How to Project Your Facebook Ads Budget & ROAS
Finding the right budget to spend on Facebook Ads and your potential return on ad spend (ROAS) is an important aspect of planning your Facebook Ads marketing. JEMSU provides a Facebook Ads calculator that allows you project your advertising budget & ROAS based on desired leads or revenue.
Projecting Your Facebook Ads Budget & ROAS requires the following:
- Desired Monthly Revenue
- Desired Monthly Leads (for Non-eCommerce)
- Average Cost Per Click
- Average Conversion Rate
- Average Conversion Rate from Lead to Customer (for non-eCommerce)
- Average Order Value of a Customer (for eCommerce)
- Average Lifetime Value of a Customer (for non-eCommerce)
Projected ROAS for eCommerce = Advertising budget divided by average cost per click times average conversion rate times average conversion value divided by project advertising budget. Example #1. ((($10,000 / $5) * .03))*$250) / $10,000 = 1.5 or 150% ROAS. Example #2 ((($5,000 / $2) * .05))*$55) / $5,000 = 1.375 or 137.5% ROAS
Projected ROAS for Non-eCommerce = Advertising budget divided by average cost per click times average conversion rate times average conversion rate from lead to customer times average lifetime value divided by project advertising budget. Example #1. (((($15,000 / $20) * .09)*.12)*$12,500) / $15,000 = 6.75 or 675% ROAS. Example #2. (((($25,000 / $25) * .08)*.20)*$6000) / $25,000 = 3.84 or 384% ROAS.
Facebook Ads Calculator Example
Example Data: Dentist. Desired Outcome is 10 new patients per month. Average cost per click $9. Average conversion rate is 7%. Average conversion from lead to customers is 33%. Average lifetime value is $3200.
Facebook Ads Calculator Breakdown
How Much Monthly Revenue Do You Want? – This is amount of monthly revenue you’d like to earn directly from your advertising.
How Many Leads Do Want per Month? – This the number of leads you’d like to get directly from your advertising.
Average Order Value – This is average revenue from a single checkout order across all your products / services.
Average Cost Per Click – This is the average amount you spend per click. This can be found in your analytics if you are already running ads. If you are projecting ROAS we recommend using Google’s keyword planner and average the top of page bid (low range) with top of page bid (high range) to get an overall average cost per click (CPC).
Average Conversion Rate – This is the average conversion rate of your ad traffic into sales. For ecommerce a conversion is anytime someone completes a checkout. For non-ecommerce a conversion is anytime someone completes a form or phone call. This varies by industry and business from <1% to >20%
Average Conversion Rate of Lead to Customer – For non-ecommerce businesses, this is how well your sales team converts a lead into a paying customer. This also varies widely by industry, business and sales team ability.
Average Lifetime Value of a Customer – For non-ecommerce businesses with recurring products or services, this is the average conversion value times the average length of time a customer stays with you or repeats purchases. If a dentist makes on average $700 a year from each patient, but patients stay for an average of six years. Then the average lifetime value of a patient is $4200.
Monthly Advertising Budget Needed – This is the recommended monthly budget you need to spend to achieve your lead or revenue goal.
Projected ROAS for eCommerce – Monthly advertising budget needed divided by average cost per click times average conversion rate times average order value divided by monthly advertising budget needed.
Projected ROAS for Non-eCommerce – Monthly advertising budget needed divided by average cost per click times average conversion rate times average conversion rate from lead to customer times average lifetime value of a customer divided by monthly advertising budget needed.
