TLDR;
- Competition impacts cost: In developed markets and competitive areas like London, costs can be higher, but high-intent traffic often justifies the spend.
- Targeting is key: Rather than broad targeting, focus on specific user intent on Google and precise interests on Meta to control costs.
- The "Hidden" costs matter: Your financial plan must include creative production and landing page software, not just media spend.
- Platform choice dictates budget: Google Ads captures intent (people searching for you), while Meta creates demand (reaching people based on interests).
- Use the calculator below: I've built a specific calculator in this article to help you estimate your break-even Cost Per Lead based on your metrics.
So, you’re trying to figure out a budget for advertising in London. Tbh, it’s probably one of the most stressful parts of writing a business plan or strategy document. You look online, and most "guides" give you vague global averages.
Let me be brutally honest with you: if you go into a competitive market assuming global average costs, you might struggle. London isn't just a city; it's a hyper-competitive micro-economy. I’ve run ads for service businesses in competitive areas, software startups, and B2B consultancies. The costs can be higher, but the volume of qualified customers is massive if you know what you're doing.
The problem is that "How much do ads cost?" is a bit like asking "How long is a piece of string?" or "How much does a house in London cost?" A flat in Barking costs a lot less than a townhouse in Mayfair. Ad inventory works exactly the same way.
In this guide, I’m going to break down exactly what you should expect to pay across Google, Facebook (Meta), and LinkedIn. I'll also help you structure a financial plan that actually makes sense, rather than just guessing numbers. We’ll look at CPCs, CPMs, and the metrics that actually matter: CPA (Cost Per Acquisition).
The "Competitive Premium": Why You Pay More
Before we dive into the specific numbers, you need to understand why your budget needs to be robust. When you target a dense, competitive area, you are entering an auction against deep pockets.
However, higher costs often come with higher purchasing power. For example, we've seen lead costs for an HVAC company in a competitive area hover around $60, whereas a home cleaning company we worked with achieved a cost of £5 per lead. In a dense market like London, you might lean towards the higher end for services, but the order value is often significantly higher.
If you are struggling to figure out how to allocate funds between the platforms and management fees, you might want to have a read of my breakdown on London Paid Ads: The Founder's Cost-Efficient Guide which goes into the strategy side of things a bit deeper.
Google Ads Costs (The High Intent Market)
If you are a service business (plumber, accountant, solicitor, emergency repair) or a B2B company where people are actively searching for your solution, Google Ads is usually where you start.
Google Search Ads function on a pay-per-click (CPC) basis. In developed countries, the cost per click (CPC) often falls in the £0.50-£1.50 range. However, this varies wildly by industry.
From my experience, here are some ranges we've seen in various campaigns:
- Competitive Trades: We're running a campaign for an HVAC company currently in a competitive area, and they are seeing costs of around $60 per lead.
- Consumer Services: On the other hand, we’ve run ads for childcare services where the cost per lead was around $10 per signup.
- Local Services: Our best consumer services campaign was for a home cleaning company which got a cost of £5 per lead.
The mistake people make in their financial planning is assuming a cheap CPC means a cheaper campaign. Not true. If you pay £1 per click but only 1% of people buy, your Cost Per Acquisition is £100. If you pay more per click but 30% of people call you because they have an urgent need, your Cost Per Acquisition might be lower relative to the value of the customer.
For your financial plan, it's always better to budget for higher costs and be pleasantly surprised than the other way around.
Also, don't forget that managing these costs is a skill in itself. If you're wondering what it costs to hire someone to keep these click prices down, check out my guide on Google Ads Management Costs in the UK: 2024 Guide.
Meta Ads (Facebook & Instagram)
Meta works differently. You are usually paying for impressions (CPM), not clicks. In London, Meta ads are incredibly powerful because almost everyone is scrolling on their phone on the Tube, on the bus, or while waiting for their coffee.
The cost here depends heavily on who you target and your offer.
Scenario: B2B Software
We worked with a B2B software company where we generated 4,622 registrations at a cost of $2.38 per registration. This shows that even in competitive sectors, the right creative and targeting can yield low costs.
Scenario: Store Launch
For an eCommerce store launch, we generated 1500 leads at just $0.29 per lead.
For your financial plan, based on data for developed countries, I generally forecast a Cost Per Result of:
- £1.60 - £15.00 for Signups/Leads (depending on conversion rates of 10-30%).
- £10.00 - £75.00 for Sales (depending on conversion rates of 2-5%).
- B2B: While B2B can be more expensive, we have achieved leads for B2B decision makers for as low as $22.
Many founders struggle to map these costs to a full budget. If that's you, I've written a detailed piece on how to build a forecast model here: The Paid Ads Budgeting and Forecasting Framework.
LinkedIn Ads: High Quality B2B Traffic
If you are B2B and targeting decision-makers, LinkedIn is an obvious choice. It allows for narrow targeting options that aren't available elsewhere.
