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How To Budget For Your Digital Advertising Campaigns

Are you constantly wondering about your spending and advertising costs? This guide will help you understand how to allocate your advertising budget. As you manage your company's marketing efforts, you're seeing increased costs per leads, impressions, and site traffic with each campaign. Choosing the right marketing channels and allocating your budget for immediate returns is crucial for your business's success.

At Llama Lead Gen, our seasoned marketers have the answers to guide your advertising budget allocation and drive brand growth. With experts in each channel, we've analyzed case studies to eliminate guesswork from your budget planning. This guide is designed to help financial leaders and heads of marketing understand advertising budget allocation and adapt to thrive in the current market.

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Master Ad Budgeting with Our Expert Guide

Ad budgeting made simple. Learn how to plan and execute effective ad campaigns.

Chapter 1 Illustration
Chapter 1

What's Included in a Digital Advertising Budget?

Chapter 2 Illustration
Chapter 2

How Do You Put Your Campaign Goals Into Numbers?

Chapter 3 Illustration
Chapter 3

What If Your Budget Doesn't Work?

Chapter 4 Illustration
Chapter 4

What Comes Next?

Chapter 1

What's Included In A Digital Advertising Budget?

  • Why Budget?

  • What Goes Into a Budget?

  • The Hidden Costs Associated With Managing Digital Advertising Campaigns

Illustration for Digital Advertising Budget
Digital Advertising Budgets

We brought on Llama Lead Gen to audit our paid Google Search, Display, and Video campaigns and help us optimize our campaigns at a lower spend. We also brought them on to assist with Marketo admin - creating and launching email and event campaigns. Results were lower cost per Acquisition, Faster Launch on Marketo Campaigns, and Improved ROI on ad spend.

Seth Anderson

Senior Marketing Manager @ CodeSignal


Why Budget?

Advertising budgets define the outcome of your campaigns. An increasingly digitized landscape calls for more significant investments in digital advertising - with studies showing that digital expenditure will continue to grow exponentially for B2B companies alone. The US Small Business Administration recommends spending 7-8% of business revenue on marketing and advertising. Digital advertising bridges the gap between businesses and a global pool of customers and requires a highly strategic game-plan to succeed. Of course, there is no one-size-fits-all digital advertising budget. Businesses must first identify the primary objective of their campaigns before formulating a realistic budget. Advertisers can achieve this by outlining the goals of their business and answering basic questions like “Is it a product or service?” and "What is the desired impact of the campaign?"

Advertising strategies may cater to lead generation, raising brand awareness, or strengthening brand loyalty. The type of campaign will determine the optimal approach and budget allocation. Different strategies and outcomes involve specific metrics. Brand awareness is improved by actions such as likes, shares, comments, and engagements, while lead generation campaigns depend on click-through-rates (CTRs) and cost-per-lead (CPL). Businesses should consider investing a substantial portion of their profits into the production of quality leads, which optimizes every ad dollar spent.

Let’s take an example: you have a goal of closing 3 sales per month for your SaaS solution, with each sale priced at $3,000. If the campaign results in 3 conversions with every 20 leads, we get a conversion rate of 15%. Now to get those 20 leads, each lead has a CPL (cost-per-lead) of $150, making the total advertising costs equal to $3,000 (the cost of 1 sale). It's essential to calculate the CPL, conversion rates, and recurring fees to ensure cost-effective spending in the right avenues.

Screenshot example of Linkedin ad
Screenshot example of Linkedin ad

An ad campaign we ran for one of our many B2B SaaS clients where we generated nearly 3,000 qualified leads through our paid advertising campaign on LinkedIn.

What Goes Into A Budget?

When you set out to do some online shopping, are you sitting there with a meticulously made budget, or are you just buying whatever catches your eye and hoping you can afford it? Honestly, the answer is probably somewhere in the middle. We set a number in our heads of what we want to spend, but if we go over, we know it's not the end of the world. This is the same attitude that many take with budgeting for their digital advertising campaigns. However, unlike shopping for fun, an ad campaign can make or break your business.


