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We all know the old adage, “You need to spend money to make money.” While this quote is very applicable for those of us managing AdWords campaigns, a crucial word is missing…
You need to spend money wisely to make money.
This is especially true when allocating budgets to specific campaigns. No one wants to waste their budget by allocating funds ineffectively.
Smart Spending
Here we will walk through the budget allocation process to maximize the performance of all of your campaigns.
For this example, we have 3 campaigns: A, B, C. Our current budget is $1000 and our goal is to smartly allocate the budget to maximize conversions.
| Campaign | Impressions | Impression Share | CTR | CPC | Rate | Clicks | Conversions | Cost | CPA |
|---|---|---|---|---|---|---|---|---|---|
| A | 1000 | 80% | 10% | $1 | 10% | 100 | 10 | $100 | $10 |
| B | 2000 | 50% | 10% | $2 | 10% | 200 | 20 | $400 | $20 |
| C | 3000 | 30% | 10% | $3 | 10% | 300 | 30 | $900 | $30 |
1. Prioritize the highest performing campaign by sorting campaigns according to lowest CPA.
Campaign A has the lowest CPA at $10. We will focus on optimizing our budget to reach 100% of the impression share.
Stats for Campaign A:
| Campaign | Impressions | Impression Share | CTR | CPC | Rate | Clicks | Conversions | Cost | CPA |
|---|---|---|---|---|---|---|---|---|---|
| A | 1000 | 80% | 10% | $1 | 10% | 100 | 10 | $100 | $10 |
2. Calculate budget allocation for Campaign A for maximize impression share.
Current impressions: 1000
Divided by impression share of 80% = 1250 maximum impressions
1250 X 10% CTR = 125 clicks @ $1.00 = $125.00
We need to allocate $125 for the maximum potential impressions.
Remaining budget: $875.
3. Select the 2nd highest performing campaign.
Stats for Campaign B:
| Campaign | Impressions | Impression Share | CTR | CPC | Rate | Clicks | Conversions | Cost | CPA |
|---|---|---|---|---|---|---|---|---|---|
| B | 2000 | 50% | 10% | $2 | 10% | 200 | 20 | $400 | $20 |
4. Calculate budget allocation for Campaign B for maximize impression share
Current impressions: 2000
Divided by the impression share of 50%= 4000 maximum impressions
4000 X 10% CTR = 400 clicks @ $2.00 = $800
We need to allocate $800 for the maximum potential impressions.
Budget: $875-$800=$75
5. Allocate the remaining budget ($75) to the lowest performing campaign (C).
There’s so much more we could have factored into these equations: bids, Quality Score, CTRs, etc. We simplified the examples to make them easily understandable, but the amount of variables campaign managers need to consider is overwhelming.
Here at AdScale, we have created a platform to smartly allocate your campaign budgets. Let our AI automatically adjust budgets to strategically boost your results.
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