If you were to guess how much social media ad spend grew last year, you might say 5-10%. An optimist might hazard a guess at 20%.
So you might be surprised to hear that the figure for just two social media platforms (Facebook and Instagram) for 2021 was a staggering 43% growth year-on-year.
Ads are a popular marketing choice for businesses. But are they right for you? And does this rapid growth mean future ad costs are prohibitive?
We are here with all the answers as we explore whether social media ads are worth it for you and your business.
Start With a Budget
Before determining whether social media advertising is worth your time and money, you need to understand your budget. Every company has a finite amount they can spend on advertising, so set a figure for your business.
Think about writing down one or two core aims from your advertising. Together with your budget, this will provide you with a helpful starting point for the rest of your research.
What’s Your Preferred Platform?
Diving deep into social media ads means understanding what options you have available. There are numerous ways you can advertise via social media. Here is a list of some leading social media platforms you might want to consider.
- Instagram (powered via Facebook)
Each of these platforms will have its strengths, weaknesses, and cost variance. It’s important to remember that cost of a pay-per-click platform ultimately depends on the level of competition you face for that advertising space.
More established platforms like Facebook, with a mature advertising algorithm and a large user base, could potentially come with higher social media costs. This post from The Hoth explores Facebook ad costs in more detail.
Research Costs in Your Niche
Next, it’s time to start researching the average costs you will likely pay for your ads. You’ll need to research specific prices for your niche to do that.
Although this won’t give you a perfectly accurate figure, it will provide some helpful guidance; costs tend to vary by niche.
That’s down to the level and strength of competition and the buying power of customers in that niche. Luxury designer handbags will come with higher ad costs than, say, plastic hair accessories.
Understand How to Establish ROI
Suppose you sell a pricey product like a designer handbag. In that case, your revenue per customer will be significantly higher than if you were selling those low-cost hair accessories.
That’s where ROI becomes a vital metric. ROI is the revenue you get for every dollar you spend on advertising. That is the most important figure to track as it will tell you whether or not your ad campaign is profitable.
Once you have your estimated ad costs, you’ll need to assess your likely revenue for each new customer you sign up for via that ad.
Run Some Tests
Before deciding about social media ads, it’s worth running a test campaign to see whether your actual ROI is close to your estimated figure.
That test will also help you tweak and refine your campaign before your final launch so that you have the chance to improve on that ROI figure.
Social Media Ads: Are They Right for You?
Social media ads will probably work for your business. Still, you’ll need to do your research for your specific niche for a more comprehensive answer. And you should pay for some test ads to get a more definitive answer.
You can also find out more about how to run optimized ad campaigns on different platforms by exploring our technology section.