On January 2015 Facebook changed yet again. They removed almost all of the unpaid content posted by business pages from the news feeds of the people that had chosen to follow those pages. For many businesses that rely on Facebook’s free marketing this has been almost a devastating blow.
Since before 2014 Facebook marketing could be done for free. Hey post something of value and it would go out to all those likes you tried so hard to get. It was the most powerful marketing tool for a business, no budget necessary. Businesses had a pulse on their client base and prospects. They could hear what people liked about their business and what people wanted the business owner to work on. It was awesome and it proved that “nothing is free”, was wrong. When someone clicked the like button it meant that they opted in to get posts from said business. However we slowly watched as Facebook changed what they said and shaped their business in a way that… oh that’s right makes them money.
Facebook after January 2015 has changed completely. Facebook now says that we have to pay in order to reach our likes or anyone else for that matter. For a lot of businesses that have grown to expect free marketing, this burns. These businesses have had their shirt ripped off their back. It started slow in the beginning of 2014 where we saw less and less of our likes seeing our posts. Now on average 10% of your likes see our posts without money being spent.
I understand that you like many others may feel slighted, abused, or wronged. I do. However I believe everything is 10% what happened and 90% how we respond to it. So look at it this way. We know that Facebook is a business and all businesses need to make what? Money. So it had to happen eventually. However we should be glad that Facebook let us advertise for free for such a long time. We also need to realize that it gives us a advantage. For the people like me and my clients that have decided to not feel wronged and instead understand it, and by doing so have have started to spend money on Facebook ads we have found something amazing. We have found that we can now steam roll our competition of complainers when we spend hardly any money to get people to see why we are better than our competition. To be honest Facebook is still the cheapest major marketing platform. Where else can you get access to 1 billion people and be able to target them based on age, gender, interests, job, job position? Oh and where as LinkedIn and Google ads cost between $5-$18 dollars for someone to click on your ad Facebook costs on average below $2. For me and my clients I can get it down to $1 or even as low as $.04-$.08 with good content.
So in close it’s all about how we look at it. Yea change sucks however at least we are aware of it and at least we can now have a advantage.
Alright Kevin besides the creepy stalker vibe I got at first from the whole “watching me for a while thing” haha, I will answer the question. First I want to address the difference between marketing and advertising. Many people ask this and don’t really understand the difference, and seeing the fact that I will be answering this publicly I will go over that briefly. For the few people that may get confused by what I mean let me explain. There are a lot of different ways to market your business and advertising is only one of them. In fact advertising is the most expensive way to market. Here are a few examples of marketing that would not cost anything. Having your customers review your product or service publicly on sites like yelp, asking your current happy clients if they can think of anyone else that could use the same benefits that they themselves are getting from you and then referring those people to you, and also the customer experience that your clients can come to know and love when doing business with you.
So in fact you can spend hardly anything a year and get great results. However running a business exclusively on referrals can be a bad idea as well. So how much should you spend on advertising a year?
This is one of the ways a lot of people tell you how to do it. You take a percentage of your gross sales and spend that each year. On average people will state that spending 5%-7% is a good amount to spend on advertising. If we look at the big guys we can see that’s not always the case. In fact if you are going to use the percentage method what we learn is you should spend around 5% just to keep up with last years sales. 9%-10+% would be used to explode into the market and is usually needed for growth. However as we learn from Walmart who only spends .04% of their 129 billion gross income on advertising, there are many exceptions to the rule. So really this method looks good on paper but can not always be the best way to go about it.
Maybe you’re like me and you might not be a fan of math, and even though this method takes a little more time and effort it does seem to work the best.
First Step is to take 10 and 12 percent of your gross sales and multiply each by the markup you make on your average sale. So say you make 720k a year you would get $72,000 at ten percent and $86,400 at 12%. Then take your profit margin say in this case is 45%. We then need to convert that profit into a markup. This is where it gets difficult for many people because business owners know their profits but very rarely they know the markup. So this is how you do it take $324,000 (gross profits) and divide that by $396,000 (hard cost) and that will give us a 0.8181818181818182 you take that number and move the decimal over two spots and get 81.8 percent. (Most of you probalby know how to do that but I like to help everyone.)
Step two is to then take the $72,000 times 81.8 percent (so 72,000 times 0.818) to see that the adjusted minimal budget is $58,896. Then we do the same thing for the $86,400 times 81.8 percent (so 86,400 times 0.818) and we get $70,675. Then we deduct our rent say $24,000. So this leaves us with the best possible calculated ad budget that ranges from $34,896 – $46,675 per year.
So in conclusion that really is the best way to figure it out. It will always be the best and most detailed and accurate way to calculate it. However if you just want to get it done fast (not recommended) go for the percentage way.