Advertising Budget
An advertising budget is the amount a company is willing to spend on promotion over a specific period. It includes traffic acquisition (impressions, clicks, placements); content development (copy, design, videos, landing pages); and the technologies used (CRM systems, email marketing services, analytics, chatbots).
How to Calculate an Advertising Budget
- Goal-based approach: Calculate the number of leads or sales required, multiply it by the cost per lead, and add a buffer for testing.
- Percentage of revenue: Allocate a fixed share of projected or historical revenue.
- Competitor benchmarking: Estimate the advertising spend of market players and compare it with their market share.
- Residual approach: Allocate whatever remains after mandatory expenses. This works for initial tests but is not suitable for long-term planning.
To optimise your advertising budget, reallocate funds to channels with the best return on investment. Compare not the cost per click, but the cost per lead and per deal, as well as the customer's lifetime value. You can confidently turn off platforms that do not generate sales.