Naturally, asking what your budget should look like is kind of like asking a kid in a candy store how much candy they want. The kid’s answer is probably going to be “all of it!” Similarly, an endless budget could hypothetically achieve immense results. This just isn't realistic, though. It's kind of like throwing money at a wall and hoping something sticks. Our philosophy is to justify all budget allocation with a wise and well thought out strategy based on your marketing goals and KPIs.​

Marketing Budget Allocation Infographic
Linkedin Ads Targeting Screenshot Example

Some slides from a marketing strategy we put together for one of our clients.

Think about all the things you can spend your digital advertising budget on. It’s essential to figure out short versus long term goals and what the lowest hanging fruits are to achieve the ROI you’re looking for given your budget. Asking questions help us get there: 

  • How many qualified leads per month would you be happy with? 

  • What is your price point for your product or service? 

  • Knowing your price point, how much are you willing to spend to get a lead? (different from closing a lead)

What Is A Good CPL?

Your cost per lead (or CPL, as you will see it abbreviated) really depends on who your target audience is going to be. As it happens, some types of audiences are just pricier than others. Just think about it: an engineer is going to be a much pricier audience than someone like a freelance journalist, so the former might be on the higher end ($200 CPL or more) while the latter would be on the lower end (closer to about $25 CPL). This is also dependant on what platform you decide to run your ads on -- LinkedIn tends to have higher CPLs than a Facebook or Instagram because the quality of leads is greater. This is important to keep at the forefront of your mind when figuring out your budget and determining the goals for your ad campaign.


CPL also depends on what content you are promoting and what your CTA is. Are you promoting a webinar, a case study, a guide download, or a demo? A demo might have the highest CPL, while registering for a free webinar might have the lowest because it’s less of a time commitment and there’s the added value of learning something from the webinar. With a demo, it’s a much harder sell and a one-on-one conversation with a member of your sales team.

Linkedin ad screenshot example
Linkedin ad screenshot example

Two campaigns we ran, albeit for two separate clients, but you can see the differences in the level of engagement when the main CTA was to schedule a demo versus registering for a webinar. The schedule a demo ad campaign had a CPL of $185, while the register for webinar ad campaign had a CPL of $63.

Although you might not think that a webinar is a more qualified lead than a lead who schedules a demo, a lead who attends a webinar will be more invested in your brand and your team after seeing you and/or your team members chat through certain topics of which they are invested in. When setting up campaigns, keep this in mind, and put your strongest and most likely lowest CPL content at the forefront of your ad campaigns and have a nurture sequence in mind for warming your leads through the marketing funnel you set up. 

The Hidden Costs Associated With Managing Digital Advertising Campaigns

Many marketers and small business owners forget about the hidden costs associated with building and managing a successful campaign. Now, of course, if you’re doing all of this yourself, there isn't any additional cost — just a big-time commitment! As you can see, there's a lot that goes into this. For starters, there are a variety of marketing activities that should be done in advance — things like account audits (if you have run campaigns before to get learnings of what has worked and what hasn’t), a comprehensive digital marketing strategy, developing your audience personas, and mapping out your marketing funnel. This legwork will help to create a roadmap and blueprint for successful marketing campaigns you want to run. Then, once you actually get into the meat of your campaign, there are factors like creatives, ad copy, content promotion, product or service offerings, landing pages, and CTAs that you'll need to account for.


If you want to hire an expert agency, consultant, or freelancer who builds digital ad campaigns for a living, there are going to be even more additional costs associated with each phase of the campaign. When factoring these costs into the equation, you are likely going to be looking at another $10,000 or more in addition to what you've already budgeted — and that's just to get your paid ad campaigns off the ground. Of course, it is always possible to do it for less (cutting corners, recycling copy, sourcing your own images and videos, and so on), but if you want your campaigns to be set up properly and to deliver the results you are looking for, you’ll absolutely want to pay for an expert team who can develop a marketing strategy to fit your needs and goals.


