How Much To Spend On Ads When You've Made $0

Summary

In this video, Brandy from Life Marketing shares a four-step approach for small businesses to determine their ad spend, especially when they haven’t made any sales yet. She recommends starting with a budget of $500-$1,000 per month, focusing on one platform like Google or Facebook. Step two involves A/B split testing to identify the best-performing ads. Step three stresses analyzing return on ad spend (ROAS) to assess profitability. Finally, businesses should scale successful ads and turn off underperforming ones, constantly testing to optimize results.

Takeaways

• 😀 Start with a minimum ad budget of $500 to $1,000 per month if you're a small business with no profits yet.
• 🔍 Choose one platform (Facebook or Google) based on the nature of your product or service.
• 🧪 Use AB split testing to maximize ad performance by testing different variables like visuals, captions, or target audiences.
• 💡 Split testing helps identify the most effective combination of ad elements for better engagement and results.
• 📈 Focus on ROAS (Return on Ad Spend) rather than just conversion value to ensure profitability.
• 💵 Compare ad spend with revenue generated to determine which ads are truly profitable.
• 🎯 Keep an eye on cost per lead if you're not selling products yet, and use that to evaluate ad performance.
• 🔄 Turn off ads that are underperforming and reallocate budget to the most effective ones based on data.
• 🚀 Always be testing (ABT) to continuously improve ad performance and strive for better ROAS or cost per lead.
• 📚 Utilize resources like step-by-step guides for setting up Facebook ads, creating funnels, and learning from successful ad examples.

Q & A

What is the first step to allocate an advertising budget for a small business that hasn't made any profits yet?

The first step is to allocate at least $500 to $1,000 a month towards ad spend. If that amount is not possible, spend what you can, but try to aim for that range.

How should a business decide between using Facebook ads or Google ads?

If your product or service is something people search for on Google when they need it, then Google Ads is the better choice. If it's not a necessity or something people search for, social media ads, like those on Facebook, might be more effective.

What is A/B split testing, and why is it important for small businesses?

A/B split testing involves running multiple ads with only one variable changed in each (such as captions, visuals, or audiences) to determine which combination works best. It's important because it helps businesses optimize their ad spend by finding the most effective ads.

What are some examples of variables that can be tested in A/B split testing?

Businesses can test different captions with the same image or video, use different images or videos with the same caption, or run the same ads to different audiences to see which performs best.

Why is focusing on ROAS (Return on Ad Spend) more important than just looking at the conversion value?

ROAS accounts for the amount spent on ads and the revenue they generate. Even if an ad has a high conversion value, if it costs more to acquire those conversions than the revenue they bring in, the ad is unprofitable.

How is ROAS calculated?

ROAS is calculated by dividing the total revenue generated from ads by the total amount spent on those ads. It gives a clear picture of whether an ad is profitable or not.

What should businesses do after conducting A/B split testing and collecting data?

After gathering enough data, businesses should identify which ads are performing well and which aren't. They can then turn off underperforming ads and reallocate the budget to successful ads or use the data to create new ads to test.

How should small businesses approach scaling their ads?

Once an ad proves to be effective, businesses can scale by increasing the budget for that ad and continually testing new variables to improve performance further.

Why is continuous testing important for successful ad campaigns?

Continuous testing allows businesses to refine their strategies and find what works best, ensuring they are always improving their ROAS and cost per lead, rather than settling for average results.

What additional resources were provided at the end of the video to help businesses with their ad strategies?

The video offers resources on setting up Facebook ads step-by-step, creating and executing a Facebook ad funnel, and seven top Facebook ad examples from real case studies, which are all linked for further guidance.