---
title: "Budgeting and planning a campaign | Optimize All Academy"
description: "Budgets are decisions, not wishes A marketing budget is a statement of what you expect to happen: how much you will spend, where, for how long and what…"
url: https://optimizeall.com/learn/digital-marketing-foundations/budgeting-and-planning
updated: 2026-10-05
---

Digital Marketing Foundations · Channels and budgets · lesson 7 of 15 · 14 min

# Budgeting and planning a campaign

## Budgets are decisions, not wishes

A marketing budget is a statement of what you expect to happen: how much you will spend, where, for how long and what result you expect. Without that link to results, budgets become guesses that get cut at the first bad week.

## Three ways to set a starting budget

1. **Goal-based (bottom-up):** start with the result and work backwards. This is the most useful approach and the one we will practise.
2. **Percentage of revenue:** many businesses allocate a share of revenue to marketing. It is simple but ignores your growth stage.
3. **Test budget:** a fixed amount to learn what works before scaling. Ideal for new businesses and creators launching their first paid campaign.

## Goal-based budgeting: a worked example

All numbers below are **illustrative**.

A skincare brand in Riyadh wants **100 online orders** next month.

- Past data shows about **2% of website visitors buy** (conversion rate).
- So they need **100 ÷ 0.02 = 5,000 visitors**.
- Their social ads have delivered clicks at around **SAR 2 per click**.
- Estimated media budget: **5,000 × SAR 2 = SAR 10,000**.
- Cost per order would be **SAR 10,000 ÷ 100 = SAR 100**.

Now check viability. If each order earns SAR 180 in revenue with a 50% gross margin, the gross profit per order is SAR 90. Paying SAR 100 to acquire each order loses money on the first purchase. The brand must either improve conversion rate, reduce cost per click, raise average order value (for example with bundles), or be confident customers will buy again.

This is why budgeting and KPIs are inseparable – you will learn the formulas in the next module.

## Splitting the budget

A common starter approach is the **70/20/10** idea (a rule of thumb, not a law):

- **70%** on proven activity that already delivers results.
- **20%** on promising channels or audiences you are scaling.
- **10%** on experiments: a new platform, a new creator, a new format.

If you have no proven activity yet, flip the logic: treat most of your first budget as a learning budget and define in advance what you want to learn.

## Don't forget the non-media costs

Budgets fail when they only count ad spend. Include:

- Creative production (filming, editing, design, creator fees).
- Tools (email platform, scheduling, analytics, design software).
- People or freelancers' time.
- Discounts and offers you give away.
- Platform fees and payment processing.

## Building a simple campaign plan

A one-page plan should include:

| Section | Example |
|---|---|
| Objective | 100 orders in October at ≤ SAR 90 cost per order |
| Audience | Women 22–40 in Riyadh and Jeddah interested in skincare |
| Offer | Starter bundle with free delivery |
| Channels | Snapchat and TikTok ads, two micro-creators, email to existing list |
| Budget | SAR 10,000 media, SAR 3,000 creators, SAR 500 tools |
| Timeline | Week 1 test creatives; weeks 2–4 scale winners |
| KPIs | CTR, cost per click, conversion rate, cost per order, ROAS |
| Review rhythm | Twice-weekly check, weekly decisions |

## Pacing and patience

Most ad platforms need some time and data to optimise delivery. Changing everything daily resets that learning. Agree up front how long a test runs and what threshold triggers a change (for example, "pause an ad if it spends twice the target cost per order with no purchase").

## Common mistakes

- Setting a budget with no target result.
- Spreading a small budget across too many channels to learn anything.
- Forgetting production, tools and discounts.
- Judging results after one or two days.

## Hands-on: a goal-based budget calculator in Google Sheets

Set up a small sheet with inputs in column B (illustrative values shown for the Riyadh skincare example):

| Row | A (label) | B (value or formula) |
|---|---|---|
| 2 | Target orders | 100 |
| 3 | Conversion rate (visit → order) | 2% |
| 4 | Cost per click (SAR) | 2 |
| 5 | Average order value (SAR) | 180 |
| 6 | Contribution margin % (after product, delivery, payment fees) | 45% |
| 7 | Visitors needed | `=B2/B3` |
| 8 | Media budget | `=B7*B4` |
| 9 | Cost per order | `=B8/B2` |
| 10 | Contribution per order | `=B5*B6` |
| 11 | Profit or loss per first order | `=B10-B9` |
| 12 | Break-even cost per order | `=B10` |
| 13 | Break-even ROAS | `=1/B6` |

With these inputs, cost per order is SAR 100 and contribution per order is SAR 81, so each first order loses about SAR 19. Now play with the levers: what conversion rate, click cost or order value makes row 11 positive? That is your **improvement brief**, and it is far more useful than "spend more" or "spend less".

