Strategy
How much should you spend on ads? The maths-first answer
The question every owner asks and every agency dodges. You don't need a benchmark report, you need three numbers from your own business and five minutes of arithmetic.
Founder
Start with what a customer is worth
Not the first sale, the real number. Average order value times how many times they buy, or monthly fee times how many months they stay. A dental patient is worth $2,400 over two years. A gym member is worth $840 over seven. If you don't know yours, estimate it conservatively and refine later.
Decide what you'll pay to get one
Sustainable acquisition cost is usually 20 to 30% of first-year value for local services, lower for low-margin products. Our dental client can pay $250 for a patient and still make money. Their $12 leads at a 15% booking-to-patient rate cost $80 per patient. That's a business.
Work backwards to budget
Take your target CPL, multiply by the leads you want per month, and that's the budget. Want 50 leads at a $30 CPL? $1,500 won't touch it and $15,000 would be wasteful. The answer is about $1,500 in spend plus management. This is why 'how much should I spend' has no universal answer: it depends entirely on what your leads are worth.
The minimum viable budget matters more. Meta needs roughly 50 conversions a week per campaign to exit learning. If your CPL is $30, that's $1,500 a week just for the algorithm to think straight. Below that you're in the slow lane, which is fine, but expect slower reads.
Quick formula
Customer value × 0.25 = max CPA
Max CPA ÷ close rate = max CPL
Max CPL × leads wanted = monthly budget
When the maths says don't advertise
Sometimes the answer is 'not yet'. If your margin can't carry a $40 acquisition cost and your market's floor CPL is $60, ads lose money at any budget. Better to know that before the invoice. The pricing page shows our package spend ranges, and the audit runs this maths on your actual numbers for free.
If you skimmed
The short version
- Budget backwards: customer value sets max CPA, not benchmarks
- Meta needs ~50 conversions a week to learn, underspend buys slowness
- Sometimes the honest answer is your margins can't carry ads yet
Founder at Target Growth Lab
Still audits every account himself. It's the best part of the job.
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