How to Define the Ideal Budget for Digital Campaigns (SME)
- Rocket Fuel Ads
- Oct 13
- 13 min read
To find the ideal budget for digital campaigns, start with the objectives and the funnel
Firstly, define what you want to achieve in the next 3 to 6 months. For example, I need to get 120 leads/month, 40 sales/month or 70% occupancy in low season. Then work out which stage of the sales funnel you need to strengthen: awareness (reach), consideration (traffic/engagement), conversion (leads/sales) or retention.
Find out which stage of the funnel you need to reinforce
Before setting your budget, it's essential to understand where in the sales funnel your business needs the most support. The funnel divides the customer journey into three main stages:
Top of the Funnel (ToFu): the moment when the public gets to know your brand and begins to identify a need or problem;
Middle of the Funnel (MoFu): phase in which the prospect recognises the problem and compares options for solving it;
Bottom of the Funnel (BoFu): the moment of the purchase decision, when the customer is ready to convert.
To identify which step needs strengthening, analyse your current data:
Top of the Funnel (Awareness)
KPIs to be analysed:
Campaign reach and impressions.
Number of unique visitors or sessions on the site.
Growing followers on social networks.
Middle of the Funnel (Consideration)
KPIs to be analysed:
Click-through rate (CTR) on emails or adverts.
Volume of leads generated and their qualification (MQL Leads)
Engagement with content (downloads, video views)
Fundo do Funil (Conversão)
KPIs to be analysed:
Conversion rate into sales or bookings.
Cost per acquisition (CPA).
Cart abandonment rate (in e-commerce).
For example, if there is a lot of traffic but few conversions, the problem could be at the consideration or conversion stage. If the brand is not well known, perhaps the focus should be more on the top of the funnel, increasing awareness.
The focus of this analysis is to ensure that the budget investment is aligned exactly with the point at which the funnel presents bottlenecks, to speed up the progress of potential customers and improve the overall efficiency of your marketing action.
Define a primary KPI for each stage, such as an acceptable CPA (cost per acquisition), desired ROAS (return on advertising investment) or other relevant indicator.
Define your budget: Top-down and Bottom-up
Defining the ideal budget involves looking at two different but complementary sides:
Top-down: this is when you start with the maximum limit that the company can spend, based on total revenue. In other words, what ceiling can't be exceeded so as not to jeopardise the business.
Bottom-up: this is when you start from your objectives and calculate the minimum you need to invest to achieve them, taking into account expected average costs, such as the price of clicks and the conversion rate you will achieve.
Using the two together helps to ensure that your budget is realistic, sufficient to generate results and that it fits within what the company can afford to invest.
With top-down, you guarantee that the investment is in line with the business's financial capacity without jeopardising its health. The bottom-up ensures that the budget takes into account the real cost of achieving goals, such as the number of leads or sales desired.
Without this balance, you could invest an insufficient amount that prevents optimisation or an excessive amount that creates a financial imbalance, because there are no guaranteed results in advertising. This pragmatic approach creates a solid, viable budget in line with expectations.
When the ceiling (top-down) falls below the calculated floor (bottom-up), adjust targets, deadlines or the channel mix - sticking to the original plan makes the objectives unattainable.
Top-down (percentage of turnover)
It's a rule of thumb to allocate 5% to 10% of revenue to maintenance, which can rise to 15% to 20% for aggressive growth. In 2024, average budgets were around 7.7 per cent of revenue in large companies, a good benchmark for a conservative scenario (Wall Street Journal).
For example, someone who makes 10,000 €/month can start with 500 € to 1,000 € for acquisition.
Bottom-up (based on targets and estimated costs)
Estimate the CPC/CPM and conversion rate per channel using benchmarks. This is an analysis that Rocket Fuel Ads presents to all clients before we start working.
Suppose your goal is to make 40 conversions a month, with an advert whose average cost per click (CPC) is €0.3, and you estimate a conversion rate (CVR) of 2.5% (i.e. 2.5% of clicks result in sales).
Step 1: How many clicks you need?
To achieve 40 conversions, he calculates:
Necessary clicks =400,025=1.600 clicks
Step 2: How much it will cost to achieve these clicks?
Let's assume that in your sector each click costs €0.3, the total estimated cost of adverts to achieve these clicks will be:
1.600×0,3€=480€
So the minimum budget for this goal is around 480 €.
