Allocating budgets in a multi-channel marketing strategy

allocating_budgets_marketing_strategy

'How to allocate budgets in a multi-channel marketing campaign?' This is the question that every data-driven marketer faces when it comes to allocating marketing budgets to campaigns.

Some of the most common challenges they face are:

1: Can I double my sales by doubling the marketing budget of a campaign?

2: Will doubling my budget decrease or increase the conversion rate?

3: Why the performance of a campaign falls when I invest more money into it?

Let me share a use case with you. Recently, I increased the budget of a PPC campaign by 32% (everything remaining constant) and I didn't see any substantial change in conversion rates while my cost of acquisition increased. Why?

Another scenario where I increased the budget from $300 to $600 and saw a decrease in conversion rates and an increase in acquisition cost. Why?

I will answer all the 'Why's' in this blog post.

After this, I realized that we marketers need to go slow when it comes to pumping in more money to our campaigns.

Although investing more funds into a well-performing marketing campaign seems so convincing that we often ignore the economic factors that can make or break a campaign. So, before you invest in more money into a marketing campaign, consider these two factors:

1: The law of diminishing returns and
2: Assisting marketing channels

The law of diminishing returns

According to this law, if you keep on adding more unit of production to a process while keeping other things constant, at some point in time you will generate a lower point of return.

For example: if you are pumping in more money into a well-performing PPC campaign without making any changes to the campaign, you will reach the point of diminishing returns and at some time your conversion rates will go down and acquisition costs will increase.

So, if you're planning to increase the marketing budget of a campaign, you must test new ad copies and target more keywords to see an incremental increase in conversion rate.

To keep things simple, you will keep on adding money to a marketing campaign and you will never realize when you'll start losing money.

Assisting marketing channels

If you are planning to pump in more money to a PPC campaign just because it is performing well doesn't mean all the conversion is happening through a PPC campaign. Today's marketing landscape has evolved in such a way that every channel is assisting each other. So, if a conversion is happening through a PPC campaign doesn't mean your social media efforts should be put to waste.

You should consider how well the marketing channels are assisting each other before planning an increase in the marketing budget.

So if you only increase the budget of a PPC campaign and not other channels, chances are high that your conversion rate will go down because in order to see an incremental increase in the conversion rates you must invest proportionate marketing budgets to all the assisting channels as well.

Key takeaways from this post

Just doubling the marketing budget of a campaign will not lead to an increase in conversion rates. You need to do more than just doubling budgets. Consider running more ad copies or targeting more keywords in order to increase the conversion rates.

Go slow when it comes to pumping in huge amount of money.

No single campaign is ever responsible for a conversion. Make sure you pay attention to assisting channels as well.

Wrapping up

What challenges have you faced when it comes to allocating budgets to a marketing campaign? Feel free to share your thoughts in the comments section below.
Allocating budgets in a multi-channel marketing strategy Allocating budgets in a multi-channel marketing strategy Reviewed by Akshay Chugh on 5:43 PM Rating: 5

No comments:

Powered by Blogger.