“Kai, have you wondered how effective Facebook can be with increased budgets?”, asked Liam.
“Have you wondered whether increasing your budget will even drive any incremental sales?” Kai asked Liam back.
Liam and Kai are not the only two marketers who thought about this. Every marketer who runs ads has at some point wondered whether increasing budgets will actually drive any further sales.
Some of them even went ahead and tried it manually to see how effective was the ROAS when they increased their budgets. Some saw a significant shift, some saw no effect and repented to have spent those additional dollars.
Whichever result you witnessed, I am sure you asked yourself, “Is there a better way to test this?”
We are here to let you know there is.
This is the playbook that shows how you can measure incremental sales after increasing budgets. To keep this simple, we have used Facebook as the ad platform. However, you can test this with other ad platforms as well.
A nascent but thriving electronics brand has been making all the news for five years. They have been seeing steady growth for the last few years and currently stand at 8 million USD in annual sales.
Ever since they started, Facebook has been their primary acquisition channel and they are constantly improving their ads to expand their reach and gain more customers.
Lately, they witnessed some discrepancies in their ROAS when they tested their metrics with a third-party tool. This made them have second thoughts about how effective increasing budgets on Facebook can be.
This is the exact playbook they used to test this.
Before starting with the experiment, ensure you have an MMM model created in Lifesight. If this is the first time you are using Lifesight’s marketing measurement capabilities, we recommend you first understand how you can create an MMM model.
- Log in to your Lifesight console and head to the MMM section under the Measure option.
- You will see all the models that are currently running. Select the model that you want to test.
Pro tip: Since you are focused more on the revenue, ensure you have a model that has revenue as the output metric.
- As soon as you click on your preferred model, head over to the Budget Optimizer tab.
- In the Budget Optimizer tab, you will find your current ad spend and the ROAS that has been generated for all your advertising channels. Over here, you can either change the budget or the ROAS.
Since you want to understand the incremental lift in sales corresponding to increasing budgets on Facebook, we recommend that you change the Planned Budget Percentage.
Also, set the time period you would like to optimize the budget for among Next Week, Next Month, and Next Quarter.
Note: You can set the planned budget in the range of 50% to 500% of the current budget - The Budget Optimizer will show you the current spend and will predict an optimized spend spread across all channels to get the best possible return on investment.
- You can further head down to the Saturation or the Diminishing Returns Curve graph, and select Facebook as your desired channel to get a clear idea of at what point your Facebook budget will stop giving you optimized returns.
- Finally, Lifesight also provides a Budget Worksheet which can be downloaded and tweaked for further analysis.
Integrating Lifesight’s Budget Optimizer into your business takes the guesswork out of budget allocation. As demonstrated through the use case, the Budget Optimizer not only predicts the optimum distribution of the budget for maximum results but also allows for dynamic adjustments based on real-time analysis.No longer do marketers need to rely on manual testing or third-party tools to assess the impact of increased budgets. Lifesight’s Budget Optimizer provides a clear and data-driven approach, presenting an optimized budget plan with estimated performance metrics.To get a first-hand look at how you can get the best of Budget Optimizer, schedule a demo with Lifesight today.
