How much should I spend on advertising?
How much should I put into advertising? In most businesses this is answered by instinct — and a budget set by instinct either runs out early or never works at all. 💰
The right question is not “how much should I spend” but “what can one customer cost me”.
Short answer: the budget comes from unit economics, not revenue. First find what a sale can carry, then multiply by your target volume. 📊
Three wrong methods
BU BÖLÜMÜN ÖZETİ
- “A percentage of revenue”
- “Whatever is left over”
- “Whatever competitors spend”
- The shared error
All three end in the same place. 🚫
“A percentage of revenue”
A sector average knows nothing about your margin. The same ratio is generous in one business and insufficient in another. 📉
“Whatever is left over”
You cannot advertise with what remains at month end; that amount changes every month and no learning accumulates. 🪙
“Whatever competitors spend”
Their margin, stock structure and customer lifetime differ. Their number is not information for you. 👀
The shared error
All three start from the input, not the output; a budget is built backwards from the result. 🔄
Work out your unit economics
BU BÖLÜMÜN ÖZETİ
- Average order value
- Gross margin
- Repeat purchase
- Affordable customer cost
Four numbers, one page. 🧮
Average order value
The average money a sale carries. An average from a period without promotions is more accurate. 🧾
Gross margin
What remains after product or service cost. Advertising is paid from this. 📐
Repeat purchase
How many times does a customer buy in a year? A business looking only at the first sale keeps its budget too low. 🔁
Affordable customer cost
Gross margin × purchases × the share you can allocate. That figure is your ceiling. 🎯
Related reading from the archive: digital marketing budget · Google Ads budget.
Build the budget
BU BÖLÜMÜN ÖZETİ
- Write the target volume
- Multiply
- Add a learning allowance
- Reality check
Three steps, backwards from the target. 🪜
Write the target volume
How many new customers a month? “More sales” is not a target, it is a wish. 📌
Multiply
Target volume × affordable customer cost = monthly ceiling budget. 🧮
Add a learning allowance
In the early months part of the money buys information. That is investment, not loss. 🧪
Reality check
If you cannot afford that figure, the problem is not the budget but the margin or the price. ⚖️
How small can you start?
BU BÖLÜMÜN ÖZETİ
- The data threshold
- The time threshold
- Concentrate in one channel
- The waiting option
There is a floor. 📏
The data threshold
If you cannot gather enough clicks and conversions to decide, the spend teaches nothing. 📊
The time threshold
A two-week trial gives no answer; you need at least one purchase cycle. ⏱️
Concentrate in one channel
Split across three channels, a small budget learns nothing anywhere. 🎯
The waiting option
If you cannot meet the threshold, waiting beats scattering the money. 🤚
When does the budget change?
BU BÖLÜMÜN ÖZETİ
- When cost falls
- When margin changes
- When the season arrives
- When capacity fills
On four signals. 🔄
When cost falls
If customer cost drops below the ceiling, it is time to increase; the decision sits in the increase guide. 📈
When margin changes
If costs rise and margin falls, so does the ceiling. Budget follows margin. 📉
When the season arrives
In periods of higher demand the same money brings more business. 📅
When capacity fills
If you cannot serve the demand coming in, advertising produces dissatisfaction. 🏭
What should I do today?
BU BÖLÜMÜN ÖZETİ
- Step 1: write the four numbers
- Step 2: calculate the ceiling
- Step 3: multiply by target volume
- If you want help
Three steps, one hour. 🪜
Step 1: write the four numbers
Order value, margin, repeat purchase, allocatable share. One page. 🧮
Step 2: calculate the ceiling
What can one customer cost you? That figure becomes the measure for every decision. 🎯
Step 3: multiply by target volume
The monthly budget follows; the split sits in the channel guide. 📊
If you want help
Let us work out your unit economics and budget: use the consult your expert form. For your current setup see the advertising digital audit; the whole sits on the advertising consulting page. 🎯
📝 Notes From the Field
A business set its budget by a “five percent of revenue” rule and believed it was losing money every month. Once the four numbers were written it became clear the margin was high and customers bought three times a year. The affordable cost was twice what it was actually spending — the problem was underspending, not overspending.
📖 Short Glossary
Unit economics: the revenue and cost structure of a single sale. Affordable customer cost: the upper limit you can pay to win a customer. Learning allowance: budget spent to gather information early on. Data threshold: the minimum measurement needed to decide.
⚡ Quick Summary
The budget comes from unit economics, not from revenue, leftovers or competitors. 💰 Four numbers are written: order value, margin, repeat purchase and allocatable share. Multiply by target volume and add a learning allowance. Below the data and time thresholds, waiting beats scattering.
🎯 Next Step
Let us work out your unit economics and budget: use the consult your expert form. The channel split sits in the splitting guide; for your setup see the advertising digital audit.
Frequently Asked Questions
Sık Sorulan Sorular
Calculate a ceiling from margin and target volume, and treat the first two months as a learning period. In that period the aim is not profit but discovering the real customer cost.
Decide monthly and execute daily. Judging by daily figures makes fluctuation look like a trend and leads to premature intervention.
Use average project value instead of order value, and the number of months a client stays instead of repeat purchase. The logic is identical: advertising is funded from the gross margin a client leaves behind.