My company is well-known for doing things differently. And our data-driven process behind “how to set your ad budget” is one of the best examples of this.
Most ads agencies start with, “How much money do you want to spend?” But, I want you to take a few steps back and think, “What does ‘success’ look like in my marketing? What do I want to achieve with this ad spend?”
Yes, we’re working backwards – but let me tell you, this process is so much more effective than just picking a number (+we have the success stories to prove it!).
In this episode I’m talking you through an in-depth example from one of my IGNITE students: If she wants to make $30K in revenue, what does that mean for her monthly ad spend? Tune in to find out!
And one last thing – whether you have data or you’re buying it, this process will work for you!
Once you’ve listened (and scribbled some notes!), head over to Instagram to share your ‘a-ha!’ moments. Tag @emilyhirsh with your questions – and I’ll hop on stories to answer!
[3:25] The Hirsh Process looks at this differently.
[4:25] Start at the end and work backwards
[5:19] Now, there’s 2 places you can start from.
[6:22] Here’s an in-depth example from one of my IGNITE students
[8:10] But, one thing I want to mention is this.
[12:24] If you’re buying data, this process still works!
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Emily Hirsh: I’m Emily Hirsh, and this is the Hirsh Marketing Underground Podcast. Attention innovators, influencers, creators, and game-changing entrepreneurs: Your internet domination begins right here. We are the powerhouse marketers that you’ve been looking for. You’re already making waves in your industry, and we’re here to help amplify those waves of change by creating a connection that cuts through the noise. We take everything you’ve built inside your zone of genius and find its audience. With killer strategy and laser eye for impact, we launch multimillion-dollar campaigns and skyrocket your reach online. And now, we are doing the unheard of: We’re unveiling everything we’ve learned, taking you behind the scenes with the Hirsh Marketing team, and giving away the secrets to our clients’ success. Stay tuned for top-converting strategy, ROI reports, and insider knowledge that you won’t find anywhere else. You’re changing the world, and we’re the team to help.
Hello, my friends. I am so excited about this week, this episode. Life is really good right now. I have spent this last week in orientation week with our IGNITE students, and it’s just been this new experience for me to be in the teaching spot and coaching spot, and I really love it. I am definitely a naturally-born leader, and I love helping lead people to a transformation, to a realization, to an epiphany that changes the course of their marketing and their business, and that’s just so rewarding. This whole week, we’ve done orientation day every week, so I did a bonus training every day of the week, and then also, I did a bonus Q&A session in the afternoon. So I got tons of questions from students, and was really just trying to encourage people to go through the content and utilize the extra support, and make it so that they were not stuck at all, because they had such fast answers to everything, and it’s just worked really well.
If you have a course, it’s a great model to do it this way. Basically, I did a live launch, so we have a whole group of 50 students in the group, and we waited a week, because the fourth of July [Independence Day in the USA], and then we did orientation week, which was that bonus training, and then we’re doing two weeks of the bonus Q&As. And I do rapid Q&A, it’s like 15 minutes each day … a couple days I went to 30 [minutes] because I wanted to answer all the questions, but it doesn’t take a lot of time, and for me, I don’t really even do a lot of prep. I just jump on and start answering the questions, and it’s really fun.
So, one of the things that I felt the most proud about, watching these guys go through this, and kind of shift their mindset into The Hirsh Process and into the concepts of buying data, and paying to test your ad spend, and paying to just… you know, knowing that you might not get your return on investment back right away, but that you’re playing the long-game, especially with a new funnel and a new product, which I’ve talked a lot about on the podcast, actually. And then in combination, I’m preparing a speech for next week. I go speak at a big event, War Room in LA, and I’m working on a speech. I teach a version of The Hirsh Process in my signature talk, and I’m customizing it for this group…
…but another thing I realized is just how different I look at, and our process looks at, setting your ad budget, and I realized this when I was actually talking to a coach that I am working with on my speeches, and he’s like… “This first point,” that I talk about, of deciding what success means in your marketing, which is part of Step One of The Hirsh Process, and starting backwards instead of starting with your budget, is like the opposite of so many ads people. And I just got this question from a student, I just looked into our form where I’m going to be doing the Q&A soon, and I saw this question, and she said, “I set my budget, here’s the budget, here’s…” And she was working all the way backwards, and I’m like, “Oh my gosh,” I’m just so happy.
