Securing a decent marketing budget is only half the battle. Making sure it is spent effectively is another matter of its own. The optimal distribution of the budget between the individual sales funnel levels is a real challenge for Facebook marketers and can be a real challenge significant influence on the ROI to have.
in the first part of our Facebook Ads Budget Guide we have laid the foundation to understand how Facebook Ads work at all. In the second part we will show you how to build the optimal sales funnel for your business and how to divide your Facebook Ads budget over the individual levels.
The typical three funnel levels: traffic, prospecting and retargeting
When deciding on the budget allocation between individual marketing channels and sales funnel levels, ideally the Maximizing Long Term Incremental Revenue play a leading role. But more on that later.
If you present the branding as a marketing goal and only consider the actually measurable quantities of direct response advertising, we can focus on the three most typical sales funnel levels restrict. The following breakdown is common:
- 10 – 30 % For traffic: Optimization for Upper funnel goalslike link clicks or ViewContent
- 40 – 80 % For Prospecting: Optimization for the final conversionsuch as B. Purchase or subscription to prospecting audiences
- 10 – 30 % For Retargeting: Optimization for the final conversion for users who recently had an intention to buy, subscribe, etc. have expressed
However, these guidelines vary considerably depending on the
- Spending level
- Retargeting audience size
- Aiming between conversions and website traffic
- other branding campaign activities (branding campaigns running in parallel can reduce the need for traffic campaigns)
Many advertisers also have separate campaigns for Re-engagement and mid-funnel activities. But we'll focus on the three above for now, as the principles are similar for the rest.
How to Build a Full Funnel Online Marketing Budget
At the heart of any successful ecommerce business is a carefully crafted marketing budget that enables the brand to target customers at every step of the funnel.
How you use your budget and marketing priorities has a big impact on your success in today's competitive digital landscape.
Here is one Step-by-step instructionshow you can optimize your online marketing budget across the individual sales funnel levels, depending on which phase your company is in.
1. Identify the maturity of your company and your marketing priorities
Every company is unique. This is why it is important to first determine what stage your company is in before creating a budget. The budget allocation and strategies for digital advertising vary greatly depending on the type, maturity and stage of the company.
If you have a Start-up your brand has not yet made a name for itself. You need to raise awareness of your brand through campaigns in upper sales funnel generate, for example through Facebook prospecting.
Newer start-ups benefit most from brand awareness campaigns when demand generation is essential and customer acquisition is cheap. An established online retailer, on the other hand, should focus on how to efficiently capture demand.
There are two major e-commerce business types: brands and resellers.
If you have a fire you will find yourself in one of three different categories:
- Mature brand
- Historical wholesale
If you have a Reseller are you either a:
- Traditional reseller or
- Reseller and house brand
All of these business types each have unique differences that need to be considered when organizing your online marketing budget. Your company's maturity level also plays an important role in assessing what types of marketing campaigns you should prioritize.
Brands and resellers that are still in the Growth phase the demand generation should be in Prioritize the upper funnel. Elderly, more mature brands and resellers with an established customer base should focus more resources on that Recording the existing demand use and best practices on lower end of the sales funnel place to the Promote conversions.
As your brand matures, so will your brand. Once the customers are more familiar with your brand, you can use some of your expenses further down to your mid-funnel campaigns relocate.
2. Prioritize your budget according to the sales funnel
Once you've established where your business is, it's time to determine exactly where your funds should be put. So you can finally get the Maximize the return on your campaigns and advertising spend.
At best, every retailer needs to be present throughout the entire sales funnel. The difference, however, is in how much weight is placed on each stage of the funnel according to your marketing priorities. Accordingly, it is important to identify these ideal budgeting priorities according to the maturity of your ecommerce business.
3. Create an Online Marketing Budget Template
Here are some sample budget templates. Since every company is individual, you should of course see these budgets as guidelines rather than fixed specifications.
Digital brands in the start-up phase
The priority for most startups is getting notoriety and Generate demand for their brand and product range. Campaign and advertising spend heavily on the top funnel marketing initiatives.
Digital brands in the maturity phase
Brands that are labeled as mature have an established digital presence on one or more channels and have an existing customer base. The early phase of cost-effective customer acquisition has developed in such a way that the Customer Lifetime Value and the Prioritize customer loyalty to drive conversions in the lower funnel.
Historic wholesale brands
Older, more established wholesale brands that venture into the digital landscape already have established offline channels and benefit from a high level of awareness. Here it is advisable to spend a larger part of the budget for campaigns to record demand with a balanced relationship between generating demand, customer care and re-targeting assign.
Traditional resellers & house brands
Traditional resellers and house brands both have the advantage of an established brand presence with physical shelf space and recognizable product offerings. They are already frequented by customers in the shops and are now also present online.
