A question we get asked a lot is: how much should I spend on my Facebook ADS?
Its a difficult question to answer, because it depends on your goals and how much you want to spend on marketing.
The more important question is: are my adverts cost effective? Or am I spending more than I am making?
The most important number in Pay Per Click marketing is the cost per conversion (also know as ‘cost per action’ and ‘cost per result’) This is the amount of money you need to spend, on average, to get someone to take the action you want them to take. This number varies wildly between industries but the average is about £10-15. For Martial Arts schools this is the cost of someone booking a free trial lesson on your website.
If you have your conversion tracking set up correctly on Facebook, you will be able to see this number on Ads Manager for every campaign you run:
If you know this number, you can work out if an advert is profitable to you by comparing it to the amount a student is worth to you.
We’ve designed the below calculator to help you work this out. You can enter your average monthly leads, sign ups and average student cost to find what your maximum cost per conversion should be. (This calculator assumes students stay a minimum of 3 months, on average) So, for example, if you had 50 leads per month and signed up 10 students your Trial Booking to Student Conversion rate is 20%.
If you charge an average of £45 per month, per student and a student stays 3 months then a new student is worth, at least, £135 to you. So if you are spending more than £27 per Free Trial booking your ads are losing money.
If you are spending LESS than this, then your campaign is successful and you can scale up your monthly spend to get more students. Obviously the ideal would be to spend much less than this, many in Digital Marketing aim for ads to provide 4x return on ad spend – so divide that final figure by 4 to get an ‘ideal’ amount – but if you are spending less than you are making that is a successful ad!
Try it yourself here:
You can find more Digital Marketing guides and tools on the NEST toolkit.
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