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Dann Albright on September 9, 2020 (last modified on March 29, 2023) • 16 minute read
Last summer, we published a report wherein 63% of marketers said that Facebook marketing had become strictly pay-to-play.
Feel the same way? Well, youâre not imagining the decline in your organic reach.
In 2014, due to the amount of content being published to the Facebook news feed, the social media giant refined its algorithm to show more relevant content to its users rather than all of the content.
Then, in early 2018, Facebook announced that âweâre going to shift ranking to make News Feed more about connecting with people and less about consuming media in isolation.â
The result has been a steady decline in the organic reach of your brand page. (According to our own research, 67% of marketers say reaching their audience organically on Facebook has gotten harder in recent years.)
One way to counter that? Spending money.
In fact, the majority of companies (both agencies and SMBs) polled in this Databox’s study on Facebook ads said their budgets have increased in 2021 (compared to 2020) and expect their Facebook ads budgets to increase further in 2022.
By advertising on Facebook, brands have more control over who sees their message, and perhaps more importantly, the number of people that actually see it.
But how well does it scale? In other words, if we increase our ad spend, will we also increase signups? Leads? Customers?
To find the answer, we surveyed a couple dozen agencies on both the effectiveness and scalability of Facebook advertising.
In this post learn:
According to Facebook, A budget is the amount of money you want to spend on showing people your ads.
Like the cause and effect rule. How much youâre willing to pay can have a significant impact on your ROI all things being equal.
Itâs also important to note that there are two types of budgets – daily budget and lifetime budget.
As the name implies, this is the amount of money youâre willing to spend on an ad set or campaign every day. This is useful as youâre able to adjust your ad spend and plan ahead especially if your budget varies day-to-day.
Lifetime budget is determined by how much youâre willing to the spend for the entirety of the campaign or ad set
The short answer is – it varies from business to business.
Depending on the goal of your campaign or the type of ad campaign youâre running, your budget might need to be more or less. For example, you might not need to spend as much if itâs a retargeting campaign compared to an ad targeted at a cold audience.
Also, according to a 2018 study by AdEspresso where they assessed over $636 million of Facebook ad spend, the average CPC figures based on the following objectives were:
While the average cost per like is $ 0.16 and cost per app install is $0.65.
92% of the marketers we surveyed said that Facebook ads are at least somewhat effective at generating sales. 54% said theyâre âvery effectiveâ and only 8% said that Facebook Ads are ânot effectiveâ in generating downstream impact.
Next, if youâre seeing success in your advertising efforts, do you continue to increase the investment?
The answer is complicated.
Most marketers say yes – spending more money on Facebook ads will result in more sales. But there are a lot of âifs.â
Here are 8 factors to put into consideration before increasing your Facebook Ad spend:
Want to make sure your Facebook ads are performing and trending in the right direction? There are several types of metrics you should track, from costs to campaign engagement to ad-level engagement, and so on.
Here are a few weâd recommend focusing on.
Tracking these metrics in Facebook Ads Manager can be overwhelming since the tool is not easy to navigate and the visualizations are quite limiting. Itâs also a bit time-consuming to combine all the metrics you need in one view.
Weâve made this easier by building a plug-and-play Facebook Ads dashboard that takes your data and automatically visualizes the right metrics to give you an in-depth analysis of your ad performance.
With this Facebook Ads dashboard, you can quickly discover your most popular ads and see which campaigns have the highest ROI, including details such as:
And more…
You can easily set it up in just a few clicks – no coding required.
To set up the dashboard, follow these 3 simple steps:
Step 1: Get the template
Step 2: Connect your Facebook Ads account with Databox.
Step 3: Watch your dashboard populate in seconds.
Letâs start with a big one.
Spending more money on Facebook ads will get you more sales . . .
âYour ads can be the most engaging and memorable ads on social media,â says Keri Lindenmuth from KDG. âHowever, if you donât have a sales team thatâs able to listen to customers and their needs, you wonât make as many sales as you hoped.â
âAds are a great way to grow engagement but donât forget about ensuring your sales team meets the same high quality.â
Of course, this applies primarily to B2B companies and B2Cs with high-price items. But the point stands for other products, too. You can grab peopleâs attention with a Facebook ad, but the product (and people) still need to sell.
Our research suggests that many companies donât expect direct sales from Facebook, but rather leads that the sales team can turn into sales.
