Solved: Optimal Performance Marketing Budget in Budapest

Hi there,

Thanks for reaching out!

Happy to give you some initial thoughts on how to figure out your performance marketing budget for Budapest. It's a common question, and honestly, there's no magic number. But there is a solid way to think about it so you don't just throw money away. The real trick isn't picking a budget out of thin air, but building one from the ground up based on what you actually want to achieve. Let's get into it.

We'll need to look at your goals first...

Right, first things first. The question "what should my budget be?" is the wrong question to start with. It's like asking "how long is a piece of string?". The right question is "what do I want to achieve, and how much will it cost to get there?". Most people get this backwards. They pick a budget they're comfortable with, say £1,000 a month, and then hope for the best. That's a recipe for disappointment.

Instead, you need to work backwards from your business goals. It’s a simple bit of maths, but it’s the foundation for any successful campaign. If you dont know your numbers, you're just gambling. Let's say your goal is to generate an extra £20,000 in revenue this quarter.

Here’s how we break it down:

1. How many new customers do you need? If your average customer is worth £2,000, then to hit your £20,000 goal, you need 10 new customers (£20,000 / £2,000).
2. How many qualified leads do you need to get those customers? This depends on your sales conversion rate. If you close 1 out of every 5 qualified leads you talk to (a 20% close rate), you'll need 50 qualified leads to get those 10 customers (10 / 0.20).
3. How much can you afford to pay for a lead? This is where it gets interesting. We'll get into this in more detail later, but for now, let's just pick a number. Let's say based on your profit margins, you can afford to pay up to £100 for a qualified lead.
4. What's your total budget? If you need 50 leads and you're willing to pay £100 for each, your ad spend budget is £5,000 (50 * £100).

See? We've just built a budget based on a tangible revenue goal. It’s no longer a random number; it's a strategic investment. This approach completely changes your perspective. You're not "spending" £5,000 on ads; you're investing £5,000 to generate £20,000. Now that's a much better conversation to have.

To make this a bit more practical, I've put together a simple calculator for you. Play around with the numbers to see how different goals and conversion rates affect the budget you'd need. This should give you a much clearer starting point.

I'd say you need to understand the Budapest market...

You specifically mentioned Budapest, and that's a good observation. Every market is different. Running ads in Hungary is not the same as running them in the UK, Germany, or the US. The main differences come down to competition, user behaviour, and ultimately, cost.

Generally speaking, you can expect costs like Cost Per Click (CPC) and Cost Per Mille (CPM, cost per 1000 impressions) to be lower in Hungary compared to more saturated Western European or North American markets. There's simply less competition from big companies with massive budgets pushing up auction prices. This is the good news. A £10 CPC keyword on Google Ads in London might only be £2-£3 in Budapest.

However, and this is a big 'however', cheaper clicks do not automatically mean cheaper customers or better ROI. The quality of traffic can be different. Conversion rates might be lower. For example, if your website and ads are in English, you're immediately filtering for a specific segment of the population, which can be good or bad depending on who you're selling to. The local purchasing power is also a factor. A price point that seems reasonable in London might be considered a luxury in Budapest, affecting your conversion rates on sales-focused campaigns.

So, while the raw advertising costs are lower, the overall Cost Per Acquisition (CPA) might not be as dramatically different as you'd think once you factor in conversion rates. This is why you must track your funnel end-to-end. It's useless to celebrate a £0.50 CPC if none of those clicks ever turn into a lead or a sale. You'd be better off paying £5.00 for a click that has a real chance of converting.

To give you a rough idea, here's a table comparing some ballpark figures for different campaign objectives. These are just estimates from my experience, your actual results will vary depending on your industry, offer, and creative. But it should help frame your expectations for the Budapest market.

The main takeaway here is not to get seduced by cheap vanity metrics. Your focus should be on the final ROI. Which brings me to my next point, and it's probably the most important shift in mindset you can make.

You probably should forget CPL and focus on this instead...

