Most businesses set their advertising budget the same way they set the office thermostat. Someone picks a number that feels about right, nobody's quite sure why it's that number, and it stays there until somebody complains. A bit of money goes out each month, some stuff happens, and at no point does anyone sit down and work out whether the number bears any relation to what the business is trying to do.
We understand why it happens. Advertising is one of those costs that feels optional right up until the day the phone stops ringing. So it gets treated as a discretionary spend - a tap you turn up when things are good and off when they're tight - rather than a proper line in the plan. The trouble is that this is precisely backwards. The months when you can't afford to advertise are usually the months you most need to.
So here's how we'd actually think about it.
Start with what a customer is worth
Before you decide what to spend getting customers, you need a rough idea of what a customer is worth once you've got them. Not the value of a single sale - the value of the whole relationship. If the average client stays with you for three years and spends two thousand pounds a year, that customer is worth six thousand pounds, not the two hundred they spent on their first order.
This one number changes everything. A business that thinks a customer is worth two hundred pounds will panic at the idea of spending fifty to acquire one. A business that knows the real figure is six thousand will happily spend two hundred and still be delighted. Same advert, same cost, completely different decision - and only one of them is looking at the right maths.
You don't need this to three decimal places. A sensible estimate, based on what you actually know about your customers, is enough to stop you flying blind.
Work backwards from a goal
Once you know what a customer is worth, you can work backwards. Say you want twenty new customers this year. You know that, roughly, one in ten people who enquire go on to buy. So you need two hundred enquiries. And you know from experience that it takes a few hundred people seeing your advert to generate one enquiry.
Suddenly the budget isn't a number plucked from the air - it's the answer to a question. What will it cost to put your business in front of enough people to generate two hundred enquiries? That's your budget. It might be more than you'd hoped. It might be less. But at least it's connected to something.
The businesses that struggle with advertising are almost always the ones that never did this sum. They spent a bit, got a bit, and had no way of knowing whether "a bit" was good, bad or a disaster, because they never said out loud what they were trying to achieve.
Leave room to learn
Here's the part nobody likes hearing. The first month or two of any advertising spend is largely tuition. You're paying to find out what works - which message lands, which audience responds, which platform actually sends you customers rather than clicks. Almost nobody gets it right first time, and the ones who claim they did got lucky.
This means you should budget for a run-up, not a single sprint. A business that spends five hundred pounds, sees nothing dramatic happen and concludes "advertising doesn't work for us" has learned nothing except that five hundred pounds isn't enough to learn anything. Give it long enough to gather some evidence, then use that evidence to spend the next lot more wisely.
Don't spend money you can't measure
The one rule we'd hold to above all others : don't put money into anything you can't measure. If you can't tell whether a particular advert brought you customers, you shouldn't be running it, because you'll never know whether to do more of it or stop. Measurement isn't an optional extra bolted on afterwards - it's the thing that turns advertising from a gamble into a process.
That doesn't mean everything has to be trackable to the penny. Some of the most valuable things advertising does - building familiarity, keeping you front of mind - are genuinely hard to pin down. But you should at least know, roughly, what you spent and what came back. If you can't answer that, the budget question is academic anyway.
Set the number on purpose. Connect it to what a customer is worth and what you're trying to achieve. Give it long enough to teach you something, and measure enough to know whether it's working. Do that, and advertising stops being a cost you resent and becomes one you understand - which is usually the point at which it starts to pay for itself.
If you'd like a hand working out what a sensible figure looks like for your business, that's exactly the sort of conversation we're happy to have.