Episode 011: How to decide on a good ads budget for list growth

Apr 15, 2024Podcast

In this episode we talk about how to decide on a good ads budget for list growth. This is for you if you’re not sure how much to allocate to grow your email list. I’ll tell you how you can find out information to make this decision easier.

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Transcript:

Okay, everyone, in this episode, I’m going to talk about how to choose a good ads budget for list growth. Notice how I said “how to choose,” not “what is a good budget.” And I want to start out by saying that the budget that is the best one for you is the best one for you and not anyone else. The best budget is the one that makes sense for your business, your turnover, and what works for one person may not be right for you.

Understanding your numbers

Having said that, there are benchmarks and averages you can use to sort of give yourself a bit of a benchmark. But I want to propose it to you this way: I want you to choose the budget that is right for you. You might not like what I’m about to say, but this does mean understanding your numbers, understanding the revenue generated from each sale that you make.

Let’s say that you’re running a campaign for a group course that you’re running. If you know how many people you can get to the page for signing up to your course, then if you know what percentage of those people actually sign up and become members, when you have that data, and when you have the data of how many, say, impressions that your post got, how many clicks, and then how many landing page views you get, and then how many people actually go follow through and sign up, that information is very helpful in determining what to spend on ads and what sort of cost per click or cost per transaction that we attribute back to ads.

I find that if you know your own numbers, if you know what’s working for you, and if you know what budget makes sense for you, that is extremely helpful. And, you know, if I feel, and this is my personal opinion, what works for you works for you. Comparing yourself to others, it can help guide you, or it can make you feel bad that you’re maybe not doing as well. So, choose carefully whether or not you look at what other people are doing.

Benchmarking and reverse engineering to work out a good ads budget

But having said that, if you know your numbers, if you know the volume of traffic that you get organically, if you know the volume of people that you get signing up to your program, the cost of your program, and then the revenue that you make from each transaction, these are all really good numbers to know. Because then we can break these numbers down into a cost per click or a cost per action that makes sense for you. And we can reverse engineer that information, that data, those numbers, and then we can say, “Hey, it costs 20 cents to get someone to click and visit my page. Therefore, if I spend X and I know that these ads work and this campaign works, then we can spend Y, or we can get Y.”

If you don’t know these numbers, there’s going to be a lot of guesswork involved, and it’s, I can understand, it being very stressful, especially if you’ve never run ads before. So, just to give some generalizations, if you can get people, if you run an ad campaign to get people signing up to your email list, your mailing list, and the cost per lead, the cost per person added to your list is under $2 per sign-up, that is awesome. That is a great goal to aspire to.

I myself find cost per visits to my Instagram profile, if that’s well below a dollar, that’s awesome. That is a great thing to look for. And so, when it comes to you and your business, if you’re selling something that’s very high ticket, like $10,000, if it costs you $100 in ad spend to get one person to your $10,000 product or program, that’s like a drop in the ocean.

Conclusion

So, I don’t really want to give too many examples because everyone’s business comes in different shapes and sizes. If you want to know what a good spend is, what a good cost per lead is, I would encourage you to get familiar with your numbers if you’re not already. Reverse engineer the number of signups you can get for your program and the revenue that you generate from each sign-up. Then we can use that information to determine, okay, what sort of goal is appropriate.

If we’re getting, you know, $5 to get somebody on your mailing list or to get someone to sign up for your course, and you feel like that’s too much, that’s not necessarily a mistake. It just means that we might have to do some fine-tuning to get your numbers closer to something that’s more appropriate. This isn’t really like a black and white thing. It can be very flexible.

Also, I want to refer back to my previous podcast episode where I talked about validating whether or not you’re ready for ads or whether or not they’re going to work for you. If you can get, organically, without ads, 2% or even 5% of website visitors converting into customers, that is a good healthy sign that ads can work for you. And we can use that number, that 2% or that 5%, and engineer, based on your revenue and how much organic traffic that you have, we can engineer a budget that makes sense.

Anyway, I hope this helps move you in a direction, in a better direction. I’d love to invite you to stick around and listen to more episodes because I really love talking about ads, and I really love seeing businesses succeed and not waste their money. I like it when budgets actually bring a return on investment. So if you’ve got a concern about your budget and you’d like to discuss it privately, that’s totally appropriate. I don’t think it’s appropriate to talk about any individual’s budget on a public podcast like this, but I am happy to have a look at your stats and provide some guidance.

Otherwise, I hope you stick around, and I look forward to seeing you and speaking with you in the next episode.

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