The question seems simple.
“How much should I invest in advertising?”
It's one of the first questions a company asks when it decides to start acquiring customers online. And it's also one of the hardest to answer with a number.
Not because there's a lack of benchmarks, percentages or statistics. Quite the opposite: a single search turns up dozens of suggestions on how much a company should spend on Google Ads, Meta Ads or digital advertising in general.
The problem is that almost none of these figures start from the right place.
The goal comes before the budget.
And the company, at least in this case, should know the answer better than any agency.
Before talking about budget, you have to talk about goals
How much does the company want to grow?
How many new customers does it want to win?
Which products or services does it want to push?
How much margin can it give up to secure a new sale?
What is a customer worth on average?
These are the questions an advertising strategy should start from.
The company holds information that an outside professional can't know in advance: margins, production capacity, average order value, product availability, sales cycle, capacity to manage customers.
The budget comes afterwards.
And above all, having money available doesn't necessarily mean the investment is sustainable.
A company might have enough cash to invest a certain amount, but not the margins to make that investment profitable.
When talking about an advertising budget, you also shouldn't consider only the amount allocated to the platforms. In many cases the real investment also includes strategy, creative, landing pages, tracking, analysis, day-to-day management and ongoing optimisation.
The media budget is what is invested in the channels.
The real advertising investment is the full set of resources needed to turn that budget into business opportunities.
Budget isn't calculated on turnover, because every company has different economics
For years we have heard more or less universal rules.
In some contexts the idea is to allocate a share of profit, rather than turnover, to promotion. It's a useful principle because it shifts attention from the size of the company to the sustainability of the investment, but it can't be applied as a rule that works for everyone.
A benchmark such as 20% of profit may seem high, especially for a small business. But the point is not to take that percentage as an automatic formula. The point is to understand that an advertising budget should come from the company's real ability to sustain acquisition, not from a figure chosen out of imitation or habit.
A large part of Italy's business landscape is made up of SMEs and micro-enterprises, often family-run, while the big digital advertising platforms operate in very different markets and economic models.
So applying the investment logic of large international companies to a small Italian business automatically makes little sense.
But there is another element to consider.
The internet has changed the scale of competition.
A local business investing in digital advertising is no longer necessarily talking only to people in its own area. It may end up competing with companies much further away and, in many sectors, with players operating on a national or international scale.
The potential market grows.
And competition grows with it.
Advertising should be treated like an employee
To explain the idea of budget to a business owner, I find it more effective to set aside advertising jargon for a moment.
Let’s try thinking of advertising tools as a person.
Picture an employee who takes home €1,500 net a month. For the company, the real cost of that person is not €1,500. Once you add gross salary, employer contributions, severance (TFR) and the extra monthly payments, the total cost to the company can reach roughly €2,500–2,800 a month, with significant variations depending on the national collective agreement, grade, sector and specific situation.
The exact number is not the point.
The point is the order of magnitude.
So here is a provocation that might help:
why should a company automatically consider an advertising investment of a few thousand euros a month to be huge?
We are not necessarily talking about tens of thousands of euros.
We are talking about a figure that, in many cases, compares with the total cost of one in-house employee.
The point is not to establish that €2,500 is always enough, any more than the opposite is true.
The point is to change perspective.
Advertising should be seen as a productive resource.
And like any other productive resource, it should be judged on what it produces.
How much should this “employee” produce?
This is where the metaphor gets even more interesting.
How would we assess a sales agent?
How many contacts have they generated?
How many leads have they brought in?
How many deals have they opened?
How many sales have they made?
What are the customers they won worth?
Advertising should be held to the same logic.
Not just:
“How much did we spend?”
But:
“What did we get for what we spent?”
And there is a substantial difference compared with traditional selling.
A salesperson who spends the day making phone calls or going door to door can reach a limited number of people.
Digital advertising tools can potentially reach thousands or millions.
Above all, they can try to reach people based on signals of interest, intent and characteristics that match the product or service being promoted.
It is a completely different way of making contact.
A cold call interrupts someone while they are doing something else.
An ad can appear while that same person is searching for exactly what the company sells.
This difference is one of the reasons digital advertising can become real sales infrastructure.
You don’t have to advertise everything
Having a budget does not necessarily mean spreading it across every available product, service or market.
In fact, the opposite is often true.
If resources are limited, you have to choose where to use them.
The first priority should be the company’s core business, ideally focusing on the products and services with higher margins or a strategic role in growth.
Not all sales are worth the same.
A low-margin product can generate revenue without necessarily supporting a high acquisition cost.
A more profitable service, on the other hand, might allow a larger advertising investment and therefore a greater ability to compete.
So the budget is not just there to “get noticed”.
It is there to buy sales opportunities that make sense for the company.
The right moment to increase the budget
The next question is inevitable:
when should you increase the investment?