While costs on LinkedIn can be higher than other platforms, the quality is often the differentiator. For one software client targeting B2B decision makers, we achieved a Cost Per Lead of $22. For another client in environmental controls, we reduced their cost per lead by 84% using a mix of LinkedIn and Meta ads.
For your financial plan: Ensure you have enough budget to test properly. We usually recommend a budget for ad spend of $1,000-$2,000 per month to start with across your platforms.
The "Hidden" Costs in Your Financial Plan
Here is where most business plans fail. You calculate the ad spend (media budget), but you forget the costs required to actually run the ads. To reach a local audience effectively, you can't just put up a stock photo.
- Creative Production: You need budget for video editing, graphic design, or UGC (User Generated Content) creators. A persuasive video can work to get leads at lower costs.
- Agency / Freelancer Fees: Unless you are doing this yourself, you need to pay for expertise. You can read more about typical pricing models in my article London Ad Agency Pricing: The Founder's ROI Guide.
- Tech Stack: You need a CRM to manage the leads, a landing page builder, and analytics tools.
Calculating Your Budget: A Reverse Engineering Approach
Instead of asking "How much does it cost?", try asking "How much can I afford to pay for a customer?"
This is the only way to build a robust financial plan. You need to know your Unit Economics.
The Formula:
Lifetime Value (LTV) x Margin % = Gross Profit per Customer.
Decide how much of that profit you are willing to spend to acquire the customer (CPA Target).
I've built a calculator below to help you play with these numbers specifically for your business.
Strategy: How to better pre-qualify your audience
One massive efficiency hack for your financial plan: Focus on intent and problems, not just geography.
On Google Ads
Target keywords that express specific user intent, rather than broad informational queries. For example, focus on users looking for "software for lead generation" or "emergency electrician" rather than just "marketing" or "electrical". This way, ads are shown to people who are "prequalified"—they are already searching for the kind of solution you offer.
On Meta Ads
Target interests related to the problems or goals you solve, rather than going for broad awareness. For example, for a lead generation tool, we'd look for interests related to outreach challenges, such as "email marketing" or people following marketing publications. We'd then target them with ads that call out their problems. This way, we know that people that click on the ads are likely already interested in similar solutions.
It's vital to get this right. If you want to know more about the specifics of setting up a budget that accounts for these nuances, check out London: How to Budget Paid Ad Management [Expert Guide].
Myth-Busting: "I need £5k/month to start"
I hear this a lot. Agencies will tell you that you need a huge budget to advertise in a city like London.
This is nonsense. I usually recommend a budget for ad spend of $1,000-$2,000 per month to start with. This depends on how many leads you need (number of leads you need x cost per lead = ad spend).
If you have £1,000/month:
- Don't do: Brand awareness on Facebook.
- Don't do: Broad keyword searching on Google.
- Do: Long-tail "Exact Match" keywords on Google.
- Do: Retargeting (showing ads to people who already visited your site).
The smaller your budget, the tighter your targeting needs to be. For a realistic look at budgets, see Solved: Realistic Marketing Budget (Data-Driven Plan Inside).
Summary: Your Ad Budget Financial Plan
To create the financial plan you asked for in your post, I would structure it like this:
| Cost Item | Est. (Monthly) | Notes |
|---|---|---|
| Media Spend | £1,000 - £2,000+ | Recommended starting budget. |
| Management Fees | Variable | Don't skimp on expertise. |
| Creative & Tools | Variable | Video ads, landing page software, etc. |
| TOTAL | £1,500+ | Minimum viable budget. |
I've detailed my main recommendations for you below:
If you take one thing away from this, it's that competitive markets punish vague targeting. Your financial plan shouldn't just be a line item called "Marketing." It needs to be a calculated investment based on your required Cost Per Lead.
| Step | Action |
|---|---|
| 1. Define the Audience | Focus on intent (Google) or specific problems/interests (Meta). |
| 2. Calculate Max CPL | Use the calculator above. Know your "Walk Away" price. If leads cost more than that, pause the ads. |
| 3. Choose One Platform | If budget is limited, pick EITHER Google (for intent) OR Meta (for volume). Don't dilute your budget across both. |
| 4. Budget for "Failures" | The first month is buying data. You might not break even in Month 1. Your financial plan must account for this "learning phase" cash flow dip. |
Creating a financial plan for advertising can feel like navigating a minefield. There are high costs and aggressive competitors.
If you're looking at these numbers and thinking, "I'm still not sure if my margins can support this," or if you want someone to double-check your forecasting math before you commit budget, it might be worth getting a second opinion. We offer a free initial consultation where we review your strategy and account together which usually is super helpful and gives potential clients a taste of the expertise they'll see going into their project if they decide to work with us.
Hope this helps!
