There’s no one-size-fits-all answer to how much a startup should spend on advertising—but the proper spend always depends on the business’s stage, structure, and priorities. Too little, and you’ll struggle to generate momentum. Too much, and you risk burning through cash without a return.
At Digitlab, we believe the most reliable way to determine your advertising budget is by answering three critical questions: What’s your acquisition cost? How much runway do you have? And what resources can you deploy?
These three factors set the foundation for a digital strategy that’s not only realistic but also built to grow with you.
Start with Your Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) refers to how much you must spend to acquire a new customer. This includes ad spend, marketing tools, and sales efforts. Understanding your CAC is essential because it tells you whether your advertising is sustainable.
Example: If you’re spending R500 in ad and sales costs to bring in one customer, and that customer only spends R300 with you—you’re running at a loss. But if that customer’s lifetime value is R2,000, then a R500 CAC is a strong signal you can scale confidently.Tip: Run small tests across paid channels like Google, Facebook, or LinkedIn to gather CAC benchmarks. Once you know what it takes to acquire a customer, you can reverse-engineer a sensible budget based on how many customers you need to reach your revenue goals.
Understand Your Financial Runway
Your runway is how long your startup can operate before the money runs out. It’s usually measured in months, based on current expenses and expected revenue. This directly impacts how aggressive or cautious your advertising strategy should be.
Short runway (3–6 months): Focus on short-term, conversion-driven advertising that brings in revenue quickly.Longer runway (12–18 months): You can play a longer game by investing in SEO, brand awareness, and content strategies that build value over time.
Tip: Your ad budget should reflect how quickly you need results. A short runway doesn’t mean any marketing—it just means tighter targeting, faster feedback loops, and more apparent ROI tracking.
Be Honest About Your Resources
Resources aren’t just about budget—they include time, skills, systems, and people. One of the startups’ most significant mistakes is overestimating what they can handle in-house.
If you generate 100 leads a month but don’t have the sales team to follow up, you’re wasting money.If you cut external costs but don’t have the internal capacity to manage campaigns or optimise creative, performance will drop.
Tip: Align your ad spend with your ability to execute. If you don’t have an in-house marketer, consider allocating part of your budget to a trusted partner (like a digital agency for startups) who can help you extract more value from your spending.
Know Your Revenue Targets
Having clear revenue goals helps you work backwards to define a realistic ad budget. If you know how much revenue you want to generate and understand your average customer value and CAC, you can calculate how many customers you need—and what it will cost to get them.
Example: If your goal is to bring in R 100,000 in new revenue, and your average customer is worth R 2,000, you need 50 customers. If your CAC is R 400, your ad budget should be around R 20,000 to meet that goal.Tip: Pair your revenue goals with your sales cycle length to plan to spend more strategically across time.
Choose the Right Products to Take to Market
Not every product in your suite needs to be marketed from day one. Focus your advertising budget on high-demand, easy-to-adopt products that solve a clear problem. These are often your best entry points to win new customers.
Once you’ve acquired customers through a flagship product, introduce the rest of your offering using lower-cost cross-sell tactics—like email, remarketing, or onboarding flows. This approach improves your CAC and makes better use of your ad spend.
Example: If you're a SaaS startup with a broad toolset, lead with the most popular or essential tool (e.g. invoicing or scheduling). After adoption, introduce users to the rest of the platform gradually.Tip: Look at market demand, search volume, and customer feedback to identify which product to lead with.
So, How Much Should You Spend?
As a rough starting point, many early-stage startups allocate 5–20% of their monthly revenue to marketing and advertising. But that range only makes sense once you consider your CAC, runway, and resources.
Here’s a simplified framework:
- Pre-revenue startups: Focus on brand-building, validation, and lead generation. Expect modest ad spend (R5,000–R15,000/month) and a strong focus on learning.
- Revenue-generating startups: Allocate 10–20% of monthly revenue to ads, adjusted by CAC and conversion performance.
- Venture-funded or scaling startups: Use CAC and lifetime value (LTV) to model spending. If LTV is 3x CAC, you’re in a good place to scale investment.
Final Thought
Advertising spending isn’t a fixed number—it’s a strategic lever. Startups that succeed are the ones who ask the right questions before investing in growth. When you’ve clarity on your acquisition cost, runway, and resources, your marketing becomes smarter, leaner, and more effective.
If you’re ready to build a growth strategy grounded in data and built for traction, check out our Growth Marketing Plan. It’s a structured, insight-led process designed to help startups like yours scale with purpose and confidence.
Let’s turn that budget into real momentum.
Growth Marketing Plan
Our Growth Marketing Plan is designed to attract high-quality leads, optimise your marketing and sales process, and help you scale confidently.
