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There's no universal number — the right ad budget depends on your revenue target, margins, industry, and stage of business. But most frameworks start with the same question: what percentage of target revenue are you willing to invest in acquisition?
The most practical approach: work backwards from your revenue goal.
Both methods should produce similar numbers. If they diverge significantly, your industry benchmark or conversion rate assumptions need revisiting.
Start lean, then scale. Begin with 50–60% of your calculated budget, validate performance for 30–60 days, then increase spend on what works. The biggest mistake is over-investing before you know your break-even CPA.
Industry benchmarks aren't rules — they're reference points. Higher-margin businesses can afford to spend more on acquisition. Lower-margin or high-repeat-purchase businesses often need tighter CPA targets.
| Industry | Typical Ad Spend | Best Platforms | Avg. CPA Range |
|---|---|---|---|
| eCommerce / DTC | 10–15% of revenue | Facebook, Google Shopping, TikTok | $15–$60 |
| SaaS / Software | 10–20% of MRR target | Google Search, LinkedIn | $30–$150 |
| Local Services | 5–10% of revenue | Google Local, Facebook | $20–$80 |
| Lead Generation | 8–15% of revenue | Google, Facebook Lead Ads | $10–$50 per lead |
| Agency / B2B Services | 5–12% of revenue | LinkedIn, Google | $50–$300 per lead |
| Mobile App | 15–25% of LTV target | TikTok, Facebook, Google UAC | $1–$5 per install |
Note: These percentages are based on publicly available industry benchmarks from platforms like WordStream, HubSpot, and Meta's advertiser data. Your actual numbers will vary based on margins, competition intensity, and targeting quality.
Once you have a total budget, the question is how to split it. Platform allocation should follow intent level and audience match — not which platform you're most comfortable with.
People searching for your product are already motivated to buy. Google Search captures existing demand and typically delivers the strongest initial ROAS. Allocate 40–50% here first.
Meta's platforms reach people who don't know they want your product yet. Best for discovery, retargeting, and lookalike audiences. Allocate 30–45% depending on your funnel.
TikTok CPMs are still relatively low compared to Meta. Best for sub-30 audiences, impulse-buy products, and brands with strong creative. Start small, scale if ROAS holds.
The allocation that works in month 1 won't be optimal in month 6. Review platform ROAS every 30 days and shift budget toward winners. Never keep failing platforms on life support.