How to Set a Digital Ad Budget: Working Backwards from the Goal

An ad budget is set by asking “what do we want to reach?” rather than “what do we have?”.

The calculation

• Monthly target customers: for example 50
• Site conversion rate: 2 percent → 2,500 visits needed
• Average cost per click: 8 → 20,000 media budget
• Agency and creative production as a separate line

Channel split

Balance demand capture (Google Search) and demand creation (Meta, YouTube) by sector: 60 percent search for a product people already look for, 60 percent social for a new product.

The first three months

Month one tests, month two optimises, month three scales. At the end, compare customer acquisition cost (CAC) with lifetime value (LTV); if LTV/CAC is above 3, the budget can grow.