Amazon And Facebook Ads – How Much Money Do You Need

In all of the Amazon based FB groups and on YT channels, running FB ads to your Amazon listings is a big topic.  Are they really that amazing?  Can they really make you that much more money and boost your rank?

You bet your ass they can – IF you have all of the pieces in place properly.

BUT… before you get started, the magic question is this:

How much budget do I REALLY need to run Facebook ads?

Before we get too deep here, if you aren’t sure EXACTLY, to the penny what your “numbers” are, then you need to know that first. You need to know all of the numbers that make your business work.  Think of them as the vital signs as to the health of your business or product.

Facebook Ads for Amazon – What Really Matters

You’ll hear a lot about ROI (return on investment), ROAS (return on adspend) and ACOS (advertising cost of sale) in the Amazon world but my true king of the hill is CPA – Cost Per Acquisition.  If I know exactly what it costs me to get a conversion then I’ll know what it will cost me to scale. I can then take all the numbers it takes to win a keyword and get to work dominating my niche.

The question comes up all the time when I’m talking to sellers wanting to run FB ads: “What should my starting budget be, and how long should I wait until I optimize my campaign?” – and most people don’t even know how to optimize their campaigns but that is another series of articles and videos.

Today is the day we will examine the magic question of money to start FB ads, and for a lot of you it is going to look rather scary.

Most people start with a single video, a couple of image ads, maybe even a messenger bot to get things moving and that’s fine.  Perhaps you’ve read about and are following the Kool-Aid Method. You’ll see some success with that for sure…..

BUT if you want to start to really compete, you need a much bigger campaign structure, you’ll need to learn (or pay someone) for a few more skills and you’ll need to scale horizontally out of the gate.

We are going to assume for the sake of this article that you also understand how campaigns, adsets, and ads work (the basics of FB ads)

The Supply and Demand of Purchasers | Facebook Ads for Amazon

Once you know the basics we can look at a few key bits of info:  1) Why Facebook likes higher budgets, 2) An easy way to figure out your Facebook ad budget, and 3) How to structure your campaigns based on your conversion costs (what it costs to get the sale or action you are after out of the end user).

Facebook works on machine learning.  It is infinitely better at tracking and predicting our behavior patterns as humans than we are alone.   This means that the algorithm tracks a user’s online activity and knows who is more likely to convert (purchase). Higher converting users in most cases are more expensive to target with ads, simple as that.

Since we all want people who are most likely to buy, Facebook makes us bid out of our daily budgets for placements in the newsfeed and elsewhere.  When you bid higher, you are telling Facebook that you are more willing to spend for a higher placement that is more likely to convert into a purchase.

In the case that your max bid isn’t high enough to win the auction for that user, you will be entered into auctions that are cheaper because those users are less likely to convert.

Put simply, your bid and budget essentially control how many valuable users see your ads.  This works the same with sponsored product ads on the Amazon Platform.  Ads not delivering?  You are either accidentally in an irrelevant category OR you simply don’t have enough of a bid to win the auction for someone more likely to make a purchase.

Feeding Facebook Data To Make You Money On Amazon

I personally prefer higher budgets to start, but for the purposes of this article we need a more mathematical way to calculate where to start. I like to base the budget on what a purchase conversion costs, so ideally, if you have a purchase history you should have a pretty good idea of what this number is.

Let’s say a conversion for you costs $5.00. To start, I would recommend testing a minimum of 5 ad sets (ideally 10-20 to start) and you will want to allocate at least 10x your conversion cost per ad set (ideally more like 20x) to determine your daily Facebook ad budget.

Keep in mind that there are a lot of variables the can affect this equation.  Just for simple math here though we are going to assume a $5 bid price meaning each ad set will have a $50 daily budget (10x the conversion cost that we mentioned earlier).

 

For example (minimums):

5 ad sets x $50 per ad set = $250.00 daily budget

10 ad sets x $50.00 ad set = $500.00 daily budget

20 ad sets x $50.00 ad set = $1,000.00 daily budget

“How many ads did he say running at once??”  I know it sounds like a lot but I’m just being realistic with you.  If you are running one or two ads and 1 adset and I have what amounts to 50 running at once for the same audience and I’m giving FB the budget it needs to optimize, which one of us is more likely to succeed?

This method of budgeting and bidding allows for the algorithms to optimize properly, and collect enough data to analyze things and test different spots in the feed to get you the best results.

How many ads per adset you ask? I like starting with about 3-5 unique ads with 1 duplicate of each (using the same post ID), giving you a total of 6-10 ads for the ad set.

You want more than one ad in order to test creative, different headlines, different offers, etc. to see what is going to be the most optimal performer for you.

** I mentioned sharing the post ID because it allows any engagement you get on one ad to show up on all of the others.  In the example below, you’ll see 6 adsets and 10 ads per adset.  Sharing the post ID means that any like, comment, or share that shows up as social proof on one of the ads, now shows up on ALL of the ads.  This boosts CTR and conversions as well as brings down adcosts. (GOLDEN NUGGET!!!)

Lower budget rules

If you’re working with a smaller budget, you can try starting out with less ad sets, or with a lower daily ad budget ($100 per day ad spend) instead – and yes, $100 per day is a small budget for FB ads.

As a general rule, you don’t really want to change bids and budgets too often as it can cause problems with Facebook’s Optimization. But, it is OK to change these if a campaign is performing really well or very poorly and you want to adjust settings. We would just suggest to avoid changing the settings repeatedly, you will want to wait a minimum of 3 days before making any changes initially.

If you follow these simple rules, after just a few days, you will have the data necessary to see what ads are working and you can make adjustments based on the performance. At this point it is safe to adjust your bid or budget about twice daily. You can do it much more but it is not recommended.

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