“Just wanted to let you know your campaign has a limited budget. You’re hitting your goals so might as well raise it!”
I’m guessing I’m not the only one who hears this from platform reps, account executives, and sales associates. In a perfect world, every client has an unlimited budget restricted only by the maximum scale at which ROI can remain positive. In the real world, that not-so-perfect one, budgets are almost always restricted due to legitimate business limitations, accounting obstacles, and bureaucratic reasons.
On the flipside, when budgets are time flexible, the client’s bottom line is more than likely to be positively impacted. I’ve noticed five specific areas where this setup is tremendously beneficial:
- Flexibility With Inconsistent Seasonality
- End of Month Opportunity
- Capilization on Unexpected Traffic Changes
- Avoiding Use It or Lose It Inefficiencies
- More Room for Error
In the past, I simply accepted that specific monthly budgets were the only option for my clients. But given next year’s budget planning will creep up quickly, I’d encourage everyone working under this set of restrictions to have a conversation regarding the benefits of open-ended budgeting.
Flexibility With Inconsistent Seasonality
I’m assuming most of PPC Hero’s audience is no stranger to Finding Seasonality In PPC Accounts. An experienced manager will often employ YoY trends to correctly predict where the best opportunity presents itself. Even the most skilled in this analysis, however, are not fortune tellers and therefore less than optimal budget predictions are common. When seasonality fails to align with previous years, budgets will become more inefficient if they remain restricted to monthly parameters.
Certain seasonal trends such as holiday shopping remain quite reliable, but industries impacted by weather such as travel or sports ticket exchanges can see quite considerable fluctuations in demand each year. Setting budgets up with a yearly allocation, or even quarterly, allows for a much more reactive approach when seasonality becomes unpredictable.
End of Month Opportunity
Typical budget management calls for fairly even distribution of spend per day across the month. Exceptions occur, such as the use of monthly bid schedules, but the majority of advertisers are tracking towards a single monthly cap. Because of that, I often find decreased competition in the waning moments of each month. Either because the platform’s algorithm has budgeted ahead, or because the advertiser simply found opportunity and capitalized earlier in the month.
Regardless, daily caps are pulled back for those with no budget flexibility, while remaining advertisers are able to take advantage of a slightly less crowded auction. Below is an example from an account where all other external factors for traffic surges have been ruled out, yet a major increase in traffic occurred without bid alteration. In short, don’t allow monthly budget restrictions to hold you back from high-ROI opportunities.
Capitalization on Unexpected Traffic Changes
Another major benefit of flexible spending budgets comes from the use of daily caps well above the expected rate. Personally, I feel as though the dreaded “limited by budget” status should be avoided whenever possible. Certain industries can be excluded where you have to bid high to even be on the board, then once on the SERP, you can spend until the cows come home. But for most other areas, daily spend should be more directly controlled by efficient bidding rather than budget caps. If you are having trouble with that, check out this semi-old yet still super valid Surefire Way to Maximize a Limited by Budget Campaign.
For accounts that I’ve got bidding truly dialed in on, ones where I see consistent daily spend and CPC, I often will extend my max budget quite considerably. In the example below, impressions for a given campaign were fairly consistent throughout the entire month. Due to an unexpected change in the competitor landscape, a moment with major opportunity presented itself. Given my bids hadn’t changed, my high budget caps allowed for maximization of low CPA conversions during that day. Thanks to longer-term budgets, I’m able to spread out this spike in daily budget over a longer term instead of suddenly slowing down for the remainder of the month.
Avoids “Use It or Lose It Inefficiencies”
For reference on what a “Use or Lose It” policy is, please review this important lesson from The Office.
Of course, the goal is always to exhaust the entirety of a client’s budget, within the proper timeframe, with the proper KPIs. When this looks like it won’t happen, however, inefficient practices can take place. Whether that is a direction from the client to spend quickly in order to avoid a decrease in the budget next year or an attempt from a less-than-ethical agency to squeeze out every dollar of spend. Point is, flexible budgets remove the incentive to green light irresponsible tactics.
More Room for Error
Lastly, a flexible budget simply provides more room for error. SEM platforms are a dynamic environment, impacted significantly by countless variables including user tendencies, the economy, political policies, platform features, and more. Budgets pre-determined for a single month well before that reality arrives ignores this fact. In the event that the unexpected happens, flexibility from the accounting department is certain to aid the marketing team in pursuit of the strongest bottom line.
I readily concede that time flexible PPC budgets are simply not an option for many clients. Those that retain that freedom, however, will capitalize on inconsistent seasonality, end of month opportunity, unexpected traffic surges, a lack of “use it or lose it” incentives, and a higher margin for error. Regardless, both those with and without flexibility can benefit from learning How to Use Excel Solver to Power your Budgeting.
Cover image courtesy of Glenda Alvarez