Phase 8~2 hoursMedium
8.7 Ad Budgeting and ROI
Step-by-Step
Calculate your customer lifetime value (LTV)
Before setting any budget, know what a customer is worth:
- One-time service: Average transaction value. A photo booth booking at $1,000.
- Repeat service: Average transaction x purchases per year x years they stay. A PT client at $200/month x 12 months x 2 years = $4,800 LTV.
- Referral value: If 1 in 5 customers refers another, add 20% to LTV.
- Your maximum CPA should be no more than 1/3 of LTV. If LTV is $1,000, your max CPA is $333.
Set your test budget
Calculate the minimum budget for a meaningful test:
- Formula: Target CPA x 30 conversions = minimum test budget
- Daily budget: Divide test budget by 90 days.
- Google recommends $30/day minimum for Search campaigns. Meta works with $20/day.
- If you can't afford $20--30/day for 90 days, invest that money in SEO instead.
Allocate budget across channels
For a starting budget of $60/day ($1,800/month):
- 70% Google Search ($42/day) -- highest intent, most direct leads
- 20% Meta ($12/day) -- awareness, retargeting, demand generation
- 10% testing ($6/day) -- try new keywords, audiences, or ad formats
- Adjust based on results after 30 days.
Build your ROI tracking spreadsheet
Track these monthly:
- Total ad spend (from Google Ads + Meta dashboards)
- Total conversions (form fills, calls, bookings from ads)
- CPA = total spend / total conversions
- Revenue from ad leads (track in your CRM which customers came from ads)
- ROAS (Return on Ad Spend) = revenue / spend. Aim for 3:1 minimum.
- Blended CPA = total marketing spend (ads + management) / total new customers
Scale what works, kill what doesn't
After 90 days, you'll have enough data to make decisions:
- CPA below target: Increase budget by 20% per week. Don't double overnight.
- CPA above target: Optimise landing page, ad copy, targeting, and negative keywords before increasing budget.
- CPA 2x+ above target after 90 days: Pause the campaign. Revisit offer-market fit (section 8.3).
- Never "set and forget" paid campaigns. Weekly reviews are mandatory.
The 90-Day Rule
It takes 90 days of consistent spend to know if a paid channel works. Month 1 is learning (expect to overspend). Month 2 is optimising. Month 3 is when you see real performance. Don't judge a campaign on 2 weeks of data.
You're Done When
- Customer LTV calculated
- Target CPA defined (under 1/3 of LTV)
- Test budget set and daily spend allocated across channels
- ROI tracking spreadsheet created with monthly columns
- 90-day commitment made and weekly review in calendar
97 hours. That's a month of Saturdays.
Your weekends called. They want their life back.