The answer should not be “when we decided we want to grow”.
First you need to find a strategy that works.
If a campaign proves it can generate leads or sales at economically sustainable terms, an interesting possibility opens up.
Scaling up.
You can increase the volume of visibility, widen the audience, enter new territories or go after new market segments.
But you need to be careful.
Increasing the budget changes the balance of the strategy.
Auctions get wider, you potentially move into less immediate segments, competitive pressure rises and it can become harder to maintain the same level of efficiency.
That is why a campaign that works does not necessarily have to be scaled aggressively.
First you need to understand how far it can be pushed without breaking the balance that made it profitable.
An advertising budget should not stay fixed forever
There is, however, another factor to consider.
Digital advertising works mainly through auction systems.
And in an auction, the price is not fixed.
If competition grows, pressure on bids grows. If a market gets more crowded, getting the same visibility may require a larger investment.
That is why thinking:
“I’ve found the right budget and from now on I’ll always spend that amount”
is hard to reconcile with a company that wants to keep growing.
The budget should keep pace with growth.
First you find a sustainable strategy.
Then you consolidate it.
Then you assess how much more of the market can be won.
And, if the economics remain positive, you reinvest to keep growing.
The budget does not increase because you need to spend more. It increases because we have found a system that works and want to see how far it can go.
When not to advertise
There is, however, an even more important question:
when is it better not to invest?
The answer is simple: when the company is not ready to handle the growth it is trying to buy.
Advertising cannot solve every problem.
If the product is not competitive, margins are too thin, the site does not convert, the sales process does not work or logistics cannot handle demand, increasing the budget may simply amplify the problem.
Imagine an e-commerce business that suddenly starts generating hundreds of extra orders but does not have enough staff to fulfil them.
Or a services company that generates dozens of sales enquiries without enough people to follow them up.
In both cases the advertising is working.
It is the company that isn’t ready.
That is why, before increasing the investment, you need to check the whole infrastructure:
company, website, margins, staff, product, logistics and sales process must all be able to handle the demand generated.
Increasing demand is not growth if the company is not ready to handle it.
It is wasted productive capacity.
“I’m the best in my town” is no longer enough
Finally, there is a broader consideration.
Many companies still think in strongly local terms:
“We’re the best in our area.”
That may be true.
But the internet has broken down the barriers of space and time.
If the product or service can be sold beyond local borders, the competitor is no longer necessarily the company a few kilometres away.
It could be in another region.
In another city.
In another country.
Digital advertising makes this competition even more visible because it allows far more players to compete for the same attention.
Is it a ruthless scenario?
Yes.
But it is the reality of the digital market.
And ignoring it does not make the competition any less real.
So, how much should a company spend on advertising?
If we really had to give a straight answer to the original question, we could start with a provocation:
at least as much as one of your employees costs.
Not because there is a magic figure that works for every company, but because the comparison helps clarify the nature of the investment.
If an in-house employee costs the company a few thousand euros a month, it is not unreasonable to ask whether a similar amount could go to a digital sales resource that works continuously on acquisition.
From that moment, the budget is no longer an arbitrary figure.
It becomes a variable in the strategy.
If the sales machine works, you can increase the volume.
If the market allows it, you can go after new areas.
If the company is ready, it can grow.
If, on the other hand, the infrastructure cannot yet handle the demand, the problem is probably not how much to spend on advertising.
It is everything that comes before.
And perhaps this is the most important answer to the question “how much should I invest?”: there is no absolutely correct budget.
There is an investment consistent with what a customer is worth, how much margin we are willing to give up to acquire them, how much of the market we can really serve and how ready we are to grow.
Because the goal of advertising should not be to spend less.
It should be to make growth sustainable.
LU3G insights
Sources
- Google Ads Help – About budgets: Google explains how to balance spend and results, and when a budget increase can capture additional demand at a sustainable CPA.
- Google Ads Help – Conversion values: Conversion values let you measure the real value generated by campaigns, including revenue or margins, and optimise return on investment.
- Google Ads Help – Estimating the value of a conversion: The estimate can take into account margin, likelihood of closing, repeat purchases, word of mouth and customer lifetime value.
Andrea Riva
Andrea Riva handles Paid Advertising at LU3G, where he oversees strategies, campaigns and optimisation on platforms such as Google Ads, Meta Ads and LinkedIn Ads. His approach combines data analysis, platform knowledge and a commercial outlook, with the aim of turning ad budget into an investment that is measurable, sustainable and geared to growth.
Andrea Riva
Andrea Riva handles Paid Advertising at LU3G, where he oversees strategies, campaigns and optimisation on platforms such as Google Ads, Meta Ads and LinkedIn Ads. His approach combines data analysis, platform knowledge and a commercial outlook, with the aim of turning ad budget into an investment that is measurable, sustainable and geared to growth.