Solved: Optimizing Paid Ad Spend in Manchester

Hi there,

Thanks for reaching out!

Happy to give you some initial thoughts on your question. It's a really common one, but honestly, thinking about "how much to spend" is probably the wrong way to look at it. You could spend £500 or £50,000 in Manchester – both could be a total waste if the thinking behind it is wrong. The real question isn't about picking a number out of thin air, it's about figuring out how much you can afford to pay to get a new customer and still make a healthy profit.

Below are my thoughts on how you should actually be approaching this. It's a bit of a mind shift away from just setting a budget, and more towards building a predictable growth engine for your business. It all starts with your numbers, not ours.

We'll need to look at your customer, not your budget...

Before you spend a single quid on an ad, you need to forget everything you think you know about demographics. "People aged 25-45 in Manchester" is completely useless information. It tells you nothing of value and leads to generic, boring ads that get ignored and burn through your cash.

To stop this from happening, you have to define your customer by their pain. You need to become an absolute expert in their specific, urgent, and expensive nightmare. What problem keeps them awake at 3 am? What frustration at work makes them want to quit? That's what you're selling a solution to.

Your Ideal Customer Profile (ICP) isn't a demographic; it's a problem state. Let's say you sell IT services. Your ICP isn't "small businesses in Greater Manchester." It's "the owner of a 15-person recruitment agency who is terrified of a data breach ruining her company's reputation and facing massive fines." See the difference? One is a bland fact, the other is an emotional nightmare you can solve.

Once you've identified that nightmare, your targeting becomes so much easier. Where does this agency owner hang out online? Maybe she's in a specific business owners' Facebook group for Manchester. Maybe she follows certain industry influencers on LinkedIn. Maybe she reads certain trade publications. This intelligence is the blueprint for your entire advertising strategy. You have to do this work first, otherwise you have no business running ads at all. It's the only way to avoid just blindly throwing money at the entire population of Manchester and hoping for the best.

I'd say you need to calculate what your customer is actually worth...

Right, so once you know *who* you're talking to, the next question isn't "how much should my budget be?" but "how much can I *afford* to spend to get one of these people as a customer?" The answer is locked inside a metric called Lifetime Value (LTV). This is, without a doubt, the most important number in your business.

It tells you the total profit you can expect to make from a single customer over the entire time they stay with you. Once you know this, you know how much you can spend to acquire them. Most businesses have no idea what their LTV is, which is why they have no idea how to set an ad budget.

Here’s the basic maths behind it:

• Average Revenue Per Account (ARPA): How much does a typical customer pay you each month?
• Gross Margin %: What's your profit margin on that revenue? (Revenue - Cost of Goods Sold) / Revenue.
• Monthly Churn Rate %: What percentage of customers do you lose each month?

The calculation is pretty straightforward: LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

This formula tells you the total gross margin you'll get from a customer before they leave. Let's play with some numbers. Use the calculator below to get a feel for your own LTV. It's a game-changer for understanding your marketing budget.

Now you have the truth. In the example above, each new customer is worth £10,000 in gross margin. A healthy business model often aims for a 3:1 LTV to Customer Acquisition Cost (CAC) ratio. This means for every £3 of value a customer brings in, you can spend £1 to get them. So, in this scenario, you could afford to spend up to £3,333 to acquire a single new customer.

Suddenly, worrying about a £500 ad budget seems a bit silly, doesn't it? The real goal is to build a system where you can confidently spend £3,333 to make £10,000, over and over again. This is how you scale a business without just "wasting your marketing budget". You're not spending; you're investing.

You probably should work backwards from your goals...

Okay, so we know how much a customer is worth and how much we can afford to spend to get one. Now we can finally build a sensible starting budget. And we do that by working backwards from a realistic revenue goal.

Advertising is a funnel. You start with a big audience at the top, and a much smaller number of actual customers come out the bottom. Your job is to know the numbers at each stage of that journey. It looks a bit like this:

To figure out your budget, you just need to do this in reverse. Let's say your goal for the month is to generate an extra £10,000 in revenue, and your average customer is worth £2,000. It's simple maths:

1. Customers Needed: £10,000 / £2,000 = 5 new customers.
2. Leads Needed: If you convert 1 in 10 leads into a customer, you need 5 * 10 = 50 leads.
3. Clicks Needed: If your website landing page converts 5% of visitors into a lead, you need 50 / 0.05 = 1,000 clicks.
4. Ad Budget Needed: If the average Cost Per Click (CPC) in Manchester for your industry is £2.00, your budget is 1,000 clicks * £2.00 = £2,000.

