12/08/2024
How to determine your AD budget?
Below is a blueprint method I follow to make sure I know for all of my client’s how much I need to spend to reach their goals.
🎯 Start with Your Sales Target
Imagine your brand aims to achieve £10,000 in sales. This target is your North Star, guiding all subsequent calculations and strategies.
📊 Understand Your Conversion Metrics
Knowing your conversion rate (CVR) is crucial. Let’s say your CVR is 5%, and your average order value (AOV) is £100. To reach your sales goal, you need to acquire 100 customers.
🔙 Reverse Engineering Your Needs
To figure out the number of customers needed, use the formula:
Customers Needed=(Sales Target÷AOV)÷CVR×100
For a £10,000 target with a £100 AOV and 5% CVR, you’ll need approximately 2,000 link clicks, factoring in the CVR.
📈 Add a Buffer for Realistic Estimations
Experience suggests adding a 20% buffer to your initial estimate to account for the journey from link click to landing page view. This adjustment increases your target to 2,400 link clicks.
💷 Calculate Your Ad Spend
Assuming an average cost per click (CPC) of £1, your total ad spend to achieve £10,000 in sales is £2,400.
📅 Break Down Your Daily Budget
To distribute your budget effectively, divide your total ad spend by the number of days in your campaign.
For a 30-day period:
Daily Budget=Total Ad Spend÷30Daily Budget=Total Ad Spend÷30 Thus, you’ll need a daily budget of £80.
By planning your ad spend around these key metrics, you’re not just hoping to hit your sales target; you’re strategically positioning yourself to achieve it.
