The question arrives in almost every first meeting, usually phrased as a percentage. Should we spend five percent of revenue? Ten? The percentage rules floating around the internet were written for stable currencies and mature markets. Applying them here produces budgets that are either pointlessly small or recklessly large. Start somewhere else.
How much to spend on ads: work backwards from one customer
Take your average order value. Subtract cost of goods, then delivery, then the share of cash on delivery orders that customers refuse at the door. What remains is the contribution one order actually makes. Say an online retailer sells at 1,800 pounds with a forty percent gross margin, which is 720 pounds. If one order in five comes back undelivered, the realistic contribution per completed order falls closer to 575 pounds. The same discipline applies to ROAS, which is not profit.
Now decide what share of that you will hand to media. Half is a common and survivable answer for a business that wants to grow while staying cash positive. It sets an allowable acquisition cost around 285 pounds. Multiply by the number of new customers you want each month. You now have a budget you can defend in a board meeting, rather than a number someone felt comfortable with.
For lead generation businesses the same arithmetic runs one step further back. Suppose sales close one in six qualified leads and a closed deal contributes 12,000 pounds. An allowable cost per qualified lead of 900 to 1,000 pounds is then entirely rational. It will still feel enormous to anyone used to judging cost per click.
There is a floor below which you are buying noise
Budget can be too small to work at all, and this is the part founders resist. Paid platforms learn from conversions. Below roughly thirty conversions a month, a search campaign cannot bid intelligently. A Meta ad set that never leaves the learning phase spends the whole month paying tuition and never graduating. The Meta Business Help Center explains how that learning phase works.
The practical floors we see in Egypt right now look roughly like this. The currency moves of the last three years pushed auction prices up in pound terms. A single city service business needs something in the range of 25,000 to 60,000 pounds a month across search and social before the data starts behaving. A growing online store usually needs 100,000 to 400,000 to run prospecting and remarketing properly at the same time. Property developers and multi branch retailers operate an order of magnitude above that. Their problem is allocation rather than sufficiency.
If your available budget sits under the floor, do not spread it across four channels. Pick the one channel where your buyer already has intent. That is usually search for considered purchases and social for discovery products. Win there first.
Re-baseline when the pound moves
Anyone who plans a twelve month media budget in this market and never revisits it is planning in a currency that will not hold still. Platform auctions here are priced against demand from advertisers who often earn in dollars. A devaluation therefore raises your effective cost per thousand impressions in pounds, even when nothing about your campaign changed. Imported stock gets more expensive at the same moment. That squeezes the margin the budget rests on from the other side. We go deeper on this in marketing budgets when the currency moves.
We rebuild the allowable acquisition cost every quarter with current margins and current auction prices. It takes an hour. It has saved several clients from scaling into a negative contribution without noticing.
If you want that arithmetic run against your own numbers before you commit a budget, the free audit covers it. Our paid media advertising and planning team will tell you honestly if the number you have in mind is too small to work.