Okay, this is where we separate the amateurs from the pros. Everyone gets obsessed with Cost Per Lead (CPL) or Cost Per Click (CPC). They spend all their time trying to drive that number down. "We got our CPL from £50 to £40!". It sounds good, but it's often a fool's errand. Why? Because not all leads are created equal. A £40 lead that never becomes a customer is infinitely more expensive than a £150 lead that turns into a £10,000 contract.

The real metric that unlocks intelligent, scalable growth is the ratio between your Customer Lifetime Value (LTV) and your Customer Acquisition Cost (CAC). Tbh if you dont know this, you're flying blind.

Customer Lifetime Value (LTV): This is the total profit you expect to make from a single customer over the entire duration of your relationship. It's the true worth of a customer.

Customer Acquisition Cost (CAC): This is the total cost of sales and marketing required to acquire one new customer. Your ad spend is a major part of this.

A healthy business typically aims for an LTV:CAC ratio of 3:1 or higher. This means for every £1 you spend to acquire a customer, you get at least £3 back in profit over their lifetime. If your ratio is 1:1, you're losing money once you factor in your operational costs. If it's 5:1 or 10:1, you're leaving money on the table and should be spending more agressively to grow faster.

Calculating your LTV is the first step. For a subscription business, it's pretty straightforward. For other businesses, you might need to make some educated guesses, but having an estimate is far better than having nothing.

Here’s the simple formula:

LTV = (Average Revenue Per Customer Per Month * Gross Margin %) / Monthly Customer Churn Rate

Let's walk through an example. Imagine you run a SaaS business:

• -> Average Revenue Per Account (ARPA): £300/month
• -> Gross Margin: 80% (meaning £240 is profit)
• -> Monthly Churn Rate: 5% (you lose 5% of your customers each month)

LTV = (£300 * 0.80) / 0.05 = £240 / 0.05 = £4,800

Now you have your truth. Each customer is worth £4,800 in profit. With a healthy 3:1 LTV:CAC ratio, you know you can afford to spend up to £1,600 (£4,800 / 3) to acquire a single customer. This is your CAC target.

Suddenly, that £100 CPL doesn't look so scary, does it? If your sales team converts 1 in 10 leads, your CAC would be £1,000 (10 * £100), which is well below your £1,600 target. You're profitable. In fact, you could even afford to pay up to £160 per lead and still hit your target. This is the maths that allows you to outbid and outspend your competitors who are still stuck obsessing over cheap clicks.

Here's another calculator to help you figure out your LTV and what your target CAC should be. This will be your north star for budgeting.

You'll need a solid testing framework...

Right, so we've established a goal-driven budget and we know the key metric (LTV:CAC) to watch. Now, how do you actually spend the money? You don't just dump your entire £5,000 budget into a single campaign on day one. That’s how you lose money, fast. You need to start with a smaller, dedicated testing budget. I usually recommend at least £1,000-£2,000 for a proper testing phase.

The goal of this phase isn't to get a massive ROI. The goal is to learn. You are paying for data. You're trying to find answers to these questions:

• -> Which audience is my most responsive? You need to test different targeting options. For B2B on LinkedIn, that might be job titles vs. company industries. On Facebook, it could be different interest groups or lookalike audiences.
• -> What message resonates the most? This is creative testing. You should test different ad copy (e.g., pain-point focused vs. benefit-focused), different images or videos, and different headlines.
• -> What offer generates the highest quality leads? Maybe a free guide gets lots of signups but they never convert, while a "free strategy call" gets fewer signups but they are much more likely to become customers. You have to test these things.

I usually structure this testing phase methodically. You create a campaign dedicated to testing one variable at a time. For example, a campaign to test 3-4 different audiences, but keeping the ad creative and the landing page the same for all of them. Once you find a winning audience, you then run a new test with that audience, but this time you test 3-4 different ad creatives. It's a process of elimination, constantly optimizing and finding the combinations that deliver the best results against your target CAC.

