How Much Ad Spend to Hit Your Revenue Goal?
Ever wondered how much you should actually be spending on meta ads to hit your revenue target?
In the agency, this is one of the first things we figure out for our clients. We reverse-engineer their Facebook and Instagram ad spend based on their revenue target.
Now, most of our clients have been with other agencies before coming to us, and every time we ask a new client “What’s your revenue goal?”, we get the same response:
“No one has ever asked me that before.”
That is just so wild to me!
How can we run a successful ad campaign without knowing what success looks like?
At Lume Marketing, we don’t do guesswork. We love data, and we love to reverse-engineer budgets so your ad spend actually makes sense.
Here’s how you can do the same.
Step 1: Start with Your Revenue Target
Before you even think about ad spend, you need to know:
How much revenue do you want to generate from this campaign? What is your total revenue goal? This could be per month, per year, or for a short-window sale.
What percentage of your revenue do you expect will come from ads. You can work this out based on historical data, or by factoring in how much you usually make from your other marketing channels, such as social media and email.
Example:
You want to make $100,000 from your sale.
You estimate 60% of sales will need to come from ads.
Your target for ad-driven revenue is $60,000.
Without this starting point, you’re just throwing money at Meta and hoping for the best. (Spoiler: Hope is not a strategy.)
Step 2: Look at Your Existing Data
Past data is gold. If you’ve run ads before, go back and check:
What was your CPA (Cost Per Acquisition)?
What was your AOV (Average Order Value)?
How did your other marketing channels perform?
This tells you what worked, what didn’t, and you can then work out how much you actually need to spend to reach your revenue target.
Step 3: Do the Maths
How many sales do you need to make to hit your goal?
There are two key numbers you need to start with:
CPA (Cost Per Acquisition) = How much it costs to get a customer through ads.
AOV (Average Order Value) = How much each customer spends on average.
Once you know your AOV, you can work out how many sales it’ll take to hit your goal.
Example:
If your AOV is $100, you need 600 sales to hit $60,000 in revenue.
How much do you need to spend to hit your goal?
Take the number of sales you need and multiply it by your CPA.
For example, if your CPA is $30, then:
600 sales × $30 CPA = $18,000 ad spend
If this number makes you choke on your coffee, you have a few options:
Increase your AOV.
Lower your CPA.
Make more from your organic audience and existing customers (it's 5x cheaper to get an existing customer to buy)/
Adjust your revenue target.
This is why data matters… so you’re not just pulling an ad budget out of thin air.
What If You Don’t Have HISTORICAL Data?
Not everyone has historical data to go on. If you’re running a ads, or a sale, for the first time, you need to create a hypothesis and test it.
As always, until you test, it’s just a guess.
Step 1: Make Some Educated Guesses
Look at:
Industry benchmarks for CPA and AOV.
Competitor data (if you can find it).
A reasonable conversion rate (most eCommerce stores convert at around 2%).
Example assumptions:
CPA: $30 (based on industry averages)
AOV: $100 (based on product pricing)
Conversion rate: 2%
Step 2: Run a Small Test Campaign
Instead of spending thousands upfront, test first:
Spend $500–$1,000 on ads.
Track your AOV, CPA, and conversion rate.
Use the real data to adjust your estimates.
Step 3: Adjust & Scale
Once you’ve got real numbers:
If your CPA is too high, refine your campaigns and improve your creative.
If AOV is low, add bundles, upsells, or better pricing strategies.
If your conversion rate is low, fix your website (because no ad can save a bad landing page).
Final Thoughts:
If you don’t start with a revenue goal, your ad spend is just a wild guess. And, spoiler, wild guesses usually don’t work!
In order to hit your revenue target, you want to:
✔ Start with your revenue goal, before anything else.
✔ Reverse-engineer your ad spend based on real data.
✔ Test and optimise as your campaign rolls out.
Want to run smarter, more profitable ad campaigns? Come chat to Lume Marketing, or learn how to run your own ads in The ROAS Lab.