This is an important part of the advanced skills lesson and I think understanding this for an individual advertiser is just as important as creativity, even more important than a copy if you are running simple products, easy to buy, easy to import. 100 advertisers, 90 people are often stuck at the budget of $100-500/day. Is their advertising not good enough, the product not profitable enough, or the operation is limited? Yes, of course, but those two cases are very rare.
A budget scenario that any advertiser has experienced once is when you go up several test camps with a budget of 100 – 500$ / day, your profit can be x3 / advertising budget. You think the camp is good, and immediately run a budget of $ 1000 / day to boost sales. Your profit result at camp 1000$ = with budget 500$/day. So there is no reason to maintain a budget of $ 1000, you turn it off and think “stop eating slowly”.
I think an advertising budget of $500-1000 is a risky budget. Especially for those of you who are running products with a high competitive factor (for example, imported household appliances).
To find the right budget milestones for your industry in the smartest way, you need to understand the following three factors:
1/ What is your effective volume target exactly?
This factor will determine how much money you will spend in how many days, which best suits your operating capacity.
2/ How competitive is your product?
I divide the levels with a descending factor as follows:
⁃ Re-import products to sell (very high)
⁃ Find sources to import new products (high)
⁃ Importing goods from small and medium scale production (medium)
⁃ Self-produced on a small and medium scale (low)
Since I’m only talking about newcomers to the game, I’ve filtered out a few large and super large cases. Understanding the competition in your industry will also help you decide how to space between budget milestones. With products with a high level of competition, the wider the gap between the budget milestones, the better.
3/ What is the frequency of customer response to your product?
Response frequency means how many times a customer will need to see your ad on average to make a purchase. I usually evaluate this factor specifically on the index or roughly according to the price (not exact enough) the higher the product price, the higher the response frequency naturally increases. This factor will determine whether the budget is fast or slow, divided into campaign floors or not? Is there a funnel or not? And of course so it also greatly affects the important budget milestones in each specific period.
Specific examples for you to understand, suppose I have a fashion product X, low segment, imported China in bulk. I went to test camp with a budget of $ 200 / day on a few targets and found it quite good, with a total capacity of 3 million people, x3 profit compared to the test advertising budget.
After 2 days of running the test, I found that with the stats on the camp, if I spend $1000/day, it will take me 25 days to cover the file of 3 million customers. Leave it there for now
This is a very competitive product, if it tastes good, anyone can be my opponent in 1-2 days. So the budget gap between the camp test and the remaining milestones should be as wide as possible. This depends on the operation you have. Because it is a low-end product, easy to buy, the frequency of purchase response in 2 days when I ran the test was 1-1.1, there was a 15% CTR with a CR > 50% and this is a very good indicator. This correctly states that my product doesn't need frequency to make a sale. As a result, I will have 2 options: 1/ Not enough operation or not enough resources to import goods, then I will choose the budget $200 - 500 - 700 - 1000 (increasing advertising budget as well as capital turnover + continuous import interest every 3-4 days / 1 time). And because the product is easy to sell, I will choose the campaign objective so that the same budget covers many customers with the most profitable cost, for example interactions or video views, without giving too much priority to interaction or the web. . 2/ If the operation + supply is enough, I will have the budget milestones of $1000 (test advertising samples) - $2000-10000 / day - $20,000 / day. I removed the small milestones of 300 - 500 - 700 dollars to reduce the competitive factor, no one dares to go with a madman who is spending a lot of money on advertising. And don't forget that, even when your profit / 1 order ratio drops a lot when you increase your budget, you still have many opportunities for remarketing or look a like. With a good conversion rate, don't hesitate to splurge, the win is always with you. In short, choosing the most appropriate and profitable budget levels is a very important step. It greatly affects the results that after many days you try to find a good product and then someone else eats it for you. It should be remembered that the game in the online advertising industry has a legendary principle "Whoever is fast gets it". You can't avoid being afraid that people will steal your ads and products, but what you can do is make people look bored and don't want to jump your clothes.