E se você só conseguê gastar 250 € por mês?
With €250 and a CPC of €0.3, you'll be able to buy approximately:
2500,25=833 clicks
With a conversion rate of 2.5%, the estimated monthly sales will be:
833×0,025=21 conversions
In other words, by spending €250 you'll probably achieve 21 sales, which is less than the initial target of 40.
It's important to realise that reaching the estimated costs for your campaigns doesn't happen automatically. Many campaigns start out with higher costs and, over time, are optimised to improve performance and reduce these costs.
When the value proposition, the creatives and the technical management of the adverts are done well, it is possible to obtain better results than the market average. On the other hand, if these elements are not well aligned and executed, you may never achieve the efficiency of the expected average values.
However, digital marketing is not an exact science: you have to constantly test, adjust and improve. This process is continuous and never ends, especially since the competition is always trying to improve its strategies too.
How you can reach 40 conversions even with a limited budget?
There are many things to do, but to help you think in terms of digital marketing we're going to highlight three options for improving results:
Improve the conversion rate (CVR):
If you can attract more qualified potential customers (who are more willing to convert), improve the content of your landing pages or make your value proposition more competitive, you may be able, for example, to increase your CVR from 2.5% to 4%, in which case you'll need fewer clicks to achieve 40 conversions:
400,04=1.000 cliques
With 1,000 clicks at €0.25 each, the cost is €250, which fits into the available budget.
Reducing the CPC:
Work on more qualified keywords, improve adverts and exclude terms that bring irrelevant clicks.
Adjust the strategy by combining channels:
Use remarketing and shopping to reduce the total cost per acquisition.
These are just a few examples, but the efficiency of digital marketing depends a lot on this, working on these variables in order to make the investment more efficient.
Respect the "learning" minimums per platform
Investing below the conversion minimums recommended by the platforms prevents their algorithms from learning and optimising campaigns efficiently. During the so-called "learning phase", all systems need a minimum volume of conversions or events to identify patterns, test audiences, adjust creative and deliver results with predictability and scalability.
Essential minimums for optimisation and profitability
Meta Ads:
The Meta algorithm requires around 50 optimisation events per ad set/week to get out of the "Learning Limited" state and start running advanced optimisation. (These 50 are not just "purchases": they count the occurrences of the event for which the ad set is optimised - e.g. Purchase, Lead, Add to Cart, Landing Page View, etc.)
Failure to reach this level results in unstable performance, higher costs and limited growth. It's crucial to have tracking correctly implemented (Pixel + Conversions API) so that the platform "sees" all the events and doesn't get stuck learning. It is recommended to guarantee at least 50 weekly conversions per ad set, and it is even more efficient to aim for 75-100. If the volume isn't enough, consolidate ad sets and/or optimise for events higher up in the funnel (e.g. leads or add to cart), as long as they are strongly related to purchases.
Google Ads:
For automatic strategies like tCPA, tROAS and Performance Max, the technical minimum is 15 conversions in the last 30 days - but in practice, both for learning and for really profitable levels of efficiency, the ideal level is around 30-50 conversions/month.
Only after reaching this volume does it make sense to switch to Smart Bidding or Performance Max; before that, optimisation is limited and the results unpredictable. Until you reach the minimum, keep campaigns in Maximise Conversions/Value or optimise manually, trying to scale creatives and audiences until you consolidate volume.
LinkedIn Ads:
On LinkedIn, the learning phase usually lasts between 7 and 10 days, and an approximate minimum of 50 conversions per ad set is recommended for the algorithm to start optimising effectively. Initial performance can be unstable if this volume is not reached, and good results only emerge when there is enough data for the system to calibrate deliveries, segmentation and bids. As with other platforms, it is recommended to consolidate ad groups and segregate objectives to make it easier to collect this data.
TikTok Ads:
TikTok Ads Manager also establishes a learning phase in which, ideally, you should achieve around 50 conversion events in 7 days to exit this phase. Campaigns that don't achieve at least 20 conversions in the first 10 days tend to have volatile and inefficient performance until the data needed for optimisation is collected. If the initial volume is insufficient, you should review creatives, audiences and budgets, focusing on generating conversions before trying to scale up.
Why invest to reach these minimums?
Platforms depend on consistent data, campaigns with few events generate poorly trained algorithms, dependence on chance, unstable results and high CPAs.