Mature brands that sell their goods in local stores or have established partnerships with retail channels don't have to spend as much on demand generation as they have already invested in their brand awareness and benefit from the branding of their distributors.
While the two types of company differ to some extent, they have similar priorities. Because for them it is important to know Capturing demand instead of creating it. The customers already know the company and the products. Now users must be able to easily find, access and engage with the brand via relevant digital channels.
These 4 methods will also help you to find your optimal split between the sales funnel levels!
Usually the most obvious strategy is to copy what your industry peers are doing. But if you want to be one step ahead of your competition, it is worthwhile to familiarize yourself with the most important strategy tools for Facebook Ads. This is how you determine the optimal distribution for your own brand.
1. Lift tests
Probably the most widely used tool for optimized budget allocation are Lift tests. Because these tests enable you to understand the incrementality separately according to funnel levels. Budget allocation decisions can then be made based on the relative incrementality of each sales funnel level.
However, there is a caveat:
- Short-term vs. long-term effect: Lower funnel campaigns can usually generate quick conversions based on purchase intent. However, the dynamics change with Upper Funnel campaigns as it takes longer for users to convert.
The most common result of these tests is one Shifting the focus from retargeting to campaigns in the upper funnel area. Retargeting campaigns tend to deliver the best ascribed results while Upper funnel campaigns often perform better in terms of that Incrementality exhibit.
Retargeted users have already expressed their intention to buy your product, so naturally they are more likely to convert to buyers - whether they see your ad or not.
But what does incrementality actually mean in marketing?
Incrementality considers groups of users and analyzes how these groups respond to ads. Incrementality tests are a good way to use the Influence and ROI of advertising campaigns across the entire customer journey investigate away.
The “incremental turnover” is understood to mean the income from advertising or marketing campaigns. On an e-commerce website, such sales can be increased, for example, through the personal advice function via a messaging platform (such as WhatsApp, Facebook Messanger or live chat).
Such a measure is the opposite of attribution. Because in turn, business rules and assumptions are used to analyze the advertising effectiveness and ROI of digital channels, ads, creatives and other customer touchpoints.
2. Multi Cell Lift Tests
You can also use multi-cell lift tests to test which split gives the best overall incrementality. For example, you could test the following options against each other:
- Option A.: No traffic campaigns, 70 % for prospecting, 30 % for retargeting
- Option B.: 20 % for traffic, 65 % for prospecting, 15 % for retargeting
Here, too, the Duration of the test has a significant impact on the result to have. A higher proportion of expenditure that is used for campaigns in the lower funnel can achieve optimal results in the short term. But campaigns in the upper funnel can prove crucial in the long run.
For the best results, we recommend running such a test for as long as possible. Ideally at least two months. In addition, the variance in lift test results is high. Therefore, a lot of data is needed to get reliable estimates.
3. Data-driven attribution models
Data-driven attribution models are an alternative way to understand the incrementality of the individual funnel levels. They use observation methods as opposed to experimental methods like lift tests. Both approaches have their advantages and disadvantages:
- Lift tests are the most accurate methods. However, they can only provide a snapshot - the incrementality varies (as mentioned earlier) over time, depending on the market and the level of spending.
- Observation methods are not quite as detailed, but they measure the results continuously.
4. Frequency capping for retargeting targets
An easy way to set the upper limit for your maximum retargeting spend is to set frequency targets. As the frequency increases, new impressions not only become more expensive, but also less effective.
With an upper frequency limit of 1 per week is it possible, for example, up to 80 % of the total potential brand lift (Advertising effect on brand awareness) in the reminder effect of an advertisement. In the Purchase intent showed a higher frequency upper limit of 2 per week of considerable advantage. Because by doing this, they could 95 % of the total potential fire lift are recorded.
Campaigns with insufficient frequency lead to a significant loss of brand impact. Taking into account the range at effective frequency levels should therefore be part of the campaign planning process, regardless of the campaign goal.
CONCLUSION: With the right budget you can achieve brand growth and increase your online sales!
Which strategy works best for your marketing efforts will vary depending on the maturity of the advertising account, the size of the total budget, and the budget available for testing.
Building a budget for Facebook Ads becomes a lot easier once you've identified your marketing priorities. The priorities for a young, digitally oriented brand will be very different than for a reseller or wholesale brand that already has an established offline model and brand awareness.
Now that you've determined which budget is best for achieving your goals, it's time to break that budget down among the funnel levels that will engage and involve your target audience at every stage of the sales funnel. Then it's time to test. To understand the brand lift and to maximize your incrementality, you should conduct these tests over an extended period of time.
This is how you create an uninterrupted customer journey that will help your brand grow profitably.
You don't have time to deal with it yourself? We would be happy to advise you on your Facebook advertising strategy and help you generate more sales. Let us grow your brand and contact us today for a free analysis of your advertising accounts.