Setting a paid ad budget can feel like trying to solve a riddle in a hurricane. Spend too little and you get zero traction. Spend too much and you end up wondering where your money went – and why you’re still not getting results.
So, how do you actually set the right ad budget?
Simple: your budget should match your business size, your goals, and the platform you’re using. But there’s no one-size-fits-all here. What works for a local bakery is very different to what works for an eCommerce brand scaling to seven figures.
In this guide, you’ll learn how to choose a paid ad budget that supports your growth – without blowing the bank.
Table of contents
Step 1: Start With Your Goal
Before you plug in any dollar figure, you need to define what success looks like. Are you trying to generate leads? Make direct sales? Get eyeballs on a new product?
Different goals = different budget requirements.
Why it matters
A lead gen campaign might get away with a $1,000/month spend. A product launch? That could need $10k+ if you want serious reach. And don’t forget: results from paid ads aren’t always instant, so your budget needs room to breathe over a 30 – 90 day window.
How to do it
Choose one of these three common paid ad goals:
- Traffic & awareness: Optimise for impressions and clicks
- Leads & signups: Optimise for form submissions, bookings or downloads
- Sales & revenue: Optimise for purchases and ROAS
Once you’ve got that locked, reverse-engineer your spend. For example:
- You want 100 leads per month
- Your average cost per lead (CPL) is $25
- Your minimum ad budget should be $2,500/month
Step 2: Factor in Business Size and Stage
Your ad budget should align with your business’s current capacity – not just your ambition.
Why it matters
A small business spending 50% of monthly revenue on ads = risky.
A growing business spending 10–15% of revenue to scale = smart.
And if you’re still proving your offer, smaller test budgets help you gather data without burning cash. But once you know your funnel converts? Time to ramp.
How to do it
Here’s a rough guideline based on business stage:
- New business testing an offer: $1,000 – $3,000/month
- Established business validating channels: $3,000 – $8,000/month
- Scaling business with proven funnel: $10,000 – $50,000+/month across platforms
If that sounds like a lot, remember: this isn’t “spend and hope.” With the right targeting, creative and tracking in place, you’ll know whether your budget is doing its job. (If you’re not measuring performance, check out how to do it properly).
Step 3: Understand Platform Benchmarks
Different platforms have different costs. You might pay $1 per click on Facebook… and $15 on LinkedIn. If you don’t know your platform’s average CPC or CPA, your budget might dry up fast.
Why it matters
Budgeting without platform context leads to underperformance. And it makes comparison impossible.
How to do it
Here are rough industry averages by platform (these vary, but they’re good starting points):
- Meta (Facebook/Instagram): $1-$2 CPC, $20-$60 CPA
- Google Search: $2-$10 CPC, depending on keywords
- LinkedIn: $5-$15 CPC, higher for B2B audiences
- TikTok: $0.50-$1.50 CPC, lower CPAs but needs strong creatives
- Pinterest: $0.10-$1.50 CPC, great for eCom and lifestyle
Knowing your average CPC helps you calculate how many clicks you can afford, which helps you estimate conversions. Combine this with retargeting ads and your cost per acquisition usually drops even further.
Step 4: Include Your Creative and Testing Costs
Your ad budget isn’t just media spend. You’ve also got to account for:
- Creative production (images, videos, copy)
- A/B testing budget
- Landing page development or optimisation
- Software or tools
Why it matters
If you’re only budgeting for clicks but not the assets that drive those clicks, your campaign will fall flat. And if you don’t leave room for testing variations, you’ll end up guessing what works.
How to do it
Allocate 10-30% of your total monthly ad budget to creative, testing, and tooling. That gives you flexibility to test multiple hooks, headlines and formats without cannibalising your performance budget.
Final Thought
There’s no magic number when it comes to paid ad budgets. The “right” amount depends on your goals, platform, business stage, and how much data you already have.
But here’s the rule that never fails: don’t spend what you can’t afford to learn from. Paid ads are an investment, not a gamble. And when you budget with strategy – not guesswork – you give your campaigns the best chance to perform.
Need help building a paid ad budget that fits your growth plans? Aesthetic Studios can help you spend smart from the very start.