So, I wanted to share that process with you just as a reminder, because I think people get so caught up, and they ask themselves first, like, “What should my ad budget be?” If you talk to most ads people, ad agencies… and this person I was talking to, he’s like, “The last ad agency I talked to, one of the very first questions they asked me was ‘What’s your monthly budget?’ And the way you think about it is completely backwards, but so much more effective.”
And it’s true. You can’t go into it asking yourself, “Hey, what’s my budget?” and then just picking a budget out of the air, and then saying, “Okay, that’s my budget, let’s just run with it, and see what happens.” You have to be so much more strategic with that. So instead, you flip it upside down, and you start with, what is your sales goal? And we do this with every single client, with every student I work with now in IGNITE… I’m constantly hounding this in. It’s about working backwards, and if you do that, you’re going to learn how marketing always works. Marketing always meets those numbers as long as you watch them, and you adjust them constantly, and you optimize for them.
So, when deciding on your ad budget, there’s two things: You either have a proven funnel or you have a brand-new funnel. And if you have a brand-new funnel, you’re not going to have data, so you’re not going to know, “Okay, if I get a thousand opt-ins, I usually get about one sale, or two sales, or three sales.” You’re not going to have that information, which means you have to go get that information, but you still can set and plan a budget strategically first.
So, this person, I’m actually looking at the question ,because I was so inspired by this, she said, “I just set my budget. I want to sell 10 of my $3,000 courses. I’m assuming a 1% sales conversion, so I’m going to need a thousand registrants to sell 10 courses. Estimated webinar cost per lead is $5, which equals a $5,000 budget,” and then, “Does this sound about right?” and this “feels like a big stretch” to her, “but doable.”
So, do you see how that worked out? She said, “I want to sell 10 of my $3,000 courses,” so she started there: What is your sales goal? And usually it’s in units; I usually do it in units, because that’s how you figure out the percentage of opt-ins that are going to buy. So if, let’s say, her sales goal with this is going to be $30,000, she’d just figure out, “Okay, it’s 10 sales of that $3,000 course.” And then, she next plugged in the sales conversion, so that means, how many people who opt-in to [the] front end of your funnel are you either projecting, because you’re guessing on industry averages, or are you projecting, based on your own data? So, 1-3% is average, and the more expensive your course is, the lower the sales conversion is going to be.
My advice to her on the Q&A is actually going to be, you might want to plan worst-case scenario, because this one, she doesn’t have data, I know she doesn’t. You might want to plan worst-case scenario with a half a percentage conversion, because you’re selling a $3,000 course, right? So it’s on the much higher-end level. I don’t know, based on her question, if she’s doing sales calls or not – which if she is, I would actually rework it to say, how many of those registrants do you need to get to book a call to meet your sales goal? So it’s like, every piece we’re tying it to. You either have to guess your sales conversion based on industry averages, which I would do 1-3% … and you can play with it, so you could say, “What if I convert 1%? What if I convert 3%?” Or you take data that you have from either launching, or running ads in the past, or testing your offer in some way, and you plug it in.
Now, one thing I want to mention here is, if you have only tested your offer and your funnel with warm traffic, then remember that, because it’s going to convert lower than cold traffic. So, let’s say you tested your webinar funnel with warm traffic, and 4% of the opt-ins convert. I would slice that in half for cold traffic and say, “Okay, 2% of cold traffic are going to convert,” because warm traffic is obviously going to convert higher, because they already know you, they’ve already had touchpoints with you – which is why it’s important to grow your warm traffic!
Okay, so then she says, “…a 1% sales conversion, I need a thousand registrants, because 1% of a thousand is 10.” So now she knows how many people she needs to get into the top of her funnel, and that is what can help us decide a budget, but we don’t know that number until we know our sales. Do you guys see where I’m going with this? So she needs a thousand registrants to sell 10 courses if she converts 1% of them. Her estimated webinar cost per lead is $5. I think she’s [run]… Yeah, she has. She’s gotten 50 attendees in one month of [an] $80 daily ad spend. So she knows … she might know her sales percentage conversion, too, so I’m going to talk to her about that …
But, 50 attendees she’s had in the past, so she knows she’s paying about $5 cost per lead. Again, so she’s pulling from data from running ads. You can either guess, or you can pull data that you have on that cost per lead. Industry average for a webinar is $4 to $8, so it depends on if you’re targeting business owners or if you’re targeting consumers. Guess in the middle there, like if you were brand new, I would say put $6. And you can, again, play with it. So, $5, she needs a thousand registrants. That means her budget’s $5,000. And if everything goes well, she’d make $30,000 off of that budget, which is pretty dang good, and so I’m going to make her redo the math with a half a percentage sales conversion to her $3,000 course, because… and see what that equals. I cannot do that in my head, but it would be half the sales. It’d be $15,000 with $5,000 ad spend, which is a one to three return, which is actually still good, so that’s… Yeah, that’s still good.
