How to Calculate Your Optimal LinkedIn Ads Demand Gen Budget

Work out the exact budget you need to reach your ICP with our quick-cook paid ads budget equation.

Let’s be real: budget planning is scary for even the most seasoned (pun-intended) demand gen marketers. At best, it feels like an educated guess. At worst, you’re picking random numbers out of the sky.

The good news: there’s a way to accurately calculate how much budget you need to hit your demand gen goals, take away the stress of budget planning, and save loads of time.

We created a formula.

If you’re a B2B marketer, this is how to figure out exactly how much budget to spend on your paid media demand gen campaigns.

OK, that looks like algebra. 

Because it is. 

But don’t freak out, because algebra is pretty cool. An equation like this uses things you KNOW to figure out things you DON’T—like the budget you’ll need to be wildly successful based on:

• how many people need your thing
• how often you should show them ads about your thing
• the cost to show those ads 
• time 

Your monthly budget is based on hitting your comprehensive reach. 

Comprehensive reach: reaching a significant portion of an audience with paid media activity

(Big shoutout to Tony Flores for this equation). 

You need a competitive strategy and a distinct/memorable brand to generate demand. Then, go after comprehensive reach to maximize the highest mental availability (memory recall) from your paid ad demand gen efforts. 

When more people know WHO you are, WHAT you do, and HOW you solve their problems (jobs theory), more people will naturally want to get in touch WHEN they need what you sell.

Comprehensive reach looks different for different B2Bs. 

Aim for 80% audience reach—minimum. 

This will maximize your ability to convert the 5% of buyers who are in-market right now and simultaneously build future revenue potential in the giant 95% pool of buyers who aren’t.

Let’s crunch the numbers; I promise it’s not that hard.

The first two parts of this equation are audience (A) and reach (R).

A is total audience size (the number of potential buyers).

R is the % of the audience you’d like to reach on a scale from 0 to 1, where 0 is 0% of audience reached (nobody) and 1 is 100% of your audience reached (everybody). 

You’ll work on an R of 0.8 since anything above 80% counts as comprehensive reach.

Seems high, but it’s not. 

We’ll show you how to use reverse IP reveal tools to see how effectively your messaging persuades your audience later.

Secondary benefit: With this equation, it’s easy to communicate to senior leaders exactly how much of your target audience you reach with different budgets. Armed with that, your pitch for more budget is convincing because leaders visibly see how lower budgets drastically limit reach 😉

We’ll use a mock audience for our ICP—a CMO or Head of Marketing in the construction space.

1. Head to Plan > Saved Audiences in your LinkedIn Ads account
2. Click Create audience.
3. Now we’ll use the built-in targeting filters to refine the audience for your ICP. 
4. First, set location to the United States. 
5. In the drop down for “recent or permanent,” select "permanent." Recent may include traveling prospects who don’t actually reside in your target geo. We don’t want that.
6. Next, add a filter for Chief Marketing Officer and Head of Marketing.
7. Then, and this is super important, hit the Narrow button to filter for users who meet our job title AND our industry targeting criteria. The default finds users who meet our job title OR industry targeting criteria. That means the audience will include EVERYONE in construction. AKA a lot of wasted spend.
8. Under Narrow, select Construction under company industry. There are many other targeting filters here, so play around to see what’s relevant to your ICP.

That’s it for refining the audience.  Now we see our target audience size and we’re ready to plug it into the Comprehensive Reach equation.

“What in the f*** is that!?”

FF is how many times you want your audience to see your ads. 

Go for an FF of 10 minimum.

FF scales as your audience grows—it’s harder to get comprehensive reach within larger audiences.

One perfect ad that converts every prospect after one view doesn’t exist. So you’ve gotta play the long game and bump up impressions.

If you’re worried that a 10+ frequency might irritate your audience, that’s valid but unlikely. The truth is, repeated exposure is how people remember you. 

You’ll rotate new creative into your campaigns frequently to keep users engaged and prevent ad fatigue. Be confident here: it’s better to show an ad one too many times than one too few.

Because “Almost Conversions” don’t pay the bills or make for great C-suite presentations at the end of the year.

Next up, figure out how much 1,000 impressions will cost. 

CPM fluctuates throughout the year based on how many companies compete for your audience (ad space demand). So use a baseline from your previous campaigns for a realistic projection of costs.

If this isn’t available, use either:

• An industry benchmark from a platform like Dreamdata OR
• CPM from KlientBoost’s LinkedIn, Google, and Facebook paid media benchmarks taken from 250+ active clients

We’re down to it now. 

Plan your budget to cover two sales cycles:

If your sales cycle is 90 days, plan for 180 days. 

If it’s 6 months, plan for 12 months.

If it’s 5 years, WTF?, hire a new sales team.

Ad markets are dynamic and change a lot. Set a reminder to revise your budget every 3-6 months to account for CPM fluctuations and ICP changes that will increase or decrease your target audience size.

And you’re done. 

Time to put it all together. 

You could spend ages configuring your own spreadsheet to do the maths. 

OR take the easy road and use ✨ this handy demand gen paid media budget calculator✨ we made for you instead.

And voila, now you know exactly how much to budget for your demand gen campaigns— and it was probably WAY less stressful and time-consuming than usual.

Big bow. Queue triumphant music. The frying pan is sizzlin’. 🥓

After all that, how do you know if your paid media demand gen efforts are winning Michelin stars or burning in the oven?

By paying attention to leading indicators using the right tools.

Leading indicators: metrics that predict a future outcome (so you can squeeze more value out of the effort you put in)

We look for at least 40% of our prospect accounts visiting our website. 

How the heck do you track that?

With a reverse IP tool like Koala*

Much of your demand generation magic happens in-feed—meaning, without a click from your prospects.  The goal is to show them a strong message they like and remember so they come back later when they’re ready to buy. 

With Koala, prospects are detected on your website, even if they didn’t directly click on an ad to get there. Maybe they remembered you some time after they saw your ad and they navigated to your site from memory. Koala gives you credit for that with an accurate read of the client journey (who is engaging and what actions did they take?).

Why 40% accuracy, you ask?

We’ve tried a LOT of reverse IP tools like Koala, Clearbit, Snitcher, Kickfire, etc. and the average accuracy/expectation floats around 40% at the time we made this recipe.

Read the “How to Measure Demand Gen Performance” recipe for the essential Demand Gen performance tracking KPIs.

*Koala (getkoala.com) is part of the KlientBoost ecosystem so all KlientBoost clients get a sweet deal. Get a marketing plan from us and we’ll reveal that deal + other MarTech solutions you’ll need as you climb the Marketing Maturity Mountain.