07 Nov Can You Grow A Six Figure Online Business On A “Limited” Facebook Advertising Budget In 2023?

The short answer is, YES! Building a six figure business is definitely possible on a limited advertising budget.

The best part is that a “limited” advertising budget means you are most likely trying to keep costs down for the highest possible profit. That’s a good plan! A surprisingly large amount of businesses work on a break even strategy. There’s nothing WRONG with that. The break even strategy is almost required with most businesses. But! If you have a unique product, business idea and marketing strategy, you can lean-down on the spending and still see a good amount of results.

What Is A “Limited Budget”

You could go as low as $5 a day on a Facebook ad, but a $150 per month adspend budget is honestly not going to get you very far. At least not anywhere in a “reasonable” amount of time. I make that disclaimer because Facebook ads STILL perform well (maybe even better) in the learning phase at a low spend if the 1. Setup 2. Audience Targeting and 3. Ad Creative (images, video, text, etc) are done right!

With that in mind, it is usually better to plan to spend between $50 a day to $100 a day if you want to start seeing results. Again, this is going to be different for every business/product. If you have a high average order value (AOV) and decent margins (50%+) then you could definitely spend less and still get decent results.

The Numbers

In general, the average ecommerce business is making around $50 to $100 per order and closer to 25% to 30% margins. That means they are making $15 to $30 in profit per order. More importantly, this means they/you can only afford to spend $15 to $30 per ad, right? Wrong! At least, for most businesses. Most ecommerce businesses will have repeat customers. Either they sell a consumable product or they are coming out with new products relatively consistently. A lot of the time, these repeat customers cost as little as an email (so $0 if you’re sending a few out each month!). That means your $100 order is actually worth closer to $150/$200. This gives you $45 to $60 in profit instead of just $30.

Don’t Forget About Unrecorded Conversions!

I know. I know. Spending $30 and getting $45 over about 6 months doesn’t seem like a path to building a six figure business. But even those metrics are diluted. Since Facebook’s notorious “iOS Privacy” changes, attribution has been lowered (in our experience) by close to 75%. This means your Facebook/Instagram ads will show a $30 cost per purchase when really it is closer to $10-15. I know that is incorrect math, but since April 2021 Facebook has also declined, about 25%, in its ability to target and perform as well as it used to. (Pro tip, Triplewhale, Hyros, Segmetrics, and all those other “solutions” won’t fix this problem. The best solution we have found is to add UTM’s to your ads and make sure your Shopify API conversions settings are set to maximum).

In Conclusion

You can definitely start your budget small. Spend around $50 a day as you test out the best settings, audiences and ads. Find what works and then start to scale your spend. Don’t forget about seasonality! Either spend less on the off seasons or find ways/products to adjust. If you can start to scale up from $50 a day to $200, (add Google Ads in there too!) then you will be well on your way to that six figure business!

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