How To Set a Budget for Your Business Ad Campaigns

5 min read · 5 months ago


Advertising has evolved. Yet, a small business owner’s reliance on advertising remains unchanged. Another constant? The fact that your spending can impact who sees your ads and how often. To help you out, here’s what you need to consider when setting a budget for your digital business ad campaigns.

Creating business ad campaigns is time-consuming. Setting the right budget is yet another challenge. One that determines whether your ad campaigns even get seen by your target audience. After all, we’ll bet you probably don’t have the $33 million Chanel spent in its “most expensive advertising campaign of all time,” which featured videos with Nicole Kidman. Just booking the leggy Aussie superstar cost the company $3 million.

So, you want to know how to get the biggest bang for your buck. This article covers how to do the most you can with your business ad campaign’s budget. We’ll cover the basics of digital advertising budgeting: 

  • Setting Goals
  • Narrowing the Target Audience
  • Starting Small
  • Tracking Results
  • Making Adjustments as Needed


Setting Goals

Before you spend any money on online advertising, you first have to establish your objectives. Starting up a digital advertising campaign just because you see other people doing it isn’t a strategy for success. 

Facebook alone has about one million active advertisers! You need to know what you are aiming to do with your advertising budget. Otherwise, you’re just wasting valuable business revenue.

When it comes to online advertising, some common objectives include:

  • Increasing traffic 
  • Generating more leads 
  • Improving sales
  • Growing conversion rates
  • Developing a market in a particular demographic

In setting your goals to determine your digital marketing strategy, don’t get distracted by vanity metrics. The Content Marketing Institute includes impressions, “likes,” shares, comments, followers, open rates, views, traffic, time on site, or bounce rate in its definition of vanity metrics, noting these can be problematic because “they are often ambiguous when it comes to reporting a return on investment (ROI) or value to a business.”

Want to grow traffic to your site? Read 8 Quick Ways to Get More Website Traffic than Last Year.


Narrowing the Target Audience

Along with knowing what you aim to do with your online advertising, you also need to determine who you want to target

Consider this stat: 1,700 banner ads are placed before each of us per month—we look at only half of those. You don’t want the digital ads you’re putting out there to be seen by the wrong people or have the wrong message.

A big advantage of digital advertising is the availability of data. You can segment consumers by demographic or interests to reach the right person in the right place at the right time.

Saying you want to advertise your new slick new video gaming headset to teenage boys is pretty generic targeting. You can dig so much deeper than that with the tools available online today. For example, Google’s in-market audience feature helps you target boys in the gaming group who are actively researching products like yours.

Find out more about audience targeting strategies from eight digital marketing experts!


Starting Small

When it comes to budgeting, the U.S. Small Business Administration recommends spending seven to eight percent of your gross revenue on marketing and advertising. That’s for companies doing less than $5 million a year in sales with a net profit margin in the 10 to 12 percent range. 

It will also make a difference whether you’re a new or established venture. New companies can expect to spend 12 to 20 percent of revenue on marketing. The more established can spend half of that.

Now, you’re wondering what we meant by starting small. Even five percent of your revenue may feel like a stretch! Keep in mind there are many different types of advertising, even varied types of digital marketing. 

You don’t have to run a business ad campaign that includes every social media channel as well as online directories, paid search, video, email marketing, and virtual events all at one time.

Having decided on your goals and narrowed your audience, you can hone in on the best way to begin your digital marketing. According to Moz, by spending $1 per day on Facebook ads, you have the chance to get in front of about 4,000 people that wouldn’t have seen your ad otherwise. So, the size of your budget doesn’t have to be a stumbling block.


Tracking Results

Having set SMART goals, you’re in a good position to measure the success of your online ads. You can dig down into the data to see which types of online ads are appealing to your target audiences. Or when. Or where. Maybe one time of day or a different kind of device is giving you better results. By paying attention to the metrics, you could move money to boost spending at that peak time or on that high-performing channel or device.

“You may find that one of the mediums you thought would perform best is costing you the most and yielding the worst results. As you keep track, you’ll get a better idea of what’s working and what’s not,” AJ Agrawal of Verma Media wrote in Entrepreneur.

There are many types of ad tracking available today. These can include: tracking URLs, pixels, and cookies. Honestly, you’re not going to be short of data. It’s more about using your tracking data wisely. We’ll talk about that next.


Making Adjustments as Needed

Whew. Creating your business ad campaigns, setting goals, targeting an audience, and allocating a budget is a lot of work. It feels great to get those campaigns up and running, right?

Still, avoid the impulse to move on to other things. You need to keep monitoring your efforts and be willing to make changes quickly. You might find that your social media ads are performing better than your search ads. If you wait three months to look at your results, you’ll have been wasting that budget allocation. Check in regularly, and you may be able to tweak that search campaign to become a top performer too.

Evolve your business ad campaigns on an ongoing basis. Measure, target, and analyze to make the most of your budget. Reviewing search query reports, for instance, can help you find better matches and identify new top performers. Analyzing your segmentation might lead you to tweak your bidding. 

When every dollar counts, you need to be proactive, creative, and attentive if you want your digital marketing budget to get you where you want to be.



Henry Ford is reported to have said, “a man who stops advertising to save money is like a man who stops a clock to save time.” Your small business needs to be doing advertising, and it requires a digital marketing budget to make a difference. With these five steps, you’ll be able to get focused enough to make the most of your digital marketing budget allocation and see your business ad campaigns jumpstart new success.