How much money should you put in Facebook advertising?
According to the National Auto Dealers Association (NADA), over 56% of all dealer advertising dollars went to the internet. Some of the old staples, like TV, radion, and newspapers, have fallen off a cliff.
While we lament the loss of great local papers, business must continue.
So the big question in 2020 is: Where should I put my internet dollars?
Website – You must have a great website. Period. Many people won’t even visit a business that doesn’t have a great website. It’s like the front window of your business.
You don’t need a big fancy website, but it’s wise to have one that makes it easy to search your inventory and to ask questions.
Social media – Check out these numbers from Hootsuite:
- Digital consumers spend nearly 2.5 hours on social networks and social messaging every day.
- 69% of U.S. adults use at least one social media site.
- The average American Internet user has 7.1 social media accounts.
- 88% of American 18- to 29-year-olds use social media.
- 51% of 18- to 24-year-olds say social media would be hard to give up.
All of these numbers indicate one thing: You need to advertise on social media.
Which social media platform to use
YouTube is the number one social media platform. Yes, it’s considered a social media platform because you can comment on things, leave information, and read what others think. However, very few people open YouTube to communicate with their friends.
The number one social media platform that’s real platform is Facebook. Almost all of the 69% of Americnas who have a social media account have a Facebook account. It’s that simple.
What about Instagram? Instagram has over 1 billion active users. Facebook, by contrast, has over 2.45 billion users worldwide.
So why’s that important? Facebook owns Instagram. When you set up an ad on Facebook, you have the option of showing it on Instagram without having to create another ad.
How much should you spend on advertising on Facebook/Instagram?
Here’s the thing: There seems to be no limit to how many leads you can generate using Facebook Lead Generation ads.
On average, dealers spend about $20 per lead.
So if you want leads, you just need to figure out how many times you can afford $20 for a viable lead.
Facebook offers some success stories on their website:
“Hub City Ford reached auto shoppers in the market and drove purchases over a 60-day period between November 2017 to January 2018.
Hub City Ford generated qualified leads, resulting in:
- 154 leads generated
- 34 cars sold
- 22% of leads from Facebook ended in a sale
- Number one sales month ever achieved during the campaign in December 2017.”
“Camping World improved its shopping experience and connected with shoppers showing purchase intent. Between January 24 and April 17, 2018, Camping World’s ongoing campaign delivered:
- 3X return on ad spend
- 40% average decrease in cost per lead with dynamic ads for lead generation using dynamic ads for auto.”
Even Facebook’s own direct numbers indicate that they generate leads that buy cars.
Even if you low ball the average price of Ford at Hub City Ford to $25,000 per vehicle, they made $850,000 in sales in two months. There’s no way to spend that much on ads in the same amount of time.
Their ROI was massive.
Facebook at $20 per lead
Again, if we consider the average auto is $25,000 and the average lead on Facebook costs $20, Hub City only spent $3000 on ads. The other $847,000 they made was ROI.
In more competitive areas, you’ll end up paying more than $20 per ad. You might pay less. Either way, it’s nearly impossible to not get your money’s worth. Particularly since Facebook charges you for the lead, not for the impression. If someone doesn’t click on your ad, you don’t pay for it.
How much should you spend on Facebook ads?
As long as you’re setting the ad up correctly (and we can help if you need it) and you have a follow-up plan (we can help there too), you should start at $1000 per month. See what results you get and how you might improve your process.
No matter what you do, you’re going to get a more traceable and proveable return than you ever will with a billboard, a newspaper ad, or a radio ad.
Try it and see if you can generate all the leads your team can handle. We’re betting you can.