**Contribution margin** is revenue minus all variable costs of fulfilling the order (product cost, packaging, delivery, payment and marketplace fees, expected returns). It is stricter than gross margin and better for ad decisions.

## Worked example 2: a UK B2B lead-generation budget

A Manchester IT-support company wants **4 new clients a month**. B2B budgets must work backwards through more steps (illustrative numbers from its CRM):

- Close rate from sales call to client: 25% → needs **16 sales calls**.
- Lead to booked call: 40% → needs **40 leads**.
- Landing page conversion from click: 8% → needs **500 clicks**.
- LinkedIn and search clicks average £4.50 → media budget ≈ **£2,250 a month**.
- Cost per client ≈ £2,250 ÷ 4 = **£563**, before sales time and tools.

Each client pays £600 a month with a 50% margin and typically stays two years, so the first-year contribution is £3,600: the budget is easily justified, and the real constraint is sales capacity to handle 16 calls.

## Learning budgets and stop-loss rules

When you have no history, treat the first budget as tuition:

1. **Write the question** you want answered ("Can TikTok creators drive first orders below SAR 120?").
2. **Set a spend cap and a time box** (for example SAR 4,000 over three weeks).
3. **Pre-agree the stop-loss:** pause any ad set that spends 2–3× your target cost per order without a sale.
4. **Pre-agree the success threshold** that justifies scaling.

## Using AI to draft the plan (and check it)

An AI assistant can turn your inputs into a first-draft plan quickly. Give it the numbers and constraints, and ask it to show the arithmetic:

```text
Act as a marketing planner. Using ONLY these inputs, build a one-page campaign plan
table (objective, audience, offer, channels, budget split, timeline, KPIs, review rhythm)
and show every calculation step.
Target: 100 orders in 30 days. CVR 2%. CPC SAR 2. AOV SAR 180. Contribution margin 45%.
Channels available: Snapchat, TikTok, email list of 3,000 opted-in customers.
Flag any input that makes the plan unprofitable and suggest which lever to test first.
```

Then recalculate the key numbers yourself in the sheet – language models can make arithmetic slips.

## How to measure success

- **Pacing:** actual spend versus plan by week.
- **Unit economics:** actual cost per result versus break-even cost per result.
- **Learning:** did each test answer its question? Log the answer even when it is "no".

## Video lecture: Budgeting and planning: turning a wish into a plan

Lecture coming soon · 11 chapters · about 8 minutes. Read the full transcript below.

1. Budgeting and planning
2. Three ways to set a budget
3. Example 1: Riyadh skincare (illustrative)
4. Is it profitable?
5. Four levers
6. Example 2: Manchester IT support (illustrative)
7. Splitting the budget
8. Learning budgets
9. Don't forget
10. Mistakes and measures
11. Recap and try this now

## Lecture transcript

### Budgeting and planning

Ask ten small business owners how they set their marketing budget and you'll hear the same answer: whatever's left over. Then after two bad weeks, the budget gets cut, and nobody learns anything. In this lecture you'll learn to build a budget that's a decision, not a wish. You'll work backwards from a goal, check whether it's actually profitable, split money between proven work and experiments, and set rules for when to stop or scale. By the end, you'll be able to build a goal-based budget in a spreadsheet in about fifteen minutes.

### Three ways to set a budget

Here's the mindset shift. A budget is a statement of what you expect to happen: how much you'll spend, where, for how long, and what result you expect. Without that link to results, budgets become guesses. There are three ways to set a starting budget. Percentage of revenue: simple, but it ignores your stage of growth. A test budget: a fixed amount to learn what works. And goal-based, also called bottom-up, where you start with the result you want and work backwards. That's the one we'll practise, because it connects every riyal, rupee or pound to an outcome.

### Example 1: Riyadh skincare (illustrative)

Let's do the simple worked example. The numbers are illustrative. A skincare brand in Riyadh wants a hundred online orders next month. Past data says about two percent of website visitors buy. So they need a hundred divided by zero point zero two, which is five thousand visitors. Their social ads have delivered clicks at around two riyals each. So the media budget is five thousand times two, ten thousand riyals. And cost per order is ten thousand divided by a hundred: one hundred riyals per order. Simple. Four lines of arithmetic. But we're not done, because we haven't asked the most important question yet.

