How much should you spend on ads?
Work out the monthly ad budget you need to hit a customer goal, and what it should return. Enter your own numbers; nothing is saved or sent.
Plan for at least 60 to 90 days at this budget so the campaigns have time to learn. Facebook ads management
Four numbers, one answer.
- Enter how many new customers you want each month.
- Enter what a new customer is worth to you on their first sale.
- Enter what share of leads usually become customers.
- Enter the cost per lead you expect, from past campaigns or a best guess.
Leads needed = customers wanted ÷ close rate
Monthly budget = leads needed × cost per lead
Revenue = customers × value per customer
Return on ad spend = revenue ÷ budget
Say you want 20 new customers a month, each worth $500, you close 25% of leads and expect $30 per lead. You need 80 leads, which costs about $2,400 a month and brings in $10,000, a return of about 4.2x.
What to do with the result.
- If the budget is higher than you can spend, lower the goal or improve your close rate first.
- If the return is below your break-even, raise the value per customer or lower the cost per lead.
- Commit to the budget for 60 to 90 days so campaigns can learn.
- Track real cost per customer, not just cost per lead.
Straight answers.
How much should a small business spend on ads?
Start from the number of new customers you need, your close rate and your expected cost per lead. That gives the leads you need and the budget to get them. Then commit to it for 60 to 90 days.
What is a good return on ad spend?
It depends on your margins and what a customer is worth over time. A business with repeat customers can profit on a lower first-sale return than one that sells once.
Where do I get my cost per lead?
From your past campaigns, or ask us on a strategy call. CTRL Track shows real cost per lead and cost per sale for every campaign.
Want the real numbers? Let's talk.
Book a free 45-minute strategy call and we'll run these with your actual data.
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