Only with these minimums is it possible to activate effective machine learning, guarantee profitability and scale campaigns without taking excessive risks.
If it's not possible to reach the minimum of conversions focused on buying, test events higher up the funnel (leads, add to cart, etc.), until the business gains enough traction to migrate the goal to direct sales.
SME budgets should be planned to guarantee these minimum thresholds. Only in this way is it possible to utilise the full potential of the platforms' artificial intelligence and build truly profitable and scalable acquisition campaigns.
Prioritise channels with greater predictable efficiency
Search and Shopping Ads
They are ideal for attracting customers with a clear purchase intent, as they appear when the user is looking for a specific product or service. These channels tend to have a more stable return on investment (ROI) and more predictable media costs, since you pay for qualified clicks that are generally more likely to convert. They are therefore a solid basis for budgeting, especially for generating direct sales.
Social networks such as Meta, Linkedin:
They are great for broadening your reach and nurturing all stages of the funnel, especially when you already have good creative and an acceptable conversion rate on your site or landing page. The current best practice for targeting on these platforms is to start with broad audiences, giving the algorithm freedom to optimise ad delivery based on a large volume of varied data. This allows the system to find the people most likely to convert, even if you haven't defined detailed micro-targeting.
Traditional segmentation by interests, behaviours or demographics can still be used, but in a complementary and strategic way, usually for A/B tests or very specific audiences. Limiting segmentation too much at the outset can reduce reach and hinder efficiency, because the algorithm needs varied data to learn and optimise your ads better.
So the focus should be on campaigns optimised by objective (such as Leads or Conversions), broad audiences and good creative to feed and teach the algorithm. This approach maximises the potential for scalability and improved results, especially for SMEs that don't have large volumes of data or big budgets.
The larger the budget available for campaigns, the less time it takes to collect enough data and draw reliable conclusions to implement improvements. This is because, as we mentioned earlier, platforms like Meta and Google need a minimum volume of conversions to get out of the learning phase and start optimising ads efficiently.
Therefore, in order to effectively test and optimise your campaigns, make sure your budget allows you to achieve these minimum conversions as soon as possible. This will make your analyses more informed and enable you to implement measures that really increase efficiency and return on investment.
Even with broad audiences, apply strategic exclusions (recent customers, low-quality visitors, employees) and consider limiting frequency where applicable to protect budget and efficiency.
Allocating the budget
Defining and adjusting the budget to digital campaigns is a step by step process with a structured initial budget that allows you to test hypotheses, collect real data and then evolve to optimise and redistribute resources in order to maximise return on investment in the most efficient way.
There is no single formula: the ideal budget, the phases and the duration of each stage vary depending on the sector, the volume of investment and the objectives of each business. However, to make it easier to understand and help illustrate the process, we'll present a practical example to serve as a guide for reflection.
Phase 0 - Technologies and Basics (1 week)
It is essential to ensure that all the technical configuration is fine-tuned so that the data obtained is reliable and can support concrete analyses and decisions:
Correct configuration of all relevant conversions (sales, leads, KPIs).
Creation and implementation of essential events on the website or application for tracking.
Definition of initial audiences, including exclusions to avoid harmful overlaps.
Implementation of UTM parameters for rigorous campaign analysis.
Measurement & privacy: implement CMP with Consent Mode v2; activate Enhanced Conversions (Google) and CAPI (Meta) to improve measurement; define attribution windows and also track a macro indicator such as MER for budget decisions.
This robust basis avoids errors in data collection and ensures that future results are reliable.
Phase 1 - Controlled Test (3 to 4 weeks)
This is when the real investment begins, distributed to maximise learning and understand what works best:
50% to 70% of the budget for High Intent Search: focused on keywords that indicate a strong purchase intent, typically at the bottom of the funnel (BOFU terms).
10% to 30% for remarketing: aimed at targeting users who have already shown an interest (site visitors, interactions or customers).
If you already have consolidated audiences, investment in remarketing should be maintained to take advantage of greater efficiency and lower costs.
If you don't yet have sufficient audiences, the ideal is to focus on campaigns that generate traffic and leads (Search, Meta) to build these lists.
10% to 30% for Meta (Leads/Traffic): to increase the volume of events and allow the algorithm to learn and optimise.
