How to Set an Ad Budget Without Wasting the First Month

Set your ad budget by working backwards from what a customer is worth to you. Every other method is guessing.

Start with one number

What is a new customer worth over the time they stay with you? Not the first sale. The whole relationship.

A trades business at CAD 800 a job, with customers who return twice, is working with CAD 2,400. That number sets everything else. If you can win a customer for CAD 200, spend it every time.

Then decide how many clicks a customer costs

Roughly one visitor in twenty to fifty contacts a small business. Take the middle: about one in thirty.

If a click costs CAD 2, thirty clicks cost CAD 60. That is your cost to win one enquiry. If two enquiries in three become customers, a customer costs about CAD 90.

You now have a real budget instead of a feeling.

Set the test budget high enough to learn

The most common mistake is a budget too small to teach you anything. CAD 5 a day produces about 75 clicks a month, which is not enough to tell a good campaign from a bad one.

Plan on 100 to 200 clicks before you judge the result. For most local businesses that is CAD 300 to CAD 600 across four to six weeks.

Treat that as tuition. You are buying data.

Google and Facebook are not interchangeable

Google Ads reaches people already searching. Somebody typing "furnace repair Creston" needs a furnace repaired. The intent is high and so is the price per click. Use it for services people go looking for.

Facebook and Instagram reach people who were not looking. Clicks are cheaper and intent is lower. Use it when the product is visual, or when you need to create demand rather than capture it.

If you can only fund one, and customers search for what you sell, run Google.

Daily or lifetime

Use a daily budget for ongoing campaigns, so spend stays even. Use a lifetime budget for anything with an end date, such as an event or a seasonal sale.

Fix the landing page before you spend

Ads take people to a page. If that page is slow, unclear, or missing a phone number, every dollar leaks out at the last step.

Send traffic to the page about that one service. Never to the homepage.

Move money to what works, monthly

Some ads will outperform others by several times. Shift budget to the winners and switch the rest off. That reallocation usually beats increasing the total.

Watch cost per enquiry. Ignore impressions, and be careful with clicks. Only enquiries pay wages.

Raise the budget only when the maths holds

If a customer costs CAD 90 and is worth CAD 2,400, spend more. If a customer costs CAD 900, the problem is the offer or the page, and more budget will only lose money faster.

I set up and manage ad campaigns for Kootenay businesses, and I will say plainly when ads are the wrong tool. Email jon@delcaromedia.com.