How to Set Your Marketing Budget: A Clear and Data-Driven Approach

At our marketing agency, one of the most frequent questions we encounter from clients or potential clients revolves around setting a marketing budget, particularly for advertising spend. Allocating funds for advertising on platforms like Google and Facebook can be nerve-wracking, especially if you are new to these channels. However, fear not, as determining your advertising budget is not an elusive art but a science backed by data and analysis. In this blog, we will walk you through some essential tips to help you confidently set a marketing budget that aligns with your business goals and yields optimal results.

Understand Your Business Goals:

Before diving into budget allocation, it is crucial to have a clear understanding of your business goals. What are you trying to achieve through your marketing efforts? Whether it’s increasing website traffic, generating leads, boosting sales, or building brand awareness, defining your objectives will serve as the foundation for your marketing budget decisions.

Analyze Historical Data:

For businesses with prior advertising experience, analyzing historical data is a goldmine of insights. Look back at past campaigns to identify which marketing channels and strategies have yielded the best results. This data will help you understand what has worked well in the past and enable you to optimize your budget allocation for future campaigns.

Start Small and Scale Gradually:

If you’re new to advertising on platforms like Google and Facebook, it’s wise to start with a modest budget. Treat this initial phase as a testing and data collection stage. Allocate small amounts to different marketing channels and carefully monitor their performance. Scaling up gradually based on the results will help mitigate risks and ensure your budget is being allocated wisely.

Consider Cost per Lead (CPL) and Customer Lifetime Value (CLV):

Two critical metrics in marketing budget decision-making are Cost per Lead (CPL) and Customer Lifetime Value (CLV). Calculate your average CPL by dividing your total advertising spend by the number of leads generated. Simultaneously, assess the CLV, which represents the average revenue a customer brings over their lifetime. Strive to keep your CPL below your CLV to ensure profitability in the long run.

Set Performance Benchmarks:

Establishing performance benchmarks is essential for tracking the success of your marketing campaigns. These benchmarks will vary based on your objectives and industry standards. For instance, if you aim to increase sales, monitor your Return on Advertising Spend (ROAS) or Conversion Rate. Regularly reviewing these benchmarks will help you make data-driven adjustments to your marketing budget.

Embrace A/B Testing:

A/B testing, also known as split testing, is a powerful tool to optimize your marketing efforts. Experiment with different ad creatives, copy, targeting options, and landing pages. By comparing the performance of these variations, you can identify the most effective elements and invest your budget more efficiently.

Monitor and Adapt:

Once your campaigns are up and running, don’t simply set and forget. Continuously monitor their performance and adapt your budget allocation based on the insights gained. Marketing is dynamic, and consumer behaviour can change rapidly. Staying agile and responsive will keep you ahead of the curve.


Setting a marketing budget may seem daunting at first, but when approached with a data-driven mindset, it becomes an empowering process. Understand your business goals, learn from historical data, start small and scale gradually, and always keep an eye on key metrics. Marketing budget decisions should be guided by real data and performance insights, reducing uncertainty and ensuring your investment translates into business growth. So, embrace the math, let go of the drama, and pave the way for a successful marketing strategy. Get in touch with our marketing company in Vancouver to learn how we can help you with this!