The main objective of this phase is to achieve the minimum conversion rates that the platforms require for good learning, validate the initial costs (CPA) and prepare the ground for informed decisions.
Practical illustration of budget distribution, costs and results
To help you understand these principles with concrete data, here's an illustrative example based on average European figures, with a target of 100 monthly conversions and a total budget of around €1,000.
Search BOFU concentrates most of the budget on attracting consumers with high purchase intent. Although its CPA is higher, this channel gets qualified traffic and generates the highest volume of conversions, making it fundamental to the success of the campaign.
Investment in Meta focuses on generating leads and traffic that feed the funnel. With a low average CPC (€0.14) and a low CPA, it contributes 53 conversions, which can initially be add to cart or leads, and helps build audiences for remarketing.
Remarketing uses a smaller budget (10% of the total), but with a very competitive CPA, reflecting the efficiency of reactivating visitors interested in the product
When structuring the budget in this phase 1, it is essential to ensure at least 3 to 4 weeks, sometimes less and sometimes more, in order to collect enough data to validate costs, test creatives, and adjust campaigns based on concrete results. This approach is the basis for optimised, scalable campaigns that generate real, growing conversions for your business.
Phase 2 - Budget optimisation and redistribution (2 to 3 weeks)
With enough real data, it's time to maximise the effectiveness of the budget by focusing on the channels, campaigns and creatives that perform best. To do this you must:
Consolidate and increase the budget allocated to the campaigns, audiences and creatives that are proving to be most effective, ensuring greater investment where the return is highest.
Pause or adjust underperforming campaigns, testing new variations of creative or offers to identify combinations that improve results.
For new accounts or those with little data, during the first 2-3 weeks, it is unlikely that you will have enough data for automatic bidding strategies such as tCPA or tROAS to work effectively.
We therefore only recommend migrating to these automatic strategies when there is a consistent volume of conversions, ensuring that artificial intelligence will be able to make efficient decisions and increase returns.
The same data volume requirement applies to investing efficiently in Shopping and Performance Max campaigns, taking advantage of the artificial intelligence of these platforms for cross-channel optimisation and maximising reach.
Finally, continuous monitoring throughout this phase is crucial to ensure that the changes made have the desired effect. This monitoring makes it possible to optimise investment dynamically and prepare campaigns for efficient scalability in the future.
Common mistakes (and how to avoid them)
Here are some of the most common mistakes in digital campaigns and practical tips for avoiding them:
Believing that investing little brings quick results: Very low budgets may not be enough to get out of the learning phase of the platforms, delaying or preventing results. The ideal is to concentrate the budget and simplify the campaigns to give the algorithm consistent data.
Leaving campaigns on autopilot without regular monitoring: Digital marketing requires constant monitoring, ideally weekly, to identify problems or opportunities for improvement before they have a negative impact.
Ignoring support conversions (leads, micro-conversions): Focusing only on the final sale can hide important signals along the funnel. It is essential to follow the customer's entire journey, valuing leads and actions of interest to optimise the journey.
Spreading the budget over too many channels before analysing data: Splitting investment too thinly, without enough data to understand what works, jeopardises overall effectiveness. Start by focusing on the most promising channels and campaigns and then diversify based on concrete results.
In addition to these, other common mistakes found in digital strategies include not defining clear objectives, not knowing the target audience in depth, neglecting retention and keeping marketing and sales teams misaligned.
To avoid these problems, always define clear KPIs in line with business objectives, know your audience well, monitor data regularly and ensure that marketing and sales work together.
Finally, never ignore the user experience: slow, unintuitive websites with confusing navigation can destroy the potential of campaigns, causing high abandonment and low conversion rates.
Defining the ideal budget is not a magic number, it's the balance between what the company can invest (top-down) and what is needed to fulfil targets with real data (bottom-up).
Remove bottlenecks from the funnel, ensure an impeccable technical base (CMP/Consent Mode v2, Enhanced Conversions/CAPI, UTMs) and respect the platforms' learning minimums.
Test with discipline, consolidate where there is proof of efficiency and use metrics that link marketing to the business (CPA/ROAS and a macro indicator such as MER). If the ceiling falls below the calculated floor, adjust targets, deadlines or the channel mix. In this way, the budget stops being a "spend" and becomes a predictable and scalable investment.
Get in touch to start growing your business now.
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