How much should you spend on ads?
Most ad budgets are inherited. They are last quarter’s number plus a bit, a percentage of revenue someone read was normal, or whatever the account was spending when the previous agency left. None of those have anything to do with what the business is trying to do next, which is why the budget conversation so often ends in a stalemate: the founder wants to spend less and grow more, the media buyer wants to spend more to find out what works, and neither has a number the other can argue with.
Monthly ad budget = revenue target ÷ expected ROAS
Working back from a revenue target changes the conversation, because every figure on the page is then a consequence of a decision the business has already made. You want $150,000 a month from ads. At the ROAS the account has actually delivered, that costs $50,000. That spend has to buy 1,667 orders at $30 each, and the site has to turn 83,000 sessions into those orders. Now the question is no longer “is $50,000 too much?” but “can this account hold a $30 cost per order at that volume, and if not, which number moves?” That is a question with an answer.
From the target to the budget, and back to the margin
Four steps, each worked through on the calculator’s example: $150,000 a month from ads at 3x, a $90 order, a 2% conversion rate, 50% margin per order.
The budget
If every dollar of ad spend returns three dollars of revenue, then $150,000 of ad-driven revenue needs $50,000 of spend. The daily figure is that spread over an average month. The ROAS you enter is the most important assumption on the page, which is why the tip says to use a trailing 90 days rather than a good month.
Example$150,000 ÷ 3.0 = $50,000 a month, about $1,645 a day.
What the budget has to buy
The revenue target divided by your average order value is the number of orders the ads need to produce. The budget divided by those orders is the cost per order the account has to hold, and it is the figure to compare against the CPA in your ad platform today. If your current CPA is well above it, the plan is not realistic at that ROAS, however much you spend.
Cost per order = ad budget ÷ (revenue target ÷ AOV)
Example$150,000 ÷ $90 = 1,667 orders at $30 each. Cost per order is always AOV ÷ ROAS.
What the store has to do
Orders divided by your conversion rate is the sessions the ads must send, and the budget divided by those sessions is the most you can afford to pay for each click. Together they show where the pressure lands: a low conversion rate means a lot of expensive traffic, and often the cheapest fix for an ad budget is the website it sends people to.
Most you can pay per click = ad budget ÷ (orders ÷ conversion rate)
Example1,667 ÷ 2% = 83,333 sessions, so the plan can pay $0.60 a click.
Whether it is profitable
Add your margin per order and the calculator works out your break-even ROAS, one divided by the margin, and compares it to the ROAS you planned on. A plan that reaches the revenue target at a ROAS under break-even reaches it by losing money, and this is where the page says so.
Profit after ads = revenue × margin per order − ad budget
ExampleBreak-even is 1 ÷ 50% = 2.0x; at 3x the plan keeps $150,000 × 50% − $50,000 = $25,000.
The click is the number to stare at. Sixty cents is under what a click costs on Meta or Google in Australia, so the example plan is buyable only if conversion rate or basket size improves. Lifting conversion from 2% to 2.5% raises the affordable click to $0.75; a $9 bigger basket takes it to $0.66. Neither is an ad account change, and both make the plan real.
Ad spend benchmarks for 2026
What brands spend and what the platforms charge, so you can check a plan against the market before you check it against your margin.
| Who | Share of revenue |
|---|---|
| All companies | 7.8% |
| All US companies | 9.0% |
| Consumer product companies | 12.0% |
| Revenue under US$10M | 13.3% |
| Companies under 50 staff | 16.3% |
| Revenue US$10–25M | 17.4% |
| Mostly online sellers | 18.6% |
| Online-only sellers | 18.8% |
| Large online retailers | 6.5–14% |
The more of a business that sells online, the larger the share: companies selling mostly or only online spend about 19% of revenue on marketing, more than double those with little online trade. A store that is still buying most of its customers should expect to sit at the top of the table, and to come down it as repeat and organic sales grow. What the platforms charge, as medians across thousands of online brands:
| Platform | CPM | CPA | ROAS |
|---|---|---|---|
| Meta | $15 | $39 | 1.9x |
| $15 | $28 | 3.3x | |
| TikTok | $4 | $17 | 1.5x |
Meta and Google CPMs both rose about 13% in the year to July 2026 while TikTok’s fell a quarter; Google’s cost per order rose 10% and its ROAS slipped. Australian Meta auctions run about a fifth cheaper than the global average, and the median click across these platforms works out under US$1. Australian advertisers spent $19.8 billion online in the year to June 2026, up 14%, with social video up almost 30%, so none of this is getting cheaper.
One floor applies whatever the plan: Meta wants about 50 purchases per ad set in seven days to optimise properly, which puts the daily budget at about seven times the cost per order. At a $30 cost per order that is about $215 a day per ad set before the account can learn anything.
How to make an ad budget realistic
Seven things that decide whether the plan on the plate happens in the account. Most of them are not media buying.
1.Plan on the ROAS you have, not the one you want
Use the trailing 90 days from your attribution tool, not Ads Manager’s best month. Spend does not scale at a constant return: as budgets rise the platform reaches past the easiest buyers, creative fatigues faster and the ROAS drifts down. The ROAS calculator tells you the number the ads must hit; this page tells you what it costs to hit it.
2.Clear the learning floor
Below about 50 purchases a week per ad set, Meta cannot optimise and your cost per order climbs. Fewer, bigger ad sets beat many small ones, and a plan that spreads $215 a day across six ad sets has already failed.
3.Budget the creative with the media
Budget without fresh concepts to test buys fatigue. Doubling spend usually needs twice the creative, and a steady supply of genuinely different concepts is what holds the ROAS as the budget climbs. That is the point of Ad Creatives running beside Paid Advertising.
4.Lift the conversion rate before the budget
Sessions are the expensive part. Half a point of conversion in the example takes the affordable click from $0.60 to $0.75, and a slow or confusing product page can double the cost of every plan on this page. The conversion rate calculator prices the lift.
5.Grow the basket
A bigger average order means fewer orders for the same revenue, fewer sessions to buy and a higher affordable click. Bundles and a free-shipping threshold just above today’s basket are cheaper than media; the AOV calculator shows what they are worth.
6.Split the budget by what each platform does
One budget, several auctions. Meta usually carries the volume, Google catches the demand it creates, and TikTok earns its share when new customers are the goal. Each runs at a different ROAS, so the blended figure you plan on should reflect the mix.
7.Check the margin, then check it again
A $50,000 budget that hits its revenue target at 3x looks like a win in the ad platform and is a loss on the P&L if the margin per order is 30%. Checking the planned ROAS against break-even before the money is spent is cheap; finding out afterwards is not. The profit margin calculator gives you the margin to enter here.