The fastest way to lose money with Facebook Ads is to treat it like a guessing game.
‘Does $1.24 sound expensive for a website click?’ or ‘Is 2.47% a good click through rate?’ are questions I hear people ask all the time.
I remember about 3 years ago, when I was just getting started with Facebook Ads, there was a young chap in the business called Justin Dupre. (Coincidentally he lives in Thailand.)
He used to do hourly coaching calls on FB Ads (I think he still does) and I asked him, ‘What is a good click though rate?’. His answer was, whatever means you’re making a profit.
As a relative beginner to FB Ads & with a business devoid of conversion funnels, I didn’t really understand what he meant, but fast forward 3 years, it makes complete sense.
Let me see if I can break it down for you. Please note I am going to roundup to make the calculations simple. The numbers below are not a real life case study, although I reallyreally wish they were!
Calculating Ad Spend
Let’s say you have a sales page that converts cold traffic at 10% (I wish!)
Your product is $100
So if you send 100 people directly to that sales page the calculation looks like this;
100 (Visitors) x 10% (Conversion) x $100 (Product Price) = $1000 Income.
In order to just break even on that campaign you would need to ensure that the cost per visitor or ‘website click’ in FB’s terminology was $10 or less.
$10 x 100 visitors = $1000 spend.
Now let’s add a squeeze page in there and bring the numbers down a bit;
Let’s send 100 people to a squeeze page that converts at 40% with a back end sales funnel that converts at 5%. The product price is $50.
Here’s how it looks;
100 Website Clicks
40 Optins – (40% Conversion)
2 sales – (5% Conversion)
= $100 Revenue – (2 sales @ $50)
To break even on this campaign you would need to ensure your cost per website click was $1.00 or less.
$1 x 100 visitors = $100
With me so far?
The Four Numbers You Must Be Tracking
What’s absolutely vital when running Facebook Ad Campaigns is that you know your numbers. If you are not tracking your conversions at the moment, then this is something you need to start right now.
Don’t overcomplicate it. The most important numbers if you’re just getting started are;
- Visits to Squeeze / Landing Page
- Visits to Sales Page
If you’re testing a new funnel, then you’ll need to estimate your numbers and start with small budgets until you know what you can spend to break even or make a profit.
My Free Gift to You!
To help me with these calculations and with my own tracking, I created a little spreadsheet and I thought you might find it useful.
You can pretty much plugin your numbers and it calculates the spend and profits for you!
Here’s a video walking you through how to use it and explaining further what I have said above and under the video is the download button for the spreadsheet.
The spreadsheet is completely free and no optin required so if you know someone who may benefit from this be sure to pass it on!
source : http://onlinemarketingaddicts.com/free-facebook-ad-spend-calculator/