If you need help with budgeting for your digital advertising campaigns, look no further than Llama Lead GenLet’s chat about your content marketing, social media marketing, lead generation goals, and set you up with the right budget based on your marketing goals.

Ready to demystify your marketing costs? Use our calculator now to make informed decisions that drive ROI.

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Measuring Your Campaign Goals
Chapter 2

How Do You Put Your Campaign Goals Into Numbers?

  • Establishing Tangible Digital Marketing Goals

  • Translating Your Goals Into Numbers

  • What If You Don't Know Your Goals?

Illustration for Campaign Goals

Llama Lead Gen expertly managed our ad campaigns, ensuring full budget utilization, low CPMs, and goal achievement. Their financial acumen in media management maximized our ROI. Looking forward to future collaborations!

Laurie Keith

VP of Media, Social & Emerging @ Ad Council


Establishing Tangible Digital Marketing Goals

Most clients come to us with the same goal: to generate more leads for their business. Great! However, everyone wants that. What you need to get started is to arrive at a sustainable and achievable number to set as your goal.


In order to arrive at that number, let's think back to those questions we thought about in Chapter One: 

  • Do you care more about lead quantity or lead quality? 

    • Opting for quantity likely means more leads and more eyeballs, but fewer high-quality leads, while opting for quality likely means fewer leads who are of higher quality and more likely to make a purchase from you. 

  • What number of leads would be a reasonable amount for you or your sales team to bring in each month?

    • Your answer will let you know how many ads you need to be running, where you need to be running them, how many you'll need to run in the future, and most importantly, what budget you’ll need. 

  • What is a CPL (cost per lead) you are comfortable with based on your product or service price point? 

    • When you start advertising, this will be a best guess. As you start running your campaigns, you’ll begin to see that certain content and target audiences have specific CPLs. These metrics will aid you in fine-tuning your goals, what you promote, and, as a result, fine-tuning your budget.


Once you map out what you are comfortable with for an advertising budget and what your goals are, you should begin constructing a digital marketing strategy and media plan based on the answers to these questions. A savvy marketer will also take into account the following: 

  • If you are marketing to other businesses (B2B) or to consumers (B2C)

  • The type of content you have to promote

  • Your target audience

  • Seasonality

  • What your competitors’ digital footprint is

  • What platforms you want to market on


LinkedIn, for example, is a more expensive platform than Facebook (with a higher CPC), so we’ll have to allocate a bit more of your budget for LinkedIn. For a review of advertising on different social media channels, check out our Guide To Advertising On LinkedIn Vs. Facebook, Instagram, Google, And YouTube. A sampling of ads we've created across different social media channels:

Translating Your Goals Into Numbers

Let’s look at an example. You are a leading web design company and you want to market your services that typically cost several thousands of dollars. To you, a few highly qualified leads a month would be great because even if you land just one, you’ll achieve ROI from your ad spending. Your CPL might be higher, but you’ll be fine with that because you know that you can sell your consulting services at a higher cost.


Our goal is a few leads per month. You’re aiming to achieve a CPL of $200 on LinkedIn. Say we generate 5 leads in our first month at a $200 CPL. This equates to a $1,000 total cost with an average of $200 CPL. Since our CPL and the total lead cost aren’t fully indicative of all of the people who saw your ad but didn’t count as a lead, we’ll need to map back to how many conversations likely occurred and what our conversion rate should look like. If we are shooting for an average conversion rate of 7%, we’d have to have an ads budget of $2,850 in order to achieve a CPL of $200 ($2,850 x .07% = $199.50).


Now, let’s take that same example and reverse engineer it with a CPL of $70 rather than $200. With the same 7% conversion rate, we are now looking at an ad budget of $1,000. So, for this example, the answer to “what should my digital marketing budget allocation look like?” is anywhere between $1,000 and $2,850. Making a media plan will help to map out your budget, campaigns, ad products, and targeting. 

