How Much Should You Spend on Advertising?

Course content (20 lessons)

To scale your ecommerce business with Facebook and Instagram, it’s recommended that you spend 10-30% of your top line revenue (gross sales) on advertising.

✅Watch to understand Ezra’s advice and mindset when investing in advertising.

[MUSIC PLAYING] How much should I spend on paid ads? It's the big question in our industry. And there's a perfect ratio of top-line revenue to paid amplification. And that ratio is between 10% and 30% of the revenue that your store generates. You should reinvest in paid amplification. So if your store makes $100, you should be spending between $10 and $30 of that $100 back on paid ads.
One of the things that people forget when it comes to business is that there's this thing called a year-over-year halo effect where all the energy that you built up in year one supports you in year two. When you're spending money on Facebook, you're not only spending money to buy customers. You're spending money to buy data and additional brand assets that are not customers, things like audiences of people who visited your site or watched your video, things like email leads of people who came to your site and gave you their email address.
It's one of those things where you've got to be willing to consistently spend over time. As I mentioned previously, it's like a diet. If you eat well for two days and then stop for five days and then eat well for two days, you're not going to feel good. It's not going to work. You have to pick a budget, whatever that is, whatever you can afford. $5 a day is a wonderful budget. And then commit to spending that for three months, six months, nine months, a year.
Really commit to investing because it's going to take you a while to figure it out to target audiences, to build good creative, to optimize your sales process. And you want to have that fuel constantly pumping on your fire so that you've always got movement. And one of the things that I see is people just don't spend enough. They don't reinvest enough of the money that they're making or they don't put aside enough money upfront for their business.
And $5 a day is plenty to start to really give them the opportunity to have consistent data and consistent visibility into what's working in their market. So you've got to be willing to spend. And if you have a brand that is making any amount of money, I recommend that you invest between 10% and 30% of your top-line revenue number back into advertising. For my brand right now, when you look at the $60 million in revenue that we've generated, we've spent about $17 million on paid ads.
Now, it took me 10 years to get there. I started my brand in 2010. We're now in 2019, so nine years to get to that point. But you can see that I'm at that 30%, 25% to 30% ratio. I didn't start there. I started more at the 10% ratio. But I built up over time and I reinvested. And it's one of those things where you get out what you put in, and so you have to be willing to put it in there and do it for a while until you get good at it.
So be willing to spend 10% to 30% of that top-line number or whatever you can afford. And most importantly, do it consistently. Meet me in the next video. We're going to dive into how to actually figure out who to target. [MUSIC PLAYING]

How Much Should You Spend on Advertising?

Course content (20 lessons)

Overview

01 |Create Your Audience

02 |Leverage Video Creative

03 |Awareness Campaign Set-Up

04 |Reviewing Ad Performance