But now we have a budget, she’s got a 5K monthly budget. And not only that, she has metrics. She knows, “With that budget, I’m guessing I’m going to get a thousand registrants, and I’m going to sell 10 of my courses, and my ROI will be this much.” She might be guessing, because she hasn’t run ads. The most she’s spent is $80 a day for a month, so, close. I mean, she’s spent what, like $2,500. So she’s guessing to an extent, she has some data, but look at… Isn’t that so much clearer to start ads with all of those metrics?
And then throughout the month, as you’re running it, you actually have something to compare it to. Let’s say we’re halfway through the month, she’s spent $2,500, and she doesn’t have 500 registrants. Or let’s say she has 700 registrants, but she doesn’t have the sales. So she can tweak things that need to be tweaked, from her ads to her webinar to the funnel itself, live as she’s going through it, because it’s not like you’re saying, “I’m going to spend $5,000 and I’ll evaluate it in 30 days.” You have metrics where you know that you should be, and that’s what we do for all of our clients, because in our team’s daily tracking sheets, it’s highlighted either green, yellow, or red every single day of, “Are we on track? Based on the month’s goals, are we on track to hit them if it’s the 10th of the month or the 15th of the month?”
And so we have this awesome conditional-formatted spreadsheet that is droolworthy, that all my ads managers fill out, but we’re tracking metrics throughout the month so that you can make changes throughout the month, so you’re not like, “Okay, $5,000, let me just hope it works, and I’ll check back in 30 days.” She’s able to pivot 10 days in if she’s not hitting her goals, and she’s also able to see where she’s not hitting her goals, because she has a metric with everything: her budget, her leads, her cost per lead, and her sales. And so she can see cost per lead’s high, or sales conversion is low, and fix what needs to be fixed with that.
So that is how you set an ad budget, and if you are guessing and choosing to be in a buying data … or need to be in a buying data spot, where you don’t know, you still can do this exercise with industry averages so that you know, “Okay, I’m committing to spend $2,000 or $1,000 this month testing my funnel. Out of that, I think I will get these results.” So even if you’re at the place where I’ve talked about buying data, where you do have to just choose a budget and decide, “Hey, I’m choosing this budget to test,” you still have metrics and milestones that you want to compare that budget to. It’s not, again, “Let me spend my thousand-dollar testing budget, and then come back and look at it in 30 days, and see how it did.” You still work backwards and say, “With the thousand dollars, I think I can get this many leads; and if I get this many sales, I’m going to be ecstatic; but if things played out, that’s how it should convert.”
This is so crucial. I will never stop hounding this. I’m so proud of my students for looking at things this way. So many of them have said, “This has completely changed my mindset and how I look at marketing, because I used to just think you choose a budget and you hope to get the best results, but now it’s like there’s a science to it, there’s a process to it. You pick all these numbers, you strategically plan all these numbers, and then you can easily see the problems.” So, so crucial.
All right, you guys, I had fun with this one. I got a little bit excited. If you guys are thinking about working with Team Hirsh, you want to work with an amazing team who has one of those amazing daily trackers … I’m telling you, someday I wish I could video share them on this podcast, and go through it, because I just looked at it. I’m putting a screenshot of it in my presentation, of just the tracker without client information in it! But it’s amazing. So, if you are thinking about working with Team Hirsh, we’re capped out right now. We are at capacity. There’s a 30-day waiting period to work with us, and so plan ahead if you’re thinking about it in the next quarter, this year. I would at least get on the phone with our team and get your spot and your name saved, so go to HelpMyStrategy.com to apply and book in that call, and I will catch you all next time.
Thanks for listening to the Hirsh Marketing Underground Podcast. Go behind the scenes of multimillion-dollar ad campaigns and strategies, dive deep into The Hirsh Process, and listen to our most popular episodes over at HirshMarketingUnderground.com. If you loved this episode of the podcast, do me a favor and head over to iTunes to subscribe and leave a review, so we can reach more people and change more lives with this content. That’s all for now, and I’ll catch you next time.