When it comes to allocating media budget, ad spend is usually broken down from one large pot of money into buckets for each channel and audience. Sometimes that money continues to be spent in those channels regardless of how ads are performing because “that’s how the budget was assigned.”
But there's a better way to set digital media budgets — a more fluid approach that's backed by ad performance data. It helps innovative marketers spend smarter and optimize their conversion rates, too.
This rapidly-spreading method sets aside a larger bucket of money for overall media spending at large. The brand continually shifts those dollars to and from platforms and channels, depending on how ad creative performs there.
For instance, say a brand finds through testing that its ad creative for a new product line does particularly well on Instagram. Dollars for that campaign should shift to that channel for the duration of the campaign. Each new campaign should allow time to test ad creative. The results of that test will show you which ad variations should run and where the budget should go.
As social channels, creative requirements, and user tastes have changed, it’s rarely enough to make one or two versions of ad creative and use it across all channels. TikTok has a very specific and different aesthetic from Facebook, for example.
While this lets brands tell their stories in many different ways, it also creates a time-intensive creative process with unpredictable outcomes.
Much like brands understand messaging needs to be tailored to user expectations on a social platform, their budget is no different. What will or won’t catch on is certainly a function of creative skill, but there’s also a healthy dose of timing and luck involved.
Unfortunately for brands, the latter can’t be planned for.
This is why one of the pillars of this newer, fluid approach is earmarking money for creative testing.
Traditionally, the overall media budget is broken down by platform and assumes creatives would be run, with a winner found. In other words, the testing is just part of business as usual on running media.
But brands are realizing how inefficient this is, and how long this takes. Why?
Ideally, you want to creative test and then scale. But often, they aren’t treated as two separate things. A brand throws three creatives in an ad set, lets them run, and Facebook usually latches on to one and spends most of the money there.
Brands and marketers don’t learn a lot from this. Frequently, Facebook picks a winning creative so quickly, the other ones get almost no sample size.
Additionally, when a winner is found, no one really knows why it’s winning. Is it the headline? The visual? The offer?
Getting to this answer is now possible with multivariate testing — a method many innovative marketers are leveraging to find out not only which ads are winning, but which parts of those ads cause them to perform so well. The data exhumed from these tests — what we call “creative intelligence” — can then be used across all brand touchpoints to improve conversions. It can also be used to decide exactly which ads and platforms to continue putting ad spend behind.
Budgeting for creative testing is another area many marketers are embracing when they think about their budget as a whole. Focused and fast creative testing tells you if you have creative elements that are winners. Directional data like this can help you make quicker decisions about how to move media budget around to the right places.
Have ten new TikTok videos? Allocate a dedicated budget to test two or three at a time, and see which one has the best early indicators of success.
Scale the winner, and launch your next test simultaneously. Take the winner from that, and add it to your scaling set. Repeat and win faster!
The other factor that has fundamentally changed how brands make decisions is iOS 14’s privacy settings. Tracking behaviors from ads have become much fuzzier, and many brands are relying on Marketing Efficiency Rate (or “MER”) to understand how their ads are driving sales.
In this method, media buyers rely much less on the data inside a platform for the truth about actual sales driven from their media mix. They look more at total dollars spent and total sales generated. The on-platform data still plays a pivotal role in giving signals about what’s helping or hurting that performance overall.
As the privacy screws tighten on advertisers, their levers for testing have changed. Once upon a time, winning in Facebook Ads could be done with mediocre creative targeted to hyper-specific user sets.
That type of targeting has eroded over the years as options were removed, making tracking less accurate. Media buyers are adapting to this new reality, knowing that change is going to be a constant.
This versatility is greatly helped by fluid budgeting. When iOS14 hit in the spring of 2021, brands saw their Facebook Ad results begin to plummet as the algorithm struggled with the lack of data it was used to.
Many brands started increasing their rate of creative change-out quickly, trying to beat this backslide with the speed of finding creative winners. Those who were prepared and already using a fluid budget allocation shifted away to other platforms, waiting for the dust to settle.
The lack of targeting remains, putting increased pressure on creative. The testing and rate at which they can be pushed out is paramount, but having a fixed budget with no flexibility doesn’t work well in that kind of situation. Adapting to channel changes and consumer differences is how the strong will survive in this next era of paid media.