### Is it profitable?

That question is: is it profitable? Each order brings in a hundred and eighty riyals. But revenue isn't profit. After the product, packaging, delivery and payment fees, the brand keeps about forty-five percent. That's called contribution margin, and it's stricter and more honest than gross margin. Forty-five percent of a hundred and eighty is eighty-one riyals. So they'd pay a hundred riyals to earn eighty-one. Every first order loses about nineteen riyals. Here's the key idea. The budget calculation didn't fail. It did its job. It told them before spending a riyal that something has to change.

### Four levers

So what are the options? There are four levers. Improve conversion rate, so fewer visitors are needed. Reduce cost per click with better creative. Raise the average order value, for example with bundles or a free delivery threshold. Or be confident, from real data, that customers buy again, so the second order pays back the first. In the spreadsheet in the lesson text, you can change each input and watch the profit line turn from red to green. For example, lifting conversion to two and a half percent brings cost per order to eighty riyals, and suddenly each first order is roughly break-even. That's your improvement brief.

### Example 2: Manchester IT support (illustrative)

Now a realistic B2B scenario, with illustrative numbers. A Manchester IT-support company wants four new clients a month. B2B needs more steps. Their close rate from sales call to client is twenty-five percent, so they need sixteen calls. Forty percent of leads book a call, so they need forty leads. Their landing page converts eight percent of clicks into leads, so they need five hundred clicks. At about four pounds fifty per click on LinkedIn and search, that's roughly two thousand two hundred and fifty pounds a month, or about five hundred and sixty pounds per client. Each client pays six hundred a month at fifty percent margin and stays around two years.

### Splitting the budget

So the first-year contribution from each client is about three thousand six hundred pounds, against five hundred and sixty to acquire them. The budget is easily justified. And here's the twist. The real constraint isn't money. It's whether the sales team can handle sixteen extra calls a month. Goal-based budgeting reveals bottlenecks like that before they bite. Now, how should you split the money? A common rule of thumb is seventy, twenty, ten. Seventy percent on proven activity, twenty percent on promising things you're scaling, and ten percent on experiments like a new platform or format.

### Learning budgets

If you have no proven activity yet, flip the logic. Treat your first budget as tuition. Write down the question you're paying to answer, like: can TikTok creators drive first orders below a hundred and twenty riyals? Set a spend cap and a time box, say four thousand riyals over three weeks. Agree a stop-loss in advance, for example pause any ad set that spends two to three times your target cost per order without a sale. And agree a success threshold that justifies scaling. Most platforms need time and data to optimise, so changing everything daily just resets their learning. Decide the rules before emotions get involved.

### Don't forget

Two more things beginners forget. First, non-media costs: creative production, creator fees, tools like your email platform, people's time, discounts you give away, and payment or platform fees. Leave them out and your cost per result looks better than it really is. Second, AI can help draft the plan. Give an assistant your exact inputs and ask it to build a one-page plan table and show every calculation. The prompt is in the lesson text. But then recalculate the key numbers yourself in the sheet, because language models can make arithmetic slips, and a confident wrong number in a budget is expensive.

### Mistakes and measures

The common mistakes are predictable. A budget with no target result. A small budget spread across too many channels to learn anything. Forgetting production, tools and discounts. And judging results after one or two days. So how do you measure success? Track pacing: actual spend versus plan each week. Track unit economics: your actual cost per result versus your break-even cost per result. And track learning: did each test answer its question? Log the answer even when it's no, because a clear no saves you money next quarter.

### Recap and try this now

Let's recap. A budget is a prediction linked to a result. Work backwards: target results, divided by conversion rate, times cost per click, gives you media budget and cost per result. Then compare cost per result with contribution per order, and if the numbers don't work, you know exactly which lever to pull. Split proven and experimental spend, set stop-loss rules in advance, and count every cost. Here's your try this now. Build the calculator from the lesson text in Google Sheets with your own numbers. Then change one input at a time and write down the conversion rate, click cost or order value that makes your first order profitable.

## Key takeaways

- Goal-based budgeting works backwards from the target result using conversion rate and cost per click.
- Always check the cost per result against the profit per sale before scaling.
- A 70/20/10 split balances proven activity, scaling and experiments; new businesses should budget to learn.
- Include production, tools, people, discounts and fees, not just media spend.

## Try it

Build a goal-based budget for a target of your choice: write down target results, assumed conversion rate, assumed cost per click, media budget and cost per result, then decide whether it is profitable.

- [Previous: Social, creators and messaging: WhatsApp, SMS and communities](https://optimizeall.com/learn/digital-marketing-foundations/social-creators-and-messaging)
- [Next: Funnel metrics: CPM, CTR, CPC, CVR and CPA](https://optimizeall.com/learn/digital-marketing-foundations/funnel-metrics)
- [All lessons of Digital Marketing Foundations](https://optimizeall.com/learn/digital-marketing-foundations)