There you have it. A budget of £2,000. Not plucked from thin air, but logically derived from your actual business goals. Now, all of those numbers (conversion rates, CPCs) will vary, but this is the framework. Use the calculator below to plug in your own numbers and see what a realistic starting budget looks like for you.

You'll need to understand the real-world costs...

The "Estimated Average Cost Per Click" in that calculator is the big variable. This is where experience comes in, as costs can vary massively. Manchester is a competitive market, so you should expect to be paying prices similar to other developed UK cities. For a service business, you'd almost certainly want to start with Google Search Ads, because you're catching people who are *actively looking* for a solution to their problem right now.

Based on our experience running campaigns for similar businesses, the cost to get a single lead (not a customer, just a lead) can be all over the place. I've seen some get it for a fiver and others pay over £50 for a single lead, just depends on the niche your in.

Here's a look at some real-world Cost Per Lead (CPL) ranges we've seen for service businesses to give you a bit of a reality check:

As you can see, an HVAC service provider in a competitive part of Manchester (seeing costs around $60/lead) is going to need a very different budget to a home cleaning company (£5/lead) for the same number of leads. You need to be realistic about your industry. I'd recommend doing some keyword research with Google's Keyword Planner to see the estimated CPCs for terms your customers might be searching for. This will give you a much more accurate number to plug into the budget calculator.

We'll need to look at your offer and your message...

Here's the bit that most people miss. Your budget's effectiveness has very little to do with the actual amount and everything to do with your offer. You could have a £20,000 budget, but if you're driving traffic to a slow, confusing website with a weak call to action, you might as well just set the money on fire.

The most common failure point I see is the "Request a Demo" or "Contact Us" button. It's arrogant. It assumes your potential customer has nothing better to do than book a meeting to be sold to. It's high-friction and low-value. You're asking for their time and contact details before you've given them anything of real value.

Your offer's only job is to provide a moment of undeniable value. An "aha!" moment. You must solve a small, real problem for free to earn the right to solve the whole thing.

What does this look like?

• For a service business (like an accountant): Instead of "Contact Us," offer a "Free 5-Point Financial Health Check for Manchester Businesses."
• For a marketing agency: Instead of "Book a Consultation," offer a "Free Website Audit that Reveals Your Top 3 SEO Opportunities."
• For a software company: A free trial is the gold standard. No credit card. Let the product prove its own value.

A better offer directly improves your website's conversion rate. If you can improve your conversion rate from 2% to 4%, you have literally just halved your Cost Per Lead without spending a single extra penny on ads. This is far more powerful than just increasing your ad spend. Your message matters just as much. Your ad needs to speak directly to the "nightmare" we talked about earlier. Don't sell "IT support"; sell "Peace of mind that your business won't grind to a halt because of a tech issue." It's about selling the outcome, not the service.

I'd say you should avoid this common budget-wasting mistake...

Finally, a direct piece of advice on not wasting your money. Whatever you do, do not run "Brand Awareness" or "Reach" campaigns on platforms like Facebook or Instagram when you're starting out. This is a trap that so many businesses fall into.

When you tell the algorithm your goal is "Reach," you are giving it a very specific instruction: "Find me the largest number of people for the lowest possible price." The algorithm does exactly that. It finds the people inside your targeting who are least likely to click, least likely to engage, and absolutely, positively least likely to ever buy anything. Why? Because their attention is cheap. No one else is bidding for them. You are literally paying the world's most powerful advertising machine to find you the worst possible audience for your product.

Awareness is a byproduct of making sales and having happy customers, not a prerequisite for it. From day one, every campaign you run should be optimised for a conversion goal – a lead, a phone call, a sale. This forces the algorithm to find people who are actually likely to take the action you want them to take. It'll be a higher cost per impression, but a dramatically lower cost per actual result. This is the single biggest key to not "overspending and wasting your marketing budget."

This is the main advice I have for you:

To wrap this all up, here is a table with the actionable steps I'd recommend you take. This is the framework for setting a smart, effective advertising budget that is built for growth, not just for spending.

I know this is a lot to take in, and it's a very different way of thinking than just "how much should I spend". It requires a bit of work upfront to understand your own business numbers. But this is how professional advertising is done. It’s not about guessing and hoping; it's about building a predictable system where you can confidently say "if I put £1 in, I know I'll get £3 back out."

Getting this right, especialy in a competitive area like Manchester, can be tricky. There are a lot of moving parts, and small mistakes can be costly. This is often where working with an expert can save you a lot of time, money, and frustration.

If you'd like to go through this process for your specific business, we offer a free, no-obligation initial consultation where we can review your current situation and help you build a proper strategy. It might be helpful to have a second pair of expert eyes on it.

Hope this helps!

Regards,

Team @ Lukas Holschuh