Are you looking to launch new ad campaigns and unsure of how your budgets should be set to start? We’ll walk you through the decision making process here to start you off on the right foot. And don’t worry, your budgets can always be changed and changing them will be one of the most enjoyable steps you take to optimize your campaigns.
How Campaign Budgets Work
First, let’s look at an overview of budgets. Budgets are set at the campaign level and dictate just how much you’re willing to spend on ads in that campaign over a given period of time. Typically, budgets are measured by day, although some networks like Bing Ads & Facebook Ads offer monthly and lifetime budgets as well.
Daily budgets are not always firm limits and, in the case of Google AdWords, you could go over your daily budget. AdWords may go over your daily budget by as much as 20% in order to compensate for fluctuations in search volume that happen in any given day. However, AdWords will prevent your campaign from going over your budget for the month as a whole and will credit you if spend goes over the effective monthly budget.
It’s unlikely that your campaigns will be profitable from the moment you launch them, so set aside a budget that will help you get started testing the waters and collecting data. It’s tough to say just how much is appropriate for you to test with, but I hope you can spend at least $30 per day per campaign. (Need to spend less? That’s ok, but you may need your campaign to run for several weeks to collect data. Able to spend more. Do it. Your budget will dictate just how much data you’re able to collect and how quickly you can get it.)
Choosing a Campaign Budget
To choose your campaign budget:
Take the total budget you’ve set aside for digital advertising for the month and divide it by 30.4. This will be your overall daily budget.
Take your overall daily budget and divide it by the total number of campaigns you are launching across the different ad networks. This will be the initial campaign daily budget.
Apply the campaign daily budget to each campaign you are launching. This will help you manage your total budget across your campaigns.
After the first days and weeks, you’ll collect traffic and conversion data for your campaigns. You can move money out of campaigns that aren’t spending their budget and use your performance data to reallocate money towards your best performers.
Reallocating by Spend
After a few days, you will be able to see which campaigns are spending through their daily budgets and which are hardly touching their budget. You can then take money out of the latter and reallocate it towards the former.
Reallocating by Value
It may take a few weeks, but if you’re tracking conversions you can see which campaigns are most profitable. With this data, you can move budget from the low converting campaigns into the high converting campaigns.
If you’re using AdStage to manage your campaigns and track conversions, you can group campaigns into a folder and use our budget optimizer to automatically reallocate your budget towards the campaigns that are resulting in the most conversions, regardless of network.
Sam is the Director of Marketing & Product at AdStage. Previously, he was part of the AdWords product team at Google, working as an in-house AdWords expert and consultant to product management, engineering, and UX. Prior to that, he personally managed and grew in-house online marketing programs with over $300,000 in monthly PPC ad spend.