How is the advertising campaign budget developed?
Posted: Sat Dec 28, 2024 8:30 am
First, you need to define the framework: at what costs for an advertising campaign is placement profitable for a business. To do this, you need to understand how much a business earns from a client and what part of this makes sense to direct to attracting. How to do this?
Calculate the average check : divide the total revenue by the number of sales. Take all figures for one period: month, quarter, half-year, year.
Calculate your profit: subtract all product costs from your revenue, such as cost price, logistics, mandatory deductions, and marketing expenses.
Calculate the average profit per sale: divide the result obtained in the previous step by the number of sales for the same period.
Now you can roughly calculate what budget to allocate for advertising.
Establish the business margins.
Multiply the average check by the margin.
Subtract the number obtained in the previous step from the average profit .
You received CPS (Cost Per Sale) – the cost of sale at which it is profitable for a business to advertise.
Next, determine which channels you will use to attract customers. If you don’t have any experience or statistics yet, use the general rule: direct 70% of your advertising budget to sources that bring in the buy lawyer contacts maximum number of conversions. For example, contextual and targeted advertising. 20% can be spent on experimenting with different channels, placing ads on new platforms, and testing ideas. Leave another 10% for risks. Perhaps a profitable offer will appear on a platform that is not typical for the industry, or you will decide to launch an unplanned creative in the Yandex Advertising Network (YAN).
Then the structure of the advertising budget is formed: its distribution among specific sites. Contextual and targeted advertising have tools for forecasting rates and budgets. Based on forecasts, you can launch campaigns with average rates.
When you have 50-100 conversions on different channels as you progress, you need to analyze the statistics and, based on the results, redistribute the budget, for example, increase it for profitable campaigns. Priority is given to those where the cost of attraction is equal to, or even better, lower than the CPS that you calculated above. If you pay for advertising through OneSpot, you have free access to the Analytics tool , which will collect data from different analytics systems and build visual dashboards and graphs. This will make it easier for you to compare indicators for different campaigns, channels, and creatives.
Calculate the average check : divide the total revenue by the number of sales. Take all figures for one period: month, quarter, half-year, year.
Calculate your profit: subtract all product costs from your revenue, such as cost price, logistics, mandatory deductions, and marketing expenses.
Calculate the average profit per sale: divide the result obtained in the previous step by the number of sales for the same period.
Now you can roughly calculate what budget to allocate for advertising.
Establish the business margins.
Multiply the average check by the margin.
Subtract the number obtained in the previous step from the average profit .
You received CPS (Cost Per Sale) – the cost of sale at which it is profitable for a business to advertise.
Next, determine which channels you will use to attract customers. If you don’t have any experience or statistics yet, use the general rule: direct 70% of your advertising budget to sources that bring in the buy lawyer contacts maximum number of conversions. For example, contextual and targeted advertising. 20% can be spent on experimenting with different channels, placing ads on new platforms, and testing ideas. Leave another 10% for risks. Perhaps a profitable offer will appear on a platform that is not typical for the industry, or you will decide to launch an unplanned creative in the Yandex Advertising Network (YAN).
Then the structure of the advertising budget is formed: its distribution among specific sites. Contextual and targeted advertising have tools for forecasting rates and budgets. Based on forecasts, you can launch campaigns with average rates.
When you have 50-100 conversions on different channels as you progress, you need to analyze the statistics and, based on the results, redistribute the budget, for example, increase it for profitable campaigns. Priority is given to those where the cost of attraction is equal to, or even better, lower than the CPS that you calculated above. If you pay for advertising through OneSpot, you have free access to the Analytics tool , which will collect data from different analytics systems and build visual dashboards and graphs. This will make it easier for you to compare indicators for different campaigns, channels, and creatives.