Ad Budgeting 101

1. Define Your Advertising Goals

Before setting a budget, you need to determine what you want to achieve. Your goals will directly impact how you allocate your spend. Here are some common objectives and their recommended budget focus:

• Brand Awareness: Prioritize reach and impressions to get your business in front of as many people as possible.
• Website Traffic: Optimize for clicks (CPC) and engagement.
• Lead Generation: Focus on cost-per-lead (CPL) and conversion tracking.
• Sales & Conversions: Optimize for return on ad spend (ROAS) by targeting high-intent audiences.

💡 Pro Tip: Define key performance indicators (KPIs) for each goal. For example, if your target cost-per-lead is £10 and you want 100 leads, you should allocate at least £1,000 to your campaign.

2. Determine Your Overall Ad Budget

Your total ad spend should be based on your business size, industry, and revenue goals. Here’s a simple approach:

• New businesses: Allocate 10-20% of revenue to marketing, with a significant portion going to paid ads.
• Established businesses: Spend 5-10% of revenue on advertising, depending on your growth stage.

If you don’t have a benchmark yet, start small (£500-£1,000/month) and scale as you gather data on what works.

3. Allocate Budget by Funnel Stage

A well-structured ad budget covers different stages of the customer journey:

1. Top of Funnel (TOFU) – Awareness (40-50%)
   • Focus: Brand exposure and traffic
   • Ad Types: Video ads, display ads, social media reach campaigns
2. Middle of Funnel (MOFU) – Consideration (30-40%)
   • Focus: Engagement and lead generation
   • Ad Types: Lead forms, website visits, retargeting ads
3. Bottom of Funnel (BOFU) – Conversions (20-30%)
   • Focus: Sales and conversions
   • Ad Types: Purchase-driven ads, retargeting past visitors

This ensures you’re not just driving awareness but also converting leads into customers.

4. Choose the Right Bidding Strategy

Google and Meta offer different bidding strategies depending on your goals:

• Cost-per-click (CPC): Best for driving traffic
• Cost-per-mille (CPM): Best for brand awareness
• Cost-per-acquisition (CPA): Best for lead generation and sales
• Maximize Conversions: Uses AI to get as many conversions as possible within your budget

Start with manual bidding for more control, then test automated bidding once you have enough data.

5. Track and Optimize Your Budget

Your budget shouldn’t be set in stone—monitor performance regularly and adjust based on results. Key metrics to track:

📊 CTR (Click-Through Rate): Are people engaging with your ad?
💰 CPC (Cost-Per-Click): Are you getting traffic at a reasonable cost?
🎯 ROAS (Return on Ad Spend): Is your ad spend generating profitable sales?

💡 Optimization Tips:
✔️ Pause underperforming ads and reallocate budget to top performers.
✔️ Run A/B tests to find the best-performing creatives and copy.
✔️ Adjust bids based on audience, location, and time of day.

Final Thoughts

Ad budgeting is both an art and a science. Start with a clear strategy, test different approaches, and optimize based on real data. By setting the right budget and continuously refining your approach, you’ll maximize your advertising ROI and grow your business effectively.

🚀 Need help managing your ad budget? Founded Digital can create and optimize your ad campaigns for better results. Contact us today!

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