Marketing Budget Allocation Screenshot Example

What If You Don't Know Your Goals?

Of course, this is all hypothetical and some businesses might not have the answers to all of these goal-oriented questions. At Llama Lead Gen, we usually suggest spending as little as possible in the first month of your ad campaign. Why? Our philosophy is to take a ‘test and learn’ approach to every campaign. When it boils down to it, every marketing campaign is a hypothesis. Even though we've done thousands of campaigns, each one is a bit different: the targeting is different, the product offering is different, the CTA is different, etc. There's a variety of factors that play into this. If you need help choosing your target audience, check out our Ultimate Guide To LinkedIn Marketing.


So, we don’t know what will work until we test. We don’t know how your target audience will respond or how your content will resonate just yet. Now, of course, we do work with experienced marketers and teams who have already been running digital ad campaigns for months or even years and already know their target audience, budget, and CPL. However, most advertisers we work with are either new to the digital marketing game or are experienced but haven’t yet run extensive digital marketing campaigns yet. And we'd argue that even if you are an experienced marketing team that has been there and done that, there are always new strategies to test and learn from. The platforms are always changing, as is your target audience, so it’s ever so important to test, test, and test some more to get the results you’re looking to achieve. 


With any new B2B advertising campaign, you’re most likely not going to see significant returns within the first month. For that reason, we’ll want to start off with a lower budget to see what ads work (using A/B testing best practices), optimizations based on our data, what landing pages work, and what creatives and messaging work to turn your campaign into a well-oiled machine.

Budgeting Challenges
Chapter 3

What If Your Budget Doesn't Work?

  • Going Back to the Drawing Board

  • The Value of Budgeting for A/B Testing

  • When Can You Begin A/B Testing?

  • A Breakdown of the Sprint Cycle

Illustration for Making Your Budget Work

Llama Lead Gen connected our digital campaigns with our Marketo and Salesforce systems. They revamped our LinkedIn and Google Ads campaigns by developing a new strategy, making budgetary recommendations, and more. We have much better tracking of our LinkedIn and Google advertising campaigns. We have a deeper insight into how we’re spending our money and the effectiveness of each campaign.

Brian Benner

Associate Director @ Cornerstone OnDemand


Going Back To The Drawing Board

If one of your digital advertising campaigns isn't working out the way you'd hoped, don't feel like you need to force things. It's perfectly acceptable to go back to the drawing board. As a matter of fact, it's actually encouraged — this is exactly what A/B testing is intended for. If you've decided (from your results) that you're just not finding success with a particular ad campaign, you’ll want to run A/B tests to test out different copy, landing pages, lead forms, creatives, and/or CTAs to see which resonates with consumers the most. To do this, create three or four different variations of each ad and swap out the one with the lowest engagement or performance metric with the version that's doing the best. For the most accurate results, let your A/B test run for at least a month to gain enough information for you to make an informed decision.

The Value Of Budgeting For A/B Testing

Let’s say you have a lot of campaign ideas, creatives, ad copy, blog posts, guides, landing pages, and target audiences that you want to test. That’s great, but don’t get ahead of yourself! In order to A/B test, you will first want to set up individual campaigns as control groups in order to understand what works and what doesn’t. This will allow you to optimize the campaigns that are effective in months two, three, and onwards.


With that being said, each new creative, subject line, body, landing page, blog post, etc. will require you to create a new campaign or a new ad grouping, each with an individual budget attributed to it so that you can learn from the ensuing results.


For example, if you want to test different targeting, creatives, messaging, and landing pages, that’s at least four different campaigns. We’ll need to set aside an individual budget for each of those campaigns. The minimum should be at least $1,000 for each in order to get a statistically significant breakdown of performance. So that would be a budget of $4,000, just starting out. This is why it's always important to leave a cushion in the budget for your digital advertising campaigns whenever possible.

