Managing Your Ad Budget Like a Retirement Plan

May 2, 2024
Managing Your Ad Budget Like a Retirement Plan

Achieving Long-Term Brand Success Across the Full Funnel

Isn't it interesting how thinking about your retirement fund can give you insights into managing your ad budget? Here’s a thought: imagine putting all your savings into one stock because your neighbor says it’s a good idea. Seems a bit risky, right? Unless, of course, your neighbor happens to be Warren Buffett. Then, maybe you take a note or two. Otherwise, securing a future, both financially and in retirement, doesn’t usually stem from such decisions. It's all about careful planning and smart, strategic thinking.

This is precisely our approach to budget allocation for the brands we partner with. We're not chasing the highest Return On Ad Spend (ROAS) in the short term; we're considering the entire funnel.

Full Funnel (Awareness, Consideration, Purchase, Retention)

When planning for retirement, the significance of every dollar is evident. You're vigilant about its growth and ensuring it diligently works for you. We believe the same principle should apply to every dollar spent on advertising. It's not about short-term wins. Our aim is to ensure your advertising efforts meaningfully invest in your brand's long-term growth. Why focus solely on immediate ROAS? Diving deeper, we'll see the importance of adopting a diversified approach for a robust advertising strategy and how to execute it.

Importance of a Diversified Strategy

In paid advertising on platforms like Amazon and Walmart, using a mix of strategies is crucial to truly gauge your ads' performance. Instead of optimizing every campaign toward your target ROAS, step back and view it as a portfolio. Consider dividing your advertising “portfolio” into five main categories: Awareness, Rank, Efficiency, Branded, and Auto. Each category is vital to the overall strategy, akin to how diversifying investments—stocks, bonds, real estate—helps grow your wealth steadily. Moving past a sole focus on ROAS to a more holistic plan supports steady business growth over time, similar to achieving financial goals with a stable, consistent approach. A full-funnel approach to building an advertising portfolio is how large omnichannel brands aim for long-term growth, profitability, and even budgeting for top-of-the-funnel awareness moves.

5 Key Campaign Types for a Balanced Approach

Now, let's return to these five main categories: Awareness, Rank, Efficiency, Branded, and Auto campaigns. Each plays a crucial role in guiding customers from brand discovery to purchase. Starting with Awareness campaigns, these focus on making your brand or product noticed by potential customers, setting the stage for all future interactions. They're akin to high-growth investments that appreciate over time. Rank campaigns boost your visibility in organic searches, enhancing your brand's accessibility and authority in a competitive space. Efficiency campaigns ensure your advertising spend works hard for you, optimizing return on investment for tangible outcomes. Branded campaigns protect and promote your brand identity, keeping you competitive and maintaining customer loyalty. Lastly, Auto campaigns adapt, constantly seeking new opportunities and refining your approach based on performance feedback.

Awareness Campaigns: Capturing Attention at the Top

Awareness campaigns, designed to capture potential customers' attention and introduce your brand or product, serve as the strategy's spearhead. "Awareness is where you want your customers to discover your product as they’re browsing...the main KPI we go for here is impression share and our click-through rate," Justin explains. These campaigns aim to maximize visibility, ensuring your brand stands out. The primary goal isn't immediate conversion but to sow seeds for future engagement.

Rank Campaigns: Enhancing Organic Presence

Rank campaigns aim to improve your product's organic search position, critical for increasing visibility and sales. "The purpose of these campaigns is to improve organic rank...the main KPI for these campaigns is conversion rate," Justin notes. By targeting high-converting keywords and employing exact match targeting, you can boost your organic presence, enhancing your brand's authority. Check out our short walkthrough of best match types > 

Efficiency Campaigns: Optimizing for ROI

Efficiency campaigns, the strategy's core, are optimized for the best possible ROAS. "This is everything that is optimized towards target ROAS," Justin states, emphasizing their role in converting ad spend into sales. By leveraging insights to target likely-to-convert non-branded product keywords and audiences, these campaigns directly contribute to the bottom line.

Branded Campaigns: Defending Your Brand's Territory

Branded campaigns focus on defending your brand's space and ensuring brand searches convert into sales. "These are going to be your name brand keywords, your brand defense," Justin says, highlighting the importance of ROAS and conversion rate. By showcasing top-performing products and optimizing for conversions, these campaigns help your customer base grow.

Auto Campaigns: Exploring New Opportunities

Finally, Auto campaigns, the strategy's exploratory arm, seek new opportunities and refine your approach based on real-world performance. "We always like to have keyword harvesting happening," Justin mentions, emphasizing their role in uncovering new keywords and placements. These campaigns provide valuable insights, informing strategic adjustments across all campaign types.

This section wraps up our discussion on slicing the budget across five different campaign types, leading to the next crucial aspect: budget allocation across these campaigns to implement a full-funnel approach successfully.

Budget Allocation Across Your Campaigns

Selecting the right allocation for each campaign type comes down to the targets you're selecting and how you're structuring your campaigns. For instance, with rank campaigns, we advise using exact match and limiting the number of targets within your campaign. We've even suggested single keyword campaigns for ranking purposes, but at the very most, include no more than five keywords in a rank campaign. So, let's provide some guidelines or guardrails on where to allocate any given account to achieve a single Target ROAS while allowing a full-funnel approach.

For Awareness campaigns, we typically set aside about 5 to 10% of the total budget. These campaigns are crucial for making those initial introductions between potential customers and your brand, planting seeds for future gains.

Rank campaigns should receive 15% to 25% of the budget, focusing on boosting your organic search positions, which helps increase visibility and, ultimately, sales. This allocation underscores the importance of a strong organic presence for long-term success.

Efficiency campaigns deserve the bulk of your budget, around 45% to 55%. These are the core of your ad efforts, fine-tuned to get the best ROAS. This is where your strategy pays off, turning ad spend into actual sales.

About 20% of your budget should go toward Branded campaigns, focusing on protecting your brand's space and ensuring that brand searches translate into purchases. This allocation highlights the importance of maintaining and defending your brand's value.

Lastly, Auto campaigns should receive 5% to 10% of your budget. These are for exploring new keywords and refining your strategy, keeping it fresh and adaptive to new market trends.

Wrap Up: Your Brand's Advertising Portfolio

There you have it! This is how we divide the budget to ensure a full-funnel approach is implemented effectively. Whether your budget is small or large, this strategy ensures you are capturing new prospects at the awareness stage, all the way down to optimizing for efficiency. Think of it as managing an advertising portfolio, with each strategy playing a different role, similar to asset classes in investment portfolios. Check out how AMC sheds light on the customer's full experience on Amazon, providing more insight than the traditional last-click model.

Other Resources to Check Out: