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Facebook is a great platform to push your products in the eCommerce market and find the right customers for your business. People believe that Facebook Ads can make them “rich.” Though that could be true, most people who succeed in their online ad campaigns have first worked on understanding the basics of Facebook Ads.
A few crucial things one must keep in mind before they start with Facebook Ads and begin exploring all its exciting possibilities. If you do some prep work beforehand, take a few notes on how your competitors are running them, it’s highly likely that your ads to perform well!
The basic and one of the most important building blocks of your new adventure is knowing your Margins. You’d be surprised how many people skip this step and end up with little success with their ads. But it’s important to fold your sleeves and get down to the nitty-gritty of the process if you’re in for the long haul! So, let’s jump right into it and talk about what margin really is.
What is margin?
Put simply, the amount you can afford to spend on Facebook to be profitable with your ad spend. Regardless of your business, whether you sell physical products, digital products or SaaS products, there are margins associated with it.
Before you start putting your ads online, it is crucial that you take some time out to understand all about margins and know your numbers for each of your products. Once you know the importance of this step, you can start implementing what you learn here and take a step towards making the most out of online advertising!
How to calculate margin?
Let us quickly look at the calculation of margins, don’t worry, it’s not complicated at all.
Here is how you calculate your margins. First, determine the difference between your Revenue and Operating Costs (Revenue minus Operating costs) and divide the difference by Revenue. After solving this equation, multiply the answer by 100 to find the percentage of your margin.
This quick calculation would give you the margin (in percentage). Not so complicated, right?
What to aim for?
Now that you know how to calculate your margins, you might be asking yourself, “What margin should I aim for?” That’s a perfectly valid question! In our webinar for Facebook Ads for eCommerce, Francesca shares that having a margin somewhere between 30% to 50% is a comfortable spot to be in. Of course, it’s great if your margins are well over 50% but a good rule of thumb is that you’ll be smooth sailing between 30% and 50%.
In a nutshell
Investing in online ads is the perfect way to tell the world you’ve arrived. That the snazzy product or service perfectly tailored to their needs is just a click away. That being said, lucrative offers alone won’t cut it, it can only set the ball rolling.
To build a sturdy business with sustainable growth, you need margins. They help you plan how much you want to spend on your ad campaigns and could help you gauge your threshold expenditure/ limits. As they say, don’t put all your eggs in one basket, the same goes for Facebook Ads. The margins help determine this capacity, staying in the margins means you’re making informed decisions and managing your resources wisely.
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Articles by Faraz Haider
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