What are the best practices for determining digital advertising budget allocation?

Impressions, clicks and conversions from digital marketing campaigns can be useful for in-flight optimisation, but let's not forget that they are imperfect metrics which only provide a partial picture. The gold standard of marketing measurement is MMM (Marketing Mix Model), sometimes called econometrics, which is an analysis technique that allows marketers to measure the impact of their marketing efforts. MMM used to be a very expensive technique, which only big advertisers could afford, and it was slow, so it would be performed as one big analysis once every 6-12 months. However, technology is making MMM more flexible, and accessible to a wider range of companies. Next-generation MMM is closer to real-time, easier to set-up, and cheaper.

The process to determine a digital advertising budget is typically fluid and dynamic, as it can be influenced by various factors such as business goals, market conditions, campaign performance, and available resources. It often requires ongoing assessment and adjustments to optimize the allocation of funds for the best results. Continuously monitor KPIs like click though rates, conversion rates, return on ad spend and cost per acquisition to access campaign effectiveness. It’s also important to perform A/B testing regularly on ad creatives, targeting options and landing pages to identify what works best. Allocate higher budget to higher performing variants.

My advice when deciding budgets is working backwards from your maximum allowable CPA/CPL. Understand what you'd be willing to pay, apply your average overall conversion rate from your site and from their you should be able to understand your allowable CPC to get the traffic. Once you do this, it's a game of balancing quality and quantity. Good luck - there's no perfect way to do it!

Begin by defining your advertising goals and learning about your target audience. Consider which platforms and channels your target audience uses the most and devote a bigger amount of your cash to these high-potential regions. Monitor and analyse data on a regular basis to find top-performing channels and change your budget allocation accordingly. Maintain flexibility by prioritising the channels that provide the highest ROI while maintaining within your total budget restrictions.

In my opinion, prioritize a data-driven approach. Allocate budget based on past performance analysis, emphasizing channels that deliver the highest ROI. Regularly reassess and adjust allocations to adapt to market trends. Consider a balanced mix of channels to reach diverse audiences. Stay flexible, allowing room for experimentation and optimization in alignment with evolving campaign goals.

Investing in channels that are super cheap is futile if the audience you're getting clicks from just have fat thumbs and zero intention of buying. Invest in quality traffic from the right people.

Ask yourself this: where is my audience? Really take time to think about this. Don't advertise where you feel most comfortable or think you'll be able to spend the least. Are you in B2B SaaS marketing? Then you should be looking into LinkedIn Conversation Ads. Tik Tok, on the other hand, probably a waste of your time. Are you in B2C marketing for an OTA like Kayak? Fire up that Google Ads account! People are searching "cheapest flights to Cancun" every second on Google - get your ads in front of them. Advertise where your audience will actually see your ads. Otherwise you're just shouting into the ether hoping for callback.

Understanding where your target audience hangs out is one of the most important step before planning the budget allocation. For my agency, I did the classic mistake of falling for confirmation bias. My agency manages Facebook Ads for eCommerce brands. When we decided to run Ads to get clients for our agency, we by default chose to advertise on Facebook. Which was a classic mistake. My audience - the decision makers of eCommerce brands were hanging out on LinkedIn. After burning couple of thousand dollars we realised our mistake and changed our focus to LinkedIn.

Consumers anticipate tailored experiences that cater to their unique needs. To meet these expectations, it's essential to craft customized messaging that resonates with your target audience while also carefully considering the specific channel through which the message is delivered, ensuring a seamless alignment between the content and the platform.

You need to know who you are selling to, understand their experience with your brand from awareness to purchase, and find ways to engage with them at various touchpoints.

There are lots of great tools at your disposal, like SEMrush, SimiarWeb, Ahrefs, Brightedge, etc, that'll help you get an understanding of what your competitors are doing. In addition, these tools can help you understand goals and benchmarks to set for keywords you're bidding on and terms you're trying to rank for. This'll help you determine how much of an uphill battle you're facing in order to more accurately plan campaigns, project budgets, and set timelines.

It's super hard to get competitor insight and benchmarks, unless you work with an agency. My advice is engage with someone who has a broader view of the digital landscape to provide context.

Finding a benchmark for your key metrics will be challenging, but you can use different analytics tools (web, search, social media analysis) to try to paint a picture of the digital ecosystem with your competitors. Even though it may be a difficult and less fruitful task, don't stop doing it because there is an advantage in understanding the ecosystem, what is happening, and adjusting our strategy accordingly.

If you have the goal of outperforming your main competitor, keep in mind that you will generally need to spend at least x3 the amount they spend on marketing ??????. This is assuming that they do not increase their spending at the same time ?. Therefore, it is important to plan ahead and carefully choose your battles ????.

digital advertising budget allocation effectively, consider these best practices when benchmarking against competitors and industry: 1.Competitor Analysis 2. Industry Standards For instance, if your competitors in the e-commerce industry are heavily investing in Facebook ads and industry benchmarks support this trend, it could signal that allocating a portion of your budget to Facebook advertising is a good practice.

Digital advertising is fluid, not static. Imagine you're a chef: even with a tried-and-true recipe, you'll still taste and adjust as you go. A/B testing tools (like Google Optimize) serve as your taste-test, letting you refine the "flavour" of your campaigns. Meanwhile, ad platforms (like Google Ads) are like adjusting the stove's temperature; they let you control the intensity and reach of your efforts. By consistently tasting, adjusting, and refining, you ensure that your digital marketing "dish" always delivers the best results for your allocated budget. Regular optimization isn't just smart; it's essential. It helps you unlock more ideas and opportunities for further improvements and reach.

A penny saved is a penny earned - the money you don't spend - you earn. Keep an eye for cutting edge mediums and channels - use experts if you feel you can't do it well by yourself. Always keep at least 10% of your budget for these innovative experiments - this money's target will be your next month's best earner 50% of the time.

To determine digital advertising budget allocation effectively, consider using a data-driven framework: 1. Analyze Past Performance 2. Set Clear Goals 3. Continuous Monitoring For instance, if your data-driven analysis shows that pay-per-click advertising on search engines consistently brings the highest conversion rates, allocate more of your

Something important for marketers are to integrate as closely with your sales partners as possible. Reason being, is digital advertising effectiveness is very rarely in a vacuum. When building a digital advertising budget, the process needs to be holistic and consider tradeoffs between sales resources and marketing resources. Better yet, instead of drawing a distinction between sales and marketing, think of budget as "demand gen" and consider which digital advertising tactics best complement your existing investments.

The rules of thumb are: 1. that the faster you want to achieve your business and marketing goals, the more you need to invest. 2. If you have a small budget, focus your marketing actions on 1-2 marketing channels or techniques maximum!

An often overlooked aspect of digital advertising budget allocation is the importance of setting aside funds for unforeseen opportunities or emerging platforms. As the digital landscape evolves rapidly, new advertising channels or trends can emerge unexpectedly. For instance, platforms like TikTok or Clubhouse gained prominence almost overnight. By maintaining a flexible portion of your budget, you're poised to capitalize on these emerging opportunities, allowing for experimentation without drastically affecting your main campaigns. This agility not only positions your brand as forward-thinking but can also uncover high ROI avenues before they become saturated.