Notes
Tool1 min

What to calculate before the first ad

A budget is easier to plan after defining the desired action and an acceptable acquisition cost.

Key takeaways

  • Separate test spend from creative, page and analytics costs
  • Follow the path to payment when the business needs sales
  • Use a forecast with assumptions and a stopping rule

Start with the action

For a new launch, I first clarify whether we need an enquiry, a first payment or evidence of demand. Clicks alone do not answer this question. We then choose an audience, an offer and the action to count.

A minimum test plan

  1. Choose an audience

    A clear offer for a defined group.

  2. Define the event

    What counts as a useful enquiry or purchase, and where it is confirmed.

  3. Set spend and timing

    The amount available for learning and when we review the data.

  4. Agree the decision

    When to continue, revise the hypothesis or stop.

An example ad-budget calculation

Clicks = purchases / (enquiry rate × payment rate). Spend = clicks × cost per click. Development, creative and delivery are separate. This is a scenario based on your assumptions.

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A calculation does not predict demand

The example values are hypothetical. Use one currency for your inputs. Correct arithmetic does not validate conversion assumptions. After launching, replace assumptions with observed data and assess lead quality.

Before launch

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