two), where you focus on improving your ad creativity and audience to achieve lower purchasing costs.

When I am asked what is the minimum to start with and how much to spend on Facebook advertising, I like to divide it into three levels to answer these questions. The right amount of budget to start with Facebook ads depends on the average cost of your products per purchase, your risk tolerance and your overall advertising budget.

I hope that this guide will help you decide how much to spend on your Facebook ads. If you’re looking for the absolute minimum you can spend on Facebook ads, even a single dollar can make a big difference. After all, Facebook advertising is a profitable platform for companies of all shapes, sizes and budgets.

Your marketing budget should cover all the costs involved in marketing your product or service – including things like print ads, promotions, demonstrations, exhibitions, public relations, social media, free product samples and giveaways and any costs covered by Google AdWords. This includes opening an Instagram account, posting on Facebook, and focusing on Pinterest and focusing on the one channel that has surpassed the others for your audience in 2018. Most companies spent between $200- $350 per day, $4,000-7,000 per month and $48,000-84,000 per year on their social media marketing budget.

Digital marketing budgets averaged 4.2% of the total marketing budget in 2019 and are expected to increase to 4.5% by 2020. The US Small Business Administration suggests that 7% to 8% of your gross revenue should go into your marketing budget. You should spend a large portion of your budget on mobile marketing and your most powerful channels.

If your business has a turnover of more than $5 million, the US Small Business Administration recommends increasing your marketing investment from 12% to 20% of turnover. This makes sense, but if marketing does not produce a positive ROI, management may have little faith in it. Even if a company has a profitable systemic marketing program, a company’s cutting of its marketing budget is one of the worst things a company can do.

Before you decide how much to invest in digital advertising, you should work out your company’s revenue goals. This will help determine how much revenue your digital ads generate and how much investment you need to achieve this goal.

Combine multiple ads running simultaneously for more detailed analysis, and you will find it easier to answer this question. Test budgets can be used to determine the best ad strategy, but they can also lead to failure.

Every business is different, and the best strategy for you to answer the looming question of how much should you spend on Facebook ads is to allow you to appeal to users, run multiple ads simultaneously and use the right types of ads to spend them in the first place. We encourage you to look deeper into the goal and avoid spending money on advertising campaigns that do not deliver the desired results. One of the problems we see often with small business owners is that they create a Facebook ad to spread a post and hope to make something of it.

As it turns out, social media advertising is calculated in the same way as every other form of advertising: money is revenue. The results and answers you get from your tests are key to the success of Facebook ads. Once these metrics are checked in with a Facebook ad manager, a few changes can be made and the next campaign can follow the same practices.

Apart from not spending your last dollar on Facebook ads, you should never invest a significant amount of money in any advertising channel without first testing it. It’s about finding a good balance between the channels that will make your business friendlier.

As consultants to caterers and small businesses, we are often asked how to create the right marketing budget. By digging a little deeper and building an accurate marketing budget, you can analyze how your customers treat you.

As you can see, the ideal budget depends on your current marketing foundation. The US Small Business Administration recommends putting 7 to 8 percent of your gross revenue on marketing and advertising if you make less than $5 million in sales per year and your net profit margin is in the range of 10 to 12 percent before expenses. If your company earns less than this amount, the SBA advises you to spend 7-8 percent of this amount on your marketing budget.

For example, a $500,000 company can spend between $35,000 and $40,000 a year on marketing and hiring a growth hacking agency. If you break that down into an annual budget of $50,000 a year, that’s $3,300 a month spent on marketing alone. It is important to reinvest some of your income into your business so that you can continue to grow or at least maintain your position in your market.