How Much Budget You Need to Start Advertising
There's no minimum figure that works for everyone. There is a way to calculate yours, before you spend.
The question about minimum budget nearly always gets an arbitrary answer, because it depends on variables the person answering doesn't know. The calculation can be done, though, and it serves more to decide whether to start at all than how much to spend.
Start from the value of a customer
What is a customer worth in the first year, net of costs? That figure is the ceiling worth spending to acquire one. If you don't know it, any budget is a gamble: it's the first number to recover, before opening any campaign.
The second constraint: data needed to decide
A campaign produces decisions only once it has collected enough results to separate chance from trend. Three enquiries in a month allow no conclusion. The minimum budget is the one that produces a readable number of results within the chosen window.
What to budget beyond the spend
- Producing the creative: two or three versions are needed regardless.
- The first two weeks, while the system gathers data and costs run higher.
- The time of whoever answers the enquiries that arrive.
- A reserve to extend, if early results are encouraging but not conclusive.
When it's better not to start
When the available budget produces fewer than about ten results in the period. In that case the spend produces no knowledge, and without knowledge the next campaign restarts exactly where the first one began.
A budget too small to produce readable data isn't a small investment: it's spending that teaches nothing.
Sources and Further Reading
Official documentation and guidelines cited or useful for going deeper.