Work out your budget backwards: how many customers you need each month, and how much you can pay to win one customer and still make a profit. Multiply the two to get your monthly budget, and start with a test period of two to four weeks before you scale up.
Step by step
- 1
Work out the profit per customer
Average order value multiplied by profit margin, and if customers buy again, calculate their value over a year.
- 2
Set an acceptable acquisition cost
The most you can pay for a new customer without losing money.
- 3
Set the monthly target
The number of new customers you need to reach your target sales figure.
- 4
Budget equals customers times cost
This is a first estimate that is confirmed or adjusted after the test period.
- 5
Split it
A test budget for new ads and audiences, and a larger budget for what has already proven to work.
A very small budget spread across many campaigns is not enough for any of them to learn, so the ads look like failures when they have never really been tested.
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