Here’s a visual of how you might allocate a £2,000 initial testing budget. It’s not about spending equally, it’s about allocating spend to get answers to your most important questions first – which is almost always "who is my customer?".

Only once you have this data, once you have a campaign that is reliably hitting your target CAC, do you start to scale the budget. And you do it gradually. You increase the budget by 20-30% every few days and monitor performance closely. If the CAC holds steady, you increase it again. If it starts to climb, you pull back and investigate why. This disciplined approach prevents you from burning through your budget on campaigns that aren't ready for scale.

Your offer needs to be built to solve an audience's pain

I have to mention this because it's the number one reason I see campaigns fail, regardless of the budget. You can have the most perfectly calculated budget and the most sophisticated targeting in the world, but if your offer is weak or your message doesn't connect, you will fail. A bigger budget just makes you fail faster.

Your offer’s only job is to provide undeniable value to your ideal prospect. The mistake most businesses make, especially in B2B, is making their primary call to action "Request a Demo" or "Contact Us". This is a high-friction, low-value ask. You are asking for your prospect's time in exchange for the 'privilege' of being sold to. It's arrogant, and in a competitive market like Budapest or anywhere else, it's not good enough.

You must solve a small, real problem for them for free to earn the right to solve the whole thing. Your offer should be an "aha!" moment that makes them sell themselves on your solution.

• -> For a SaaS company: Don't hide your product behind a demo wall. Offer a free trial with no credit card required. Let them experience the value firsthand. This generates Product Qualified Leads (PQLs) who are already convinced, not just Marketing Qualified Leads (MQLs) for a sales team to chase.
• -> For a service business (like an agency): Don't just say "we do marketing". Offer a free, automated website audit that shows them their top 3 SEO opportunities. Or a free 20-minute strategy session where you audit their existing ad campaigns. We do this, and it works because it provides genuine value upfront and demonstrates our expertise far more effectively than any sales pitch could.
• -> For a high-ticket product: Offer a detailed buyer's guide, a case study that breaks down the ROI another client achieved, or an ROI calculator specific to their industry. Give them tools to help them make the decision.

Once you have a high-value offer, your ad copy needs to speak directly to the nightmare your ideal customer is trying to escape. Don't sell the features of your drill; sell the perfect hole it creates. For instance, if you're selling fractional CFO services in Budapest to tech startups:

Weak Message: "Expert Fractional CFO Services in Budapest. We offer financial forecasting, bookkeeping, and strategic planning."

Strong Message (Problem-Agitate-Solve): "Are your cash flow projections just a shot in the dark? Are you one bad month away from a payroll crisis while your competitors are confidently raising their next round? Get expert financial strategy for a fraction of a full-time hire. We build dashboards that turn uncertainty into predictable growth."

The second one connects on an emotional level. It understands the founder's specific pain. This is what gets the click and makes your advertising budget actually work, and not just get wasted.

This is the main advice I have for you:

So, to bring it all together, here is a summary of the approach I would recomend for you to effectivly determine and manage your performance marketing budget. This isn't a one-time task but an ongoing process of strategic planning, testing, and optimisation.

I know this is a lot to take in. It's a very different way of thinking about budgeting than most people are used to. But this is the framework that we've seen work time and time again for our clients, from small startups to established B2B companies. It takes discipline, but it's what separates the companies that get a real, predictable return from their advertising from those that just burn cash.

Working with an expert can obviously help accelerate this process. We've run campaigns across dozens of industries and markets, so we've already made many of the expensive mistakes, meaning you don't have to. We can help you get your tracking right, benchmark your costs, and implement a rigorous testing framework from day one.

If you'd like to chat through your specific situation in more detail, we offer a free, no-obligation initial strategy consultation. We could take a look at your goals and help you build out a more concrete plan for tackling the Budapest market. Feel free to book a time that works for you.

Hope this helps!

Regards,

Team @ Lukas Holschuh