Work backwards from contribution margin
Set contribution margin per order, then break-even ROAS, then the target ROAS that funds overheads. Divide the paid revenue target by target ROAS. That is your annual media number before seasonality, and it is defensible in a board meeting.
Split new and returning revenue before you divide. Paid budget should be sized against new-customer revenue and CAC, with retention revenue forecast separately through email, SMS and organic. Mixing them produces a budget that looks efficient and starves acquisition.
Seasonality and CPM inflation
Index each month against the annual average using your own last 12 months of orders. Most UK retail runs an index of 1.4 to 2.0 in November and 0.6 to 0.8 in January and February. Apply the index to spend, then sense check against stock.
Layer cost inflation on top. Auction costs have risen most years as more advertisers enter, so plan 10% to 20% higher CPMs year on year and a steeper lift across Black Friday and the fortnight before Christmas.
Build the reserve and the trigger points
Hold 10% to 15% of the annual budget unallocated. Release it against written triggers, such as MER holding above target for three consecutive weeks or a new concept clearing the control by 20%. Written triggers stop the reserve being spent in a panic.
Forecast monthly and reforecast quarterly. Track spend against plan, MER against floor and CAC against payback. Two consecutive months more than 15% off plan is the signal to rebuild the model, because an assumption has broken.