Do you have Facebook ads that are performing well?
Are you looking for ways to generate more sales or leads from your ad campaigns?
In this article, we’ll discuss the infamous 20% rule when it comes to scaling!
What Is Scaling?
There are two common methods when it comes to scaling Facebook and Instagram ad campaigns. In this article, we will be focussing on what marketers call ‘Vertical Scaling’, which is the practice of incrementally increasing your ad budget every 7-10 days.
How Do You Measure The Success of Scaling? The best way to see if you're generating the results you need is to keep an eye on your return on ad spend (ROAS). For example, if you are spending $100 per day on your ads and they are generating $800 in sales, your ROAS is 8.0, which is an amazing result!
You might see these results and decide you want to keep increasing your budget in order for those sales to continue to grow. However, you will often find your ROAS stays the same and becomes less profitable over time. For example, if you raise your daily ad spend from $100 to $200 per day and you still get $800 in sales, your ROAS has dropped from 8.0 to 4.0, thus becoming half as profitable as it was before. This is why it’s extremely important to monitor your ads every day, so you can make the appropriate changes to ensure your campaign is still effective.
What Is The 20% Rule?
This is a very common technique that digital marketers absolutely love. This tactic is very simple to do as all it involves is increasing the budget by 20% every few days. However, much like our last article on boosting Facebook posts, this isn’t always going to be the best choice for your Facebook and Instagram ads.
Why Does The 20% Rule Work?
Gradually increasing your budget won’t trigger a new learning phase on your ad sets compared to a large increase in budget, thus the performance will be more stable. This method will take you some time to build up your budget, but your campaigns and ad sets will be able to perform well for a longer period of time.
Why Doesn't The 20% Rule Work?
Thanks to years of experience, we have identified that the percentage of which you scale doesn’t really matter as much as the actual real number increment by which you scale. Going from $100 a day to $120 is absolutely fine. However, going from $10,000 to $12,000 per day is probably a little too much, and going from $20,000 a day to $24,000 is DEFINITELY too large of a scaling increment.
Each of those numbers is a 20% increase but what we are saying here, again, is that the percentage of which you scale doesn’t matter as much as the real number. This is because you can’t continuously scale by 20% at higher budget levels and you need to scale by smaller increments. However, at lower numbers like $100 a day, you don’t have to increase to $120, in fact, you can be more aggressive and scale straight to $150 per day. If you’re only spending $20 a day and you want to double that and scale to $40 a day, that is also completely fine. As that increases, you want to scale by smaller and smaller increments.
The reason you can do this with a lower budget is because of how long you will let it run after you scale, in order to scale further. Let’s say you’ve gone from $100 to $150 a day, you should wait 7-10 days after you scale before you analyze your results and look to scale further. However if you’re doing this by 20% each time and waiting the 7-10 days, it will take you forever to go from a small budget to a large budget, which is not something you want to do with a winning campaign that you’re wanting to take advantage of.
If you’re spending $20 per day and go up to $40 per day, you’ve gone from reaching a small percentage of your target audience to a slightly larger, but still small percentage of your target audience. If you’re looking to go from $10,000 to $12,000 a day (which is a 20% increase) you’re going from reaching a good percentage of your audience to 20% more.
The extra burden you're putting on Facebook by telling it to find you an extra $2000 per day worth of audience can be very difficult, hence why you should scale by smaller increments as you go up.
In Conclusion
There are two key things to take away from this article… 1) There is no fixed percentage rule. There is no 20% rule. It sounds great in theory, but when you try to put it into practice you will see at higher budget levels when you try and increase by 20% your ad campaigns will quickly die out.
2) You don’t want to be scaling every day, two days, or three days. Especially after the iOS14 changes where it is now taking longer for data to come through. You need to increase your budget, let your campaign run for 7-10 days so they can settle at the new budget level, then you can assess the performance.
Another thing we want to mention - as you scale, it is inevitable that your cost per result/cost per purchase is going to increase. This is because Facebook starts by targeting your best prospects. As you spend more, Facebook will essentially cast a wider net to find more people, thus converting less valuable prospects and driving up your costs.
Want to know more about scaling or need help with maximizing your Facebook and Instagram ads? Touchdown Digital has a team of experts who can help you get the results you want!
Contact us today to learn more about our social media and digital marketing services!
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