New AI Algorithm: Introducing Budget Distribution

Campaign managers often struggle with trying to find the optimal balance when allocating their budget across a complex structure of campaigns in multiple publishers within their account. Between Bing and AdWords, search and display, the questions of which channel will yield the highest return prevails – and the answer is complex.

An ad or a campaign’s performance depends on the time of day, the channel, the season, the competition and so many other factors. Marketers could conclude that AdWords is their most profitable channel at the end of the month, but it is possible that at different times of day throughout the month, display was actually more profitable for either clicks or conversions.

With incremental changes to budget allocation in each of these channels throughout the month, marketers can make even more money. Acquisio just launched a new algorithm to distribute budget across budget groups, making incremental budget exchanges for even greater end-of-month results. The first of its kind in our industry, this algorithm helps campaign managers and advertisers achieve budget targets and maximize the value of each and every dollar, across search and display.

What is Budget Distribution?

The new budget distribution algorithm extends the capabilities of Acquisio Turing™’s machine learning bid and budget optimization. The algorithms automatically manage your advertising budget across budget groups (groups of campaigns) between publishers to ensure that every dollar is allocated to the best performing publisher and/or campaign at each moment of every day – driving maximum results.

Budget distribution will factor in both Search and Display in your accounts. Keep in mind that this is for publishers supported by Acquisio Turing like Adwords and Bing Ads. In the case of AdWords both search and display channels are available, while Bing only offers search ads.

How Does Budget Distribution Work?

When enabled, the algorithm applies adjustments to the budget of each group and publisher, based on recent performance and our Acquisio Turing machine learning foundation, in turn leveraging every dollar across all publishers. To get a bit more granular, the algorithm seeks to further achieve these common PPC goals, simultaneously:

  • Maximizing clicks
  • Spending the monthly budget
  • Minimizing monthly rollovers

How Do Campaign Managers Use Budget Distribution Inside Acquisio?

In the screenshot below, our budget distribution interface inside Acquisio has a slider on the lower right hand side that allows campaign managers to indicate their campaign’s priority between maximizing budget or maximizing clicks.

Acquisio budget distribution interface

Let’s look at the difference between aiming for budget or clicks:

  • Budget: aiming for budget in a campaign is a cautious and conservative approach. When campaign managers move the slider towards budget, the algorithm will only move money around that is unlikely to be spent (high impression share, over-allocation of budget etc.) By moving budget to groups that can spend additional funds, the algorithm ensures that any unspent money goes towards making you more of it!
  • Clicks: aiming for clicks is a more active use of the budget distribution algorithm that is less cautious. When campaign managers move the slider towards clicks, the algorithm will make larger adjustments moving money around between budget groups to get advertisers the most clicks for their campaign. This means that the algorithm can move budget away from one group with higher CPC to another with lower CPC. Even if the higher CPC group would be able to spend the money, the algorithm will move money to a lower CPC group delivering more clicks for the same budget. 

Campaign Managers have full control of the budget distribution algorithms and can enable the algorithm on an existing account directly from the Budget Config User interface. Once enabled, campaign managers can adjust the slider to find the right balance between their goals.

Budget Distribution Scenarios

There are different scenarios when budget distribution would come in extremely handy to PPC campaign managers. 

Assume you are managing accounts for a company selling travel packages to different planets in the solar system.  When Acquisio Turing bid and budget management was configured on one of the accounts, the campaign manager created 6 budget groups with two publishers that are aligned with ads for the different destinations seen below. [Note: figures are based on actual anonymous customer data.]

budget distribution table

Seen in the right-hand columns above, the budget share is the amount of monthly budget assigned to each group by the campaign manager. The budget share remains unchanged month over month. The target budget on the other hand, is set by Acquisio Turing and represents mostly rollover values of unspent budget from previous months. Each month that there is a budget shortfall in one group, the unspent budget rolls over to the next month, creating a target that grows and grows. For some of these budget groups, the new target budget is simply unattainable.

By reallocating budget from poorly performing campaigns to others with higher potential, it is possible to spend the overall budget more efficiently and increase performance at the same time.

Scenario 1: Best Allocation to Maximize Clicks

Overall the account has been spending well and delivering a 97% budget attainment rate. The account has been spending $5,985.75 of the $6,182.86 budget and yielding 1,094 clicks.

The problem: While overall the performance is excellent, the campaign manager struggles to find the optimal allocation of their budget. Case in point, the “Mars” budget is being spent each month and can possibly spend more but is limited by the budget allocated, while “Mercury” is struggling to spend the budget and the unspent is being rolled over every month for a surplus in target budget.

The solution: The campaign manager enables Acquisio’s Budget Distribution algorithm, setting the priority to “Clicks,” using the slider.  By setting it to “Clicks” the system will analyze the historical performance of the different solar system budget groups and move the money to where it has the ability to attain the budget and drive the maximum number of clicks.

Budget distribution in action table

When making the adjustments the most impacted is “Jupiter,”  a group that’s been attaining its budget, but has been dramatically reduced due to the high CPCs. Most of the money in the Jupiter group was moved to other groups with better CPC that have the ability to spend the additional budget.

Assuming the budget groups can spend their additional budget allocation at the historical CPCs, the account can expect to see improved budget attainment and an additional 332 clicks for the same budget.

Scenario 2: Highly Lucrative Budget Groups

While Scenario 1 is normally the best strategy, there are situations where you want to pay the higher CPC.

The problem: The “Jupiter” packages could be the most lucrative and warrants the higher CPC despite the increased costs. In such cases setting the slider to “Budget” will consider the budget share allocated by the campaign manager as the priority and will only reallocate the remaining budget to further maximize clicks.

Budget distribution scