Businesses of all scales strive to enhance their online presence
Paid media can be the catalyst for achieving these goals, but navigating its complexities requires a clear strategy. We sat down with Alex Booth, Head of Paid Media at DMS, to unpack the nuances of setting and managing a paid media budget.
What is Paid Media?
Paid media refers to any form of advertising that involves paying for space to promote content, products, or services. Unlike organic marketing, which relies on free methods like SEO and social media engagement, paid media ensures immediate visibility by placing your ads front and centre on various platforms like search engines, social media, and websites. This approach helps businesses quickly capture the attention of their target audience, driving traffic, leads, and sales.
Who should use a Paid Media ads budget?
Paid media offers significant benefits for nearly every type of business, both multinational corporations and local businesses stand to gain, albeit with different budget scales.
“There’s room for paid media regardless of business size.” Alex Booth states.
While large corporations might invest millions, smaller businesses can see substantial impacts with more modest budgets. The key is tailoring strategies to fit the business scale and objectives.
Determining your readiness to invest in paid media relies on a few vital factors. It is recommended to have a solid foundation of demand for your products or services.
“Paid media works best when there’s already an established demand for your business. If you know there are people out there willing to part with their cash for your product or service, paid media can help reach more people like them!” says Alex Booth.
Startups might find it trickier, using paid ads more as a research tool to gauge market fit. To increase the chance of success, businesses should have a baseline of organic sales and be ready to amplify their presence via ads.
How much should a company spend on paid media?
Deciding how much to allocate to paid media can be challenging. The amount heavily depends on your product’s price point and your risk tolerance. Products with higher price points usually allow for more budget flexibility, whereas lower-priced items necessitate careful budgeting to avoid overspending during testing phases. The initial spending should be seen as an investment in research and development, helping determine what works best before scaling efforts.
What channels should you use?
Choosing the right platforms is important and should be based on your market and audience research. For example, If you target 18-21 year-olds with a fashion accessory, Snapchat or Instagram might be ideal.
Regarding limited budgets, focusing on one platform before expanding can yield better results. Meta (Facebook and Instagram) and Google are often recommended starting points due to their robust audience data and targeting options.
How to decide on a realistic media budget for paid advertising
A realistic budget begins with understanding your estimated customer acquisition cost and conversion rates. Using tools like Google Keyword Planner can help estimate monthly search volumes and potential costs. Alex illustrates this with an example: “If targeting ‘lawn mowers for sale’ in the UK shows 10,000 monthly searches with a cost per click of £2, your maximum budget might range from £10,000 to £20,000.” By analysing these metrics, businesses can set achievable benchmarks.
How To Set a Paid Media Marketing Budget
Striking a balance between immediate results and long-term growth is essential. Alex advises using industry benchmarks to estimate potential budgets and adjusting your strategy based on initial performance data.
“Don’t expect immediate returns—spend the first few weeks treating it as R&D,” Alex notes.
This approach ensures sustainable growth while refining your ad strategies.
Avoiding Common Pitfalls
- New advertisers often make mistakes such as spreading budgets too thinly across multiple platforms. Focus on one platform to start with. It’s better to exhaust one well-optimised platform than to scatter resources thinly.
- Another pitfall is expecting instant results. Always allow time for initial testing and learning.
- Overestimating potential performance based on benchmarks
Best Practices for Paid Media Budgeting
- Before diving into any ads, thorough audience and industry research are paramount. Use tools and do competitive analysis to understand where established players are investing.
- Don’t lock into a fixed budget. Be ready to adjust based on performance data. Regularly monitoring campaigns ensures that budget adjustments can be made swiftly to optimise ROI.
- Be willing to shift budgets between channels based on performance
Paid media is a powerful tool that, when executed correctly, can significantly drive business growth. By understanding your audience, setting realistic budgets, and being agile with your strategy, you can unlock the full potential of paid media.
“The goal is to turn your ad spend into a beneficial investment—through informed decisions and strategic planning, you’ll be well on your way to achieving that.”
Use our Paid Media Ad Budget Template
Build a realistic paid media budget in minutes. Get the template we use at our agency on global campaigns from entertainment and travel to e-commerce and luxury property. The budget will help you:
- Make a realistic budget
- Forecast results
- Get clear outcomes
- Optimise spends
- Make your budget work
Download the Paid Media Ad Budget Template
Do you find it hard to balance and forecast budgets when planning your ad campaigns?
For the first time, we’re sharing our internal paid media budget planner. This is the same template we’ve used to scale businesses to millions in revenue, and even on huge global ad campaigns for the likes of Taylor Swift.
We’ve made this version of our template completely foolproof, with all the formulas to balance the budget and estimate your results based on the latest benchmarks for each ad channel. Just fill in the gaps, and you’ll
The result is a detailed breakdown of spend across each ad platform and even calculates the minimum spend requirements based on the platforms and countries you want to target. With this, you can get on with briefing the campaign and help your whole team make more informed decisions.
Sign up to get the template for free and we’ll also share any updates we make as they roll out!