Adam's Tip: Map out what you'd like to A/B test and rank them in order of importance. In addition, list out what you're hoping to learn from each A/B test. Add your total budget and place an ad spend for each item. This will allow you to visualize what you can A/B test within your budget.

When Can You Begin A/B Testing?

A properly executed digital advertising campaign takes a lot of time. There isn't a single company, business, or brand out there who found huge success with their digital advertising campaign on their very first try. Don't get frustrated if you aren't getting immediate results with your advertising. After all, it takes at least four weeks for a new campaign to find its footing. In that first month of your campaign, you're going to be building the marketing strategy, campaigns, ad sets, ad copy, creatives, and scoping out the target audience to set your business up for success.


It's important to look at what works and what doesn't so that you can better your ads with each passing month. In the same way that your company or business runs annual (or even quarterly) reviews, you should be routinely checking in with your campaigns to make sure that they're performing well and working toward reaching the goals you set. Give your new digital advertising campaigns some space, usually a few weeks at least, and then review the results. This is typically when A/B testing begins: after the first month. For the most accurate results, you'll need to let your A/B test run for at least a month to gain enough information for you to make an educated decision about what's working and what's not working. At this pace, you'll be able to perfect your campaigns and run them for several months at a time (optimizing each ad to your intended performance as you go, of course).

Facebook and Instagram Budget: Campaign Screenshot

An A/B test we ran for a Facebook and Instagram advertising campaign. We A/B tested the ad type (carousel and video), along with the CTA (download or install). The install CTA performed better so we wound up switching all of our future CTAs to install rather than download.

A Breakdown Of The Sprint Cycle

Advertising campaigns should be tested in sprint cycles to gauge the effectiveness of budgets. Sprint cycles will help advertisers manage budgets through a step-by-step process, minimizing losses while optimizing methods that work. Campaign managers should monitor campaigns over a reasonable time-frame, where businesses will be able to pick out accurate trends. Based on experience, a 90-120 day sprint cycle proves reliable in tracking the success of a digital advertising campaign. 

Month #1: setting the foundation

The initial stage of your advertising sprint cycle should omit paid media. The aim here is to focus on establishing the primary purpose and direction of your ad campaigns. Phase one is about building the basic structure and foundation. Without a solid plan, you won’t be spending your ad dollars as efficiently as possible, which is why we suggest creating an extensive marketing strategy document first and foremost to blueprint out the steps you should be taking to achieve the ROI you desire. Although it might seem tedious, it'll be important to whiteboard who your ideal customer is and what your marketing goals are. What does a marketing strategy usually entail?

  • Target/demographic analysis on each platform

  • How to build your accounts and campaigns

  • Content themes and messaging breakdown/ideas for your product or brand

  • Platforms breakout - where to advertise and where your audience lives

  • How to create brand awareness through social media, content marketing, and organic marketing efforts

  • Lead gen strategies to lead prospects through your sales pipeline

  • Campaign goals, KPIs, and estimated timeline

  • Paid advertising strategies and methodologies

  • Mapping out your daily/total budget, bids, and flights (dates)

  • Re-marketing strategies, conversion optimizations, and A/B testing goals

  • Competitive analysis: learn what your competitors are doing online

Marketing Budget: Competitive Analysis Screenshot
Marketing Budget: Estimated Timeline Infographic

A marketing strategy we created for an eCommerce apparel client of ours where we did a deep dive competitive analysis to uncover what their competitor's digital footprint was, how we could emulate what they were doing, and most importantly where they were missing the mark. We set forth an estimated timeline to kick off our campaigns, listing out the next steps and action items.

Month #2: fine-tuning lead generation

The second month marks the official launch of advertising campaigns based on the marketing strategy you’ve been developing in month one. At this point, you’ll want to engage in the first few weeks of A/B testing, a necessary step for gauging the responsiveness of your ads. Advertisers should have access to a detailed user dashboard that tracks the most relevant metrics for their campaign needs. We use Google Data Studio, which provides a clear breakout and is very customizable to your needs. 

