When it comes to digital marketing, one of the most common (and critical) questions is: how much should I spend on ads? Whether you’re running Facebook ads, Google Ads, or paid campaigns on TikTok, having the right advertising budget can be the difference between scaling profitably and burning through cash.
Why having an ad budget matters
Running paid ads without a clear budget is like sailing without a compass. A well-planned advertising budget:
- Keeps your marketing spend aligned with business goals
- Helps you measure ROI and cost per acquisition (CPA)
- Prevents overspending and wasted ad spend
- Allows for strategic scaling as you grow
How to decide your advertising budget
There’s no one-size-fits-all number, but here are the most important factors that should guide your decision:
1. Define your overall marketing budget
A common rule of thumb is to allocate 7–12% of your gross revenue to marketing. Out of that, 25–50% often goes to paid advertising. For example:
- If your business earns £100,000 per year
- You might allocate £10,000 to marketing
- With £3,000–£5,000 set aside for ads
📌 SEO Tip: People often search for “how much should a small business spend on ads?” so using these examples helps capture intent.
2. Consider your campaign goals
Ask yourself: What do I want this campaign to achieve?
- Brand awareness campaigns often require a higher budget, over time
- Lead generation and sales campaigns can be more performance-focused
- Retargeting ads are usually lower-cost but high-converting
Each campaign type will influence your cost per result and therefore your budget needs.
3. Research your cost per click (CPC) or cost per acquisition (CPA)
Use tools like:
- Google Keyword Planner
- Facebook Ads Manager estimates
- SEMrush or Ahrefs
to forecast what clicks or conversions will cost in your industry. For example:
- CPC in legal or finance can be £5–£15
- In e-commerce or fashion, it may be as low as £0.30–£1
This helps set realistic expectations.
4. Know your customer lifetime value (CLV)
If a customer spends £200 over a lifetime, spending £30 to acquire them might be very profitable. But if your average sale is £10, you’ll need to keep CPA much lower.
This calculation helps determine how much you can spend profitably per conversion.
Daily vs. monthly ad budgets
Platforms like Meta Ads (Facebook/Instagram) and Google Ads allow you to choose daily or lifetime budgets.
- Daily budgets are ideal for testing
- Monthly or lifetime budgets offer more control for larger campaigns
Example:
If you want to spend £1,500 a month on Facebook Ads, your daily budget should be roughly £50 per day.
Tips for optimising your ad spend
- Start small, scale up
Begin with a modest budget (£10–£30/day), and increase spend once you find winning ads. - Split test your ads (A/B testing)
Test different audiences, copy, and creatives to find what converts best. - Monitor your metrics
Keep an eye on ROAS (Return on Ad Spend), CTR (Click-Through Rate), and CPA. - Use retargeting
Retarget website visitors or social engagers to reduce acquisition costs. - Don’t ignore organic
Combine ads with content marketing and SEO for longer-term growth at lower costs.
Common advertising budget mistakes
- Setting a budget without a goal
- Not leaving enough budget for testing
- Turning off ads too early
- Focusing only on clicks, not conversions
- Ignoring seasonal or industry cost fluctuations
There’s no magic number, but here’s a quick framework to help:
- Start with 5–10% of your monthly revenue
- Set clear KPIs (clicks, leads, sales)
- Test and refine based on data
- Scale what works, and cut what doesn’t
Remember, your advertising budget isn’t a cost—it’s an investment. When done right, even a small budget can bring in big results.
SEO-friendly FAQ
How much should I spend on Facebook ads per month?
Start with £150–£300/month for testing. Scale up based on performance.
Is £500 a good ad budget?
Yes—for small businesses or startups, £500/month can go far if spent wisely on targeted campaigns.
What is a good ROAS (return on ad spend)?
A ROAS of 4:1 (i.e., £4 in revenue for every £1 spent) is a strong benchmark, though this can vary by industry.
