One of the most frustrating challenge for us, as marketeers, is when the client lowers his marketing budget and after 1-2 weeks calls us, that he does not get enough conversions, or traffic.
This is why, I decided to talk about the importance of the budget and the impact that it has on Digital campaigns. Years ago I made a case study for one of our clients. And it went like this:
Even though time on site and conversion rate were lower, the number of conversions and the revenue were higher.
But…KPIs were dropping lately. Why?
Well, the client decided to cut Google Ads budget in half. After that the traffic, conversion rate, number of conversions were dropping really fast, while the cost per conversions started to grow. We couldn’t deliver the expected conversions and revenue on Black Friday and Christmas, as we had a 10% impression share.
Explanation:
If you have a low budget on Digital Marketing campaigns:
- A low budget has as results fewer impressions and in consequence fewer conversions
- Limited by the budget campaigns will have periodically impressions and not necessarily relevant. The system tries to share the budget for the entire day.
- The campaigns will remain without budget by the end of the day.
Conclusions:
- In a world where the competition is growing constantly, the decision about cutting the budget has to come with some compromises: promoting less categories, growing the cost per conversion, accepting the fact that KPIs will be different.
- Establishing a budget over a longer period of time is necessary. For instance we have days when the campaigns don’t spend so much. The exceeding in figures of the proposed daily budget does not always lead to exceeding the monthly budget.
- Consider increasing the budget at least during the periods when higher traffic is expected and consequently more transactions (holidays, Black Friday, etc.)
Find out more about how to calculate your marketing budget from this infographic created by Wordstream.com
