The number one question we get from new clients: "How much should I spend on ads?" The answer isn't a number — it's a framework. Here's how to think about paid media budgets in a way that actually makes sense for your business.
The 5-10% Rule (and When to Break It)
Most marketing experts say spend 5-10% of revenue on marketing, with 40-60% of that going to digital channels including paid media. That's a fine starting point for established businesses. But if you're a startup or entering a new market, you might need 15-20% to build momentum.
The real question isn't "how much can I afford?" — it's "what return do I need?" If you spend $5,000 and make $20,000, the budget was right. If you spend $50,000 and make $200,000, even better.
Budget by Channel
Not every dollar should go to the same place. Here's a starting framework:
- Google Search Ads (40-50%) — Highest intent. People are actively searching for what you sell. Start here.
- Meta/Facebook Ads (20-30%) — Best for awareness and retargeting. Great creative testing platform.
- LinkedIn Ads (10-15%) — B2B only. Expensive CPCs but highly qualified leads.
- TikTok/YouTube (10-15%) — Video-first platforms. Good for brand building and younger demographics.
- Retargeting (10%) — Always reserve budget for retargeting. These are your warmest audiences.
Minimum Viable Budget
Below $2,000/month in ad spend, you won't generate enough data to optimize effectively. Google needs about 50 conversions per month to use smart bidding. Meta needs about 50 events per week per ad set. If your budget can't hit those thresholds, focus on fewer channels instead of spreading thin.
When to Increase Budget
Scale when your ROAS (return on ad spend) is consistently above your target for 30+ days. If you're hitting 4x ROAS at $5K/month, test $7.5K. If it holds, go to $10K. Scale gradually — doubling overnight usually tanks performance.
The biggest mistake? Cutting budget when it's working because "we got enough leads this month." Paid media is a machine. Turn it off and it stops. Your competitors won't.