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How much should a small business spend on social media ads?

How to set a social ad budget from your cost per lead and close rate, not a guess.

Work backward from the customers you need, not forward from what you feel like spending. For paid social on Meta, $1,500 per month in ad spend is enough to run a real campaign. That is ad spend and does not include the management fee.

The math

Four numbers get you a budget:

  • How many new customers you need this month.
  • Your close rate on leads from paid social. If you have never run it, use your close rate on web leads and expect it to be worse at first.
  • Leads needed, which is customers divided by close rate.
  • Your cost per lead. If you do not have one, run a small test for a month to find it rather than borrowing a benchmark from an industry report that does not describe your market.

Leads needed times cost per lead is your ad spend. Then sanity check it against what a customer is worth. If the spend to buy one customer is more than the gross profit that customer produces, the problem is the offer or the close rate, and more budget will not fix it.

Why a budget can be too small to work

Meta's Business Help Center describes a learning phase, during which delivery is unstable until a campaign has gathered enough optimization events. A budget that produces only a handful of conversions a week keeps the campaign stuck there, and the results you see are mostly noise. If you cannot fund enough weekly conversions, optimize toward an earlier event, such as a lead form open or a landing page view, and treat the real conversion as the thing you report on rather than the thing you bid on.

The other reason small budgets fail: spreading them over four platforms. One platform funded properly beats four funded badly. Each added platform also costs $350 per month in management at LevelUp.

What management costs

LevelUp Digital charges 10 percent of ad spend with a $1,500 per month minimum, so under $15,000 per month in spend you pay the minimum. Budget is agreed before each month starts, so the fee is known in advance. Details are on the retainers page. There is also a plain walkthrough for owners in our paid advertising guide for small businesses.

Related: What is the minimum ad spend you recommend?. Do you charge a management fee on top of ad spend?. How does LevelUp Digital approach paid media strategy?.