Budget Management

Digital Marketing - Study Notes:

Set a budget to manage spend

Budget management determines what we are willing to spend. This is what a particular campaign or indeed, a particular group of campaigns within an account will spend in a day multiplied over 30 days to see the aggregate spend for the month itself. When you are assigned a marketing budget, you have to know what percentage of the marketing budget you want to give to different campaigns.

&And the way you understand that is based on what that campaign does. So is it a campaign that converts quite readily like a brand search campaign, or a high-volume generic campaign, is it a long-tail keyword campaign? What exactly is it? Understanding how to allocate your budget is essential to knowing what is the best way to optimize your daily spend.

&So that structure we talked about previously will determine how you allocate your budget and from time to time, you will hit budget ceilings which means that you could spend more, but because your budget is capped at a certain level, you don't. These campaigns are limited by budget. This means that the daily spend is too low based on the interest that users are expressing for those particular keywords.

Manage daily spend

As a means of understanding your daily budget is just think of it as the maximum your campaign can spend in a day and then aggregate it over 30 days. I have mentioned previously putting high-volume keywords in campaigns separate to low-volume keywords.

So keywords that get a lot of traffic will spend a lot of money, you know. You might want to group those keywords that spend a lot of money in campaigns that are high traffic campaigns. And keywords that spend less money because they have less search volume, less search interest in traffic, they will spend a lot less. So, because you don't want them sharing the same budget, you can separate them out and that is a good optimization tactic and a very good way to consider your budget management strategy as part of your process.

Use budget trackers

This is very important for anyone that is managing clients. Your client will assign you a budget, and that is the budget you can spend. You can't spend any more than that, so you should keep track of your budget. So in a very simple format using something like Microsoft Excel or Google Docs or something, you can create pretty much a tabular budget tracker that shows your total budget which is the amount of budget that that particular campaign is allowed to spend, you know.

Then, I have in this example, budget share, which shows you the percentage of that campaign's budget versus the entire budget, so you can see that in the first row, we've got a campaign that has a budget of €17,000. This is 32% of the entire budget for all your campaigns, and the next one is €20,000 which is 39%, etc.

You can just work that out and understand I want to give 15% of my budget to those research keywords at the start of the buyer process, or I want to give 60% of my budget to those purchase keywords at the end of the process because I know these are the most valuable ones. These are the ones that we can see a direct ROI on, so I might want to spend a little bit more on them.

So budget share is a good way of understanding how to allocate your budget. The next column we have here is spend. This is what you've spent to date. So, you can see in the first row, that campaign has overspent its budget. It has overspent its budget by €152, €153. The next campaign down has underspent its budget by €354.

It has spent €20,145 of a budget of €20,500, so there is a carryover there. And by using a very simple methodology like this, it allows you to kind of either move budget around, if there's an overspend or indeed an underspend, and just make sure on an aggregate level, on a combined level, you don't exceed the budget that you've been allocated by your client, or indeed by your company or marketing director.

So use budget trackers. There are loads of templates online, you can use this template or indeed create your own depending on how you want to proceed.

Forecast to estimate performance

Another effective aspect of budget management is deciding how much you need. How much do I actually need to drive a particular number of clicks? So if you want to drive, in this example, 1000 clicks at a CPC you know from historical records that you would pay €1.50 for a click, a thousand clicks at €1.50, the budget you need to deliver that amount of traffic is €1,500.

You can use budget trackers to maintain your daily budget. And you can use forecasting tools to work out what traffic is required based on the CPC and what that will cost.

With AdWords, paid search, and all of the different PPC models, you're driving traffic. So what will it cost me to drive that amount of traffic? Now, what the traffic does afterwards based on conversions, and actions on site, purchases and different things like that, is another percentage we can put into the mix as well.

But for basic forecasting, if you need to generate 1,000 clicks at a cost-per-click of €1.50, that will cost you €1,500. That is the budget you need. And this is a straightforward way of managing your budget in that regard.