How Much Should I Spend on My Ad Campaign?

One question that people often ask is “How much should be spent on ads?” 

Determining the cost of ads is a crucial decision that does not have a one-size-fits-all answer. There are many factors to consider when budgeting for a digital ad campaign, so we laid out some key considerations to give you a framework as you make your decision: 

The first key factor you need to consider is your Customer Lifetime Value (CLV). The definition of CLV is a measure of the average customer's revenue generated over their entire relationship with a company. Having an understanding of this number will help you determine how much you are willing to spend to acquire a new customer and then assist our team in setting a desired cost per result. 

Second, you need to determine your Keyword Cost. Having clarity on your keywords is essential. It allows our team to develop a keyword planner for you that will show the average cost of obtaining a click. Knowing the cost per click will assist in piecing together your budget allocation to optimize your ad spend for maximum ROI.

One final key factor to understand when determining Ad spend is your Campaign Goals. Ask yourself, “What am I trying to achieve through this Ad campaign?” Clearly defining your goals and your desired cost per result can help you do the math on how much ad spend would be needed to meet those goals. For example, if your goal is 200 new leads, and it costs $100/lead, you know you’ll need to spend $20,000 to get those leads. The alignment of your ad spend with your campaign goals ensures effective budget allocation and provides an accurate metric of success for your campaign. 

In general, it is recommended to have a minimum ad spend to generate enough campaign data for learning loops and optimizations. Typically, a minimum of $1500 per month per platform and campaign is advised. This allows you to gather sufficient data to make informed decisions and optimize your ad performance. 

Our team is here to provide valuable insights and recommendations tailored to your specific needs and goals for your digital ad campaign. Connect with 454 Creative if you’re interested in seeing how digital advertising can turbocharge your growth!