Also disguised as, "What data supports this recommendation? You just made these numbers up!"
Why? This statement is most often heard by agencies that manage clients on a percentage of spend management fee model. As the client increases PPC spend, the revenue to the managing agency increases as well. This can be a major point of contention.
How to Overcome: Overcoming this objection requires: trust between the agency and the client; data-backed budget recommendations; and (if possible) a history of high-quality results. Trust, like historical results, can only be built over time and with proper customer relationship and performance management.
Luckily, it’s possible to create a budget recommendation that uses performance data to support your request for more advertising dollars. There are many methods to making good budget recommendations, but we’ll outline the process we’ve seen success with below.
To create your budget recommendation, you’ll need to understand what the upper and lower spends your campaigns can achieve each day are. The following metrics are useful in doing so:
- - Impression Share (lost due to budget)
- - Are campaigns constantly hitting the daily spend/shared budget limit?
- - Full Days Paused (over a billing cycle)
- - KPIs (depends on client goals, but could be conversions, ROAS, clicks, etc.)
- - Wasted spend, do certain campaigns drive irrelevant visitors or leads?
Other Useful Tools/Reports:
- - AdWords Keyword/Display Planner
- - Auction Insights or Competitive Analysis Tools
Over a set period of time, we evaluate campaign spend, impression share lost due to budget, daily budget, and days paused to calculate a campaign's maximum potential spend. For example, if an advertiser has a campaign that spends $10 a day average (with an impression share lost due to budget of 0%), the advertiser cannot set a daily budget of $40 and expect the campaign to hit the full budget. But, if they have $50 daily spend, and an impressions share lost due to budget is 80%, the spend potential is calculated as $250.
**Please Note: Attaining a 100% impression share isn’t always optimal for campaign performance and should be considered when creating budget recommendations**
We then analyze the potential spend over the total number of days in the budget cycle to create an estimate of the potential spend a client can achieve.
It’s important to note that if keywords, audiences, targeting, or daily budgets were changed mid budget-cycle; campaigns were paused for full days; or seasonality dramatically affects your market, these factors may impact your the accuracy of your budget forecast. Similarly, you may want to also eliminate or alter spend allocations to underperforming campaigns that are failing to achieve your performance goals.
Shape built this logic into our own budget recommendation engine called BudgetPacer. BudgetPacer cycles through the analysis above daily (rather than across a period of time) for both Google and Bing, to provide automated, data-driven budget recommendations.