What’s a good B2B Advertising Budget?

Maelie:

Welcome back – I’m Maelien Halton

Louis:

And I’m Louis Halton Davies.

If you’ve listened to the pod before, you know that we’re always keen to make sure episodes are grounded in real world challenges. 

Today’s episode comes after a great discussion I had on LinkedIn with B2B Growth Marketing Leader, Tony Watkins.

We were talking about how most of the knowledge out there in the wild only applies to businesses with ad budgets that are just unrealistic for SMEs. 

And it’s so true. As part of this podcast our core aim is to equip growth minded SMEs with practical advice. So today we’re going to talk about what a good advertising budget looks like.

Maelie:

In episode 10 we talked about how most SME advertising budgets are agreed in the boardroom without a marketer present – or at least without performance marketing data to guide the decision. 

We ran through how you can create a realistic budget using 4 metrics, which are:

1. close rate
2. Average lifetime profit per customer
3. the percentage of lifetime profit you’re happy to spend on acquiring new customers
4. And target monthly customers

Just as a quick recap, you take the amount of lifetime profit your willing to spend, times it by your close rate and then multiply it by your target monthly customers. That gives you your budget. If you want the full run through, you’ll find it in episode 10.

Today we’re going to dive much deeper into ad budgets and how to use them.

As a side note – we’re specifically going to focus on Google Ads.

Louis:

I guess the first thig to talk about is the idea of the goldilocks zone.

Now you probably know that if your budget is too high you end up overpaying for leads.

Well surprisingly this is also true if your budget is too low.

The goldilocks zone is the range of budget between one that’s too low and one that’s too high.

To reference a real-world story, we actually have a client who has high and low budget months. And during their low budget months, they actually pay £50 more per lead.

That’s because when the budget drops too low, you can start missing out on the best opportunities. 

And there’s a couple of reasons for this – your budget can run out earlier in the day, you can’t afford to bid on as many of those high cost per click converting keyword searches. 

If you think about it, a higher budget allows the algorithm to look at more potential searches to bid on – and cherrypick the right opportunities

But with a budget to small, it has a lot less visibility and has to take potshots – which is why performance often fluctuates so much month on month.

Maelie:

It’s why we say £1,500 is the minimum budget you need to see signs of life in most markets. And that’s per month, and per channel.

By ‘signs of life’ I mean that this is where you start to be able to know for sure if your ads can generate leads. 

It’s not enough to generate a predictable pipeline month on month. We’ve lost clients before because they wouldn’t scale up from £1,500 spend and still wanted predictable leads – which just isn’t possible in most industries. 

So if your budget is at around £1,500, remember that you’re looking for signs of life before scaling. As I/we mentioned earlier, a budget that’s too low can actually push your cost per lead up.

In terms of predictable pipeline, or at least a predictable lead volume, we start to see this happen from around £3,000 per month. For more competitive industries with a higher cost per click – this is going to be higher.

For context, around 80% of our client base are SMEs spending between £5k and £10k per month. Our non-SME clients may have much bigger overall budgets, but when you break it down – they’re often actually still working in that same £5k–£10k range, just by service line or strategy rather than their overall monthly spend.

Louis:

The other extreme is just as dangerous. If your budget is too high, you can quickly go past the point of diminishing returns aka the saturation point. 

This is the point where your lead volume stays the same no matter how much you increase your budget.

So we all know that ad platforms basically bid to show ads to each person. The winning bid gets the ad impression.

Once upon a time – pre 2017 – Google ads only charged a single penny more than the next highest bidder to show your ad. But over time they’ve made changes so that now you’ll be charged much closer to what you’re willing to pay.

There’s the saying in the agency world that Google uses ads to try and spend as much of your money as possible and marketers use Google try to make you as much money as possible.

Now it’s important to remember that search advertising doesn’t scale as well as other channels. Because in other channels you’re targeting people based on their demographics and their interests alone. And while you can (and should) do that in search ads too, they also have to be searching for the keywords your targeting. Which makes the audience size much smaller.

So as you increase your budget, you’ll access more opportunities to generate leads. But once your budget starts to overtake the number of searches you can target – Google doesn’t want to miss out on that extra ad revenue and will charge you for the privilege.

Maelie:

In episode 10, we talked about the importance of working to a cost-per-lead target instead of chasing the lowest CPL possible — because if you double your budget, you probably won’t double your lead volume. And if the goal posts are constantly moving i.e. everytime you achieve a lower cost per lead – that’s your new target – this is how you end up in scaling jail. Because the moment you need more lead volume, and start increasing your budget, you’ll find yourself failing your cost per lead target – and by a greater amount with every increase. 

Louis:

On the subject of scaling, you want to avoid adding to much to your daily budget in one go. We always try to avoid increasing budgets by more than 20% per day. The point is to avoid pushing campaigns back into a learning phase – and risking the cost per lead increasing as a result.

Budget decisions are also heavily shaped by bid strategy too:

• Maximise Conversions will happily spend everything, but it might not get you the best CPL.
• Target CPA usually brings you a better cost per lead but can bring your overall lead volume dow n.
• If you’re passing back purchase value, Target ROAS can be a great way to focus spend where it’s most profitable. It can be a powerful lever for driving lead quality, but it’s also the most restrictive in terms of volume.

It’s also worth mentioning that switching a bid strategy is a big change in terms of the way google ads works and it can often take 8–12 weeks for the data to normalise. Meaning if you change your bid strategy, you can’t expect immediate results, you have to sit with it for a while to spot the difference. So it can be a good id ea to run an experiment to test what kind of uplift you’d get with a new bid strategy.

Maelie:

Here’s a mindset shift that I can’t recommend enough.

Which is to think about budget in terms of clicks, not just pounds or dollars. A £15k budget with a £10 cost per click gets you 1,500 clicks. A £1.5k budget with a £1 CPC gets you exactly the same. If you think about it in terms of clicks – those two scenarios have exactly the same budget. And lead volume will be determined by your conversion rate to lead.

It’s also really important to think about your lead-to-close window.

It’s a really common pitfall to expect immediate results, but if it takes 6 weeks for a lead to close to a sale, you have to wait at least 6 weeks before making a judgement call.

You might also adjust budgets monthly, weekly, or quarterly based on seasonality. Spend more in peak periods, pull back in shoulder seasons where cost per lead naturally rises. 

All of this points to the same conclusion: budget isn’t just a number in a spreadsheet — it’s a lever you can pull to control growth. Too low or too high, and you’ll choke your performance. Get it right, and you unlock consistent, predictable results.

Louis:

So, as always, let’s finish on a recap:

• Aim for the Goldilocks zone — too low and you’ll miss the best opportunities, too high and you’ll overpay for leads.
  
• £1,500/month is the bare minimum for signs of life in most industries (per channel). £3,000/month+ is where you can start to expect predictable lead flow.
  
• Work to a cost per lead target, not the lowest possible CPL — and avoid “scaling jail.”
  
• Increase budgets gradually — no more than 20% per day — to avoid resetting learning phases.
  
• Choose the right bid strategy for your goals and allow 8–12 weeks for performance to stabilise after changes.
  
• Think in clicks and conversion rate, not just pounds — a £15k budget at £10 CPC is the same click volume as £1.5k at £1 CPC.
  
• Account for seasonality and buyer behaviour — adjust spend for peak periods, slow periods, and dayparting opportunities.
  
• Remember: ads capture demand, they don’t create it. Performance marketing should sit alongside demand generation.
  

Maelie:
If you haven’t yet listened to Episode 10, go back and check it out for the full breakdown of how to calculate a realistic budget for your business.

And if today’s episode has given you a new perspective on your ad spend, share it with a colleague or fellow marketer who’s battling the same challenges.

If you found this useful, please leave us a review. Our goal is to remove the smoke and mirrors from the B2B advertising world, and reviews really help towards this.

And if you’ve got a burning question or are facing a challenge that you’d like us to explore, just let us know.

You can head to webmarketeruk.com/topic and fill in the form.

We really wanna make every episode as useful as possible, and we read every single message. 

Thanks for listening and catch you next time.