How Much Should You Spend on Social Media Ads? A 5-Minute Guide

Wondering how much you should be spending on social media advertising for Facebook, Instagram, Twitter, etc?

For the majority of businesess wanting to generate consistent growth on social media, an advertising budget is a must.

Obviously the limits of your company budget will affect how much you have to spend on social media ads (ranging from tens of dollars to thousands per month), but as for how much you should spend, it’s all very circumstantial. Here are some things to consider:

Your total monthly budget

Once all expenses other expenses are factored in, how much money will you have available to allocate to social media advertising?

Your product or service

The kind of advertising budget you need (or more so, how far the budget you set will go) will depend on the industry you are in. Some types of products (those with a lot of competition in the marketplace) will hit your budget harder than a very niche product, whose audience is a lot smaller.

Types of ads you want to run

Simply put, different types of ads command higher fees to utilise at their entry level, e.g. video ads are typically more expensive than a single static image. If you want to run long, media-rich video or stories ads, your ad spend is generally going to have to be higher.

Your budget for A/B ad testing

Creating just one social media ad and crossing your fingers it will succeed isn’t much of a sound strategy. When you first launch a campaign, you’ll want to test multiple different ads that are slightly different in a variety of ways (and budget for it accordingly): different image, headline, call-to-action, etc. Once you’ve given the ads a few days to bed in, you’ll be able to knock a few out to concentrate on the ones that are. And within that subset, you’ll want to A/B test further until your ad is as optimised as it can be.

Your Goals and KPI

Before you launch an ad campaign, you need to have a main goal in mind (e.g. sales, traffic, brand awareness) and detail out some key performance indicators that will tell you if you’re meeting your main goal. For example, if you’re aim is to drive a purchase of a product that sells for $30, the effectiveness of your ads should mean that your spend is making it worth your while.

On this point, you may want to increase your spend up until the point of diminishing returns: where your return on investment is down to a margin that you are no longer happy to throw money at.

So, how much should you be spending on social media ads?

The truth is that the amount you should spend on social media ads will differ for every business, and that there is no one perfect dollar figure or ratio. The key ad spend figure is the amount that delivers you the largest profit for your product in the current market right at this moment.

And once you’ve found a near-enough sweet spot once, always keep testing and experimenting. All kinds of factors, from historical trends to current events, to holidays, a change in your audience, etc. will always influence the performance of your ad, and therefore your eventual ad spend.

To get yourself started, set yourself up with an Excel spreadsheet and monitor your ad spend and performance monthly.

What are your best social media ad tips? Let me know in the comments below!

Andrew Macarthy is a social media consultant and the author of the #1 Amazon Web Marketing Bestseller, 500 Social Media Marketing Tips.

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