42% of agencies say that lead generation is most important to their clients when running Facebook Ad campaigns. (More important than actual sales at 2nd with 34%.)
Keep in mind that youâll need to adjust your strategies and expectations based on your goal.
Hereâs Blake Aylott from Common Thread Collective on audience size:
âIf your product has a large audience then you can afford to scale your ads and put a massive amount of money into your ads. However, if your audience is niche then you cannot scale your Facebook ads because you will run through your audience quickly.â
James Pollard from The Advisor Coach gave an example from his own business: âFacebook is often very good at spending your money efficiently. You may max out your budget and only reach 90% of your target market.â
âHowever, youâll typically spend much more trying to reach that last 10%. If your typical Facebook CPC is $2 or $3, it wouldnât surprise me if you spent more than $5 per click to reach that last part of your audience.â
âBecause I help financial advisorsâwho usually have a small target marketâI see this problem all the time.â
HealthJoyâs Rick Ramos gave a great example of the importance of audience size: âIf you are a toothpaste manufacturer, basically, everyone can be your audience. Iâve seen a bunch of ads lately for Hello toothpaste. Their target is anyone with teeth.â
On the other hand, âFacebook advertising can be scaled to continue to have a positive return on investment as you raise spending, provided you continue to test ads that are being run and can target a large enough audience. A local car repair shop will begin to experience diminishing returns as spend is increased because the possible new business opportunities are limited,â says Vincent DeCastro from SEO My Business.
âWhether you can scale your ads on Facebook depends on how much room you have left to grow,â said Rick Kranz of OverGo Studio. âIt doesnât always equate to spending more money. Yes, in the broad B2C market there is usually some room to scale once you have your offer nailed down. But in the narrow B2B niche it is more about finding the right combo of offer, objective and audience. Just spending more money usually has a diminishing return.â
âFacebook Ads can scale well when the increases are done strategically,â says Etched Marketingâs Rachel Lindteigen. âPeople get in trouble when they try to increase too much too quickly.â
âItâs best to test and scale slowly, increase your budget by 25% at most, allow a few days for results to come in, and then scale again, if desired. Increasing too quickly can cause the ads not to scale because the algorithm needed more time to learn about the adâs performance.â
Casey Hill from Hill Gaming Company also emphasizes the importance of Facebookâs ad algorithm.
âWhen you change your budget, it resets the algorithm and this can impact sales. So for my clients, we start with testing different iterations over the first few weeks and finding the winner in terms of copy, image, and targeting.â
âThen when we double down our budget on that winner, we first make sure we have a sufficient timeline to deal with a re-adjustment and monitor the clicks/sales closely over the next few weeks.â
âIf you are patient, the ROI of the curve is clearly âSâ shaped in our experience,â says BEE Inboundâs Lanny Heiz.
âDue to the decreasing marginal returns, scaling is limited, and the marginal gains will flatten out above a certain point. To kickstart the Facebook advertising algorithm a learning period is needed.â
âThe more money is spent, the more data can be gathered; thus more learnings can be taken. In the beginning, the curve of scalability grows linearly/exponentially and only later flattens out.â
Clarify Capitalâs Nishank Khanna sums up the importance of targeting: âThe key is to stick to targeting that drives qualified leads that convert into sales. At the end of the day, nothing else matters except closed sales.â
Zach Hendrix from GreenPal shared a great story about how his company used good targeting to help them scale their Facebook ads:
âIn a recent campaign we ran in Nashville, TN, we ran a pay-per-click FB campaign with one ad targeting the entire metro Nashville area. The headline read âLocal Lawn Pros in Nashville are a click away.ââ
âAnd I thought the performance of the ad was good with a click-through rate of over one percent and conversion rate of over 10 percent on the Nashville landing page but we needed to improve on it. We thought, how can we make this more contextual and relevant to the viewer? [So] we researched census data, looking at the average income and home values throughout the Nashville area.â
âWe found that East Nashville, an up-and-coming neighborhood, was populated with more working class, and a creative class demographic and we hypothesized this customer segment would be price sensitive but still not want to cut their own lawns.â
âSo we segmented those zip codes and only ran a specific ad for them, with a headline âThe Cheapest Lawn Mowing in Nashville. Lawn mowing from $20.ââ
âWe then created a matching landing page. After running the ad for one month, on-page analytics proved the guess to be true. We saw over 200 percent lift in click-through rate and 30 percent lift in on-page conversion.â
âStudying the data your own business generates can tell you which of your online marketing campaigns works best. Do the ads appeal to your target market or another market altogether? The data may also point to completely new areas of customer interest.â
âIn addition to spending increases, itâs primarily the quality of your content and the specificity of brandâs messaging that sets the leading organizations apart when speaking about ROI,â says Ian Revling of Evolve Digital Labs.
âDonât deliver product catalog based websites or bland images of your product to consumers, thereâs too much content on social to compete with userâs family and friends. Successful and profitable social media campaigns deliver potential consumers their products in real-life situations that they can empathize and interact with.â
Daniel from Amp My Content also prioritizes great content in Facebook advertising:
âRight now weâre running Facebook ads and seeing a $22:1 ROI⌠but our results are not typical. Weâre running ads to content, that content converts leads, and then we have automated sales processes in place.â
âBecause we push to content, we usually see lower lead cost, and higher relevanceâmeaning the ad cost lowers also.â
âYou can spend more and see more salesâbut itâs not uniform. Also, youâll see far better return and lower cost, pushing to lead capture than offer alone.â
Lightning AI has managed significant Facebook ad budgets, says Colette Nataf. âBy aggregating our data, weâve found that at very low volumes, Facebook scales easily, but we see exponential increases in cost per conversions starting at spends approaching $5,000 per week.â
âThis means that for advertisers who are starting out, Facebook is a really effective channel in terms of costs.â
âBut once advertisers are scaling up to more than $20,000 per month in ad spend, even though the CPMs or CPCs may stay in the same range, the cost per conversions increase steadily. Weâve found this is true regardless of the advertiserâs industry and product that they sell.â
âFor advertisers who are looking to scale up on Facebook without seeing an increased cost per conversion, there are three options,â says Nataf.
âFirst, test new ads and creatives all the time. Second, test and optimize your funnelâeverything from your landing page to your add-to-cart payment portal. The third option is to find and create new audiences.â
âWeâve found that rapidly creating and testing new audiences allows advertisers to increase scale with new types of audiences, which can help to stabilize the overall cost per conversion in the account.â
Additionally, by regularly testing new ads and creatives, advertisers can also reduce Facebook Ads CPM, leading to lower overall ad costs.
Many marketers pointed out that spending more on Facebook ads can be very effectiveâif your targeting, messaging, copy, creative, and other factors are working well. Here are a few questions to ask yourself:
âIncreasing the budget on Facebook ads will effectively boost the sales only when three conditions are met,â says Andrzej Muzaj from CrazyCall:
âIf youâve hit the roof, itâs time to look for ways to broaden your audience. And if youâve spammed your target audience to the death, your sales will rather drop then go up.â
âIf you havenât taken the time to create a strong foundation of targeted audiences, dynamic ad copy/creative and precise ad placement, then no, you wonât generate more leads by simply throwing more money at your campaign(s),â says Intuitiveâs Rachel Bills.
âHowever, when youâve taken the time to build audiences for the different parts of your conversion funnel and curate a narrative with your ads that solve a userâs problem, then Facebook scales swimmingly.â
Every company needs to find what works for their industry and business model.
âFor example, florists may have a Facebook campaign that scales around Motherâs Day, but on a random weekday in October will be unable to use Facebook as a channel at all,â says agency marketer Josh Meah.
Other companies may find that they have seasonal cycles as well. Or that Facebook ads donât work as well for their particular industries:
âBased on our experience and about a yearâs worth of data, Facebook advertising is very effective for some industries, like real estate/rentals, and can be a less direct impact on sales for other services,â according to Deltaâs Theresa Keller.
Finally, remember that sales volume isnât the only measure of how effective ads are, says Max from FishTankBank.
âIf youâre showing ads to a new audience then youâll have a hard time generating any sales. However, there are less measurable benefits (brand awareness) which make it a worthwhile endeavor.â
Step 1: Go to your Ads Manager
Step 2: Click on Ad sets and then navigate to the specific ad set or campaign youâd like to adjust the budget for.
Step 3: Click on Edit
Step 4: Adjust your budget and confirm.
Voila!
In conclusion, marketers generally agree that spending more on Facebook ads will generate more sales if you can satisfy a range of conditions.
What about you? Have you seen increased sales because of an increased Facebook ad spend? Or have you found that your industry doesnât work that way? Share your thoughts in the comments below.
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