Google Ads Budgeting: Reporrting Dashboard

A campaign dashboard of one of our clients who is promoting their health community app across a variety of different social channels. We achieved 1,200 installs in 1-month 🚀

Month #3: broadening perspectives

The third month in the sprint cycle provides a clearer view of a budget's effectiveness. At this stage, you should be focused on optimizing current advertising campaigns and determining how to spend future budget based on performance. Advertisers can expect optimized conversion rates and the opportunity to consider other avenues of growth potential. 

Month #4: optimizing the system

The final month in the sprint cycle enables advertisers to enhance their budget allocation further, and optimize the cost-effectiveness of their investments. At this point, you can determine whether you want to continue with your current campaigns based on your results to date.


Sprint cycles support a build-and-strategize model, which is lacking in many advertising campaigns. The process is time-consuming but ensures optimal spending of budget throughout various stages of a campaign. Most importantly, digital advertisers should not rush budget-planning. The three-four months of testing provides an accurate review and assessment of consumer response and conversion rates, which is why we recommend this approach. 

Adam’s Tip: this process should be doubled if you are a company with a product/service offering that is quite costly and if your sales cycle is longer than 3-4 months. 

Book a call with a Linkedin Marketer Illustration
What Comes Next?
Chapter 4

Now That You've Successfully Budgeted For Your Digital Advertising Campaigns, What Comes Next?

  • Ongoing Budgeting Costs

  • What About Profits?

  • How Can I Generate More Leads With My Digital Advertising Campaigns?

Illustration for Marketing Budget Next Steps

Ongoing Budgeting Costs

While it might be tempting to think that you're all squared away, it's important to clarify that the budgeting journey never stops. Even if you feel you've perfected everything touched upon in previous chapters, there are always going to be ongoing budget costs you need to be aware of.


Mainly, you need to make sure you're setting aside some money so that you can keep your options open. It is essential to always make room for other growth opportunities. As such, businesses should set aside 15-20% of their budgets for “trying new things.” For example, if your Facebook promotion seems to be losing the traction it once had, it might be time to allocate some budget to Instagram. These changes should not be abrupt; they should require close monitoring without losing leads/customers from the previous platform.  


You should also allot money to invest in discovering the advertising strategies of competitors and partners. Seek out the latest trends within the industry to learn what works best with your target audience. Influencers, thought leaders, and industry experts regularly report and publish their predictive findings on blogs, webinars, and podcasts. The type of content you promote can play a big role in what resonates with your demographic and the performance of your ad campaigns. Just look at this product-based business that achieves higher conversion rates with video-based advertising. Consumers relate better to how a product looks and feels than reading a lengthy wall of text about its features. Acquiring valuable feedback from customers also provides insightful data on trending interests that can help your company acquire a first-mover advantage.


If you need more help with budgeting for your social media marketing campaigns, look no further than Llama Lead Gen. Let’s chat about your content marketing, social media marketing, lead generation goals, and set you up with the right budget based on your marketing goals.

What About Profits?

We've spent a lot of time talking about what you should be spending your money on, but there's one important thing that we haven't touched on yet: profits. Also known as ROI, or return on investment, the amount of money you make on a successful digital advertising campaign will make all of this hard work worth it in the end. Average ROIs differ greatly from social media platforms to social media platforms and your mileage will almost certainly vary from what you are promoting, but one thing is certain: if you stick with it and have done everything correctly, you will see positive ROI.


As with everything else in digital advertising, there is no absolute definition of what kind of ROI you can expect from your campaigns. But there are plenty of examples of advertisers who have seen some unimaginable ROIs after just a year of successful campaigning.

How Can I Generate Even More Leads With My Digital Advertising Campaigns?

Llama Lead Gen exists to help you generate the leads your business and your clients need to get to that peak. One look at our client success stories and testimonials/reviews prove this to be true. Through our expertise in digital advertising campaigns, we can help take your digital marketing efforts to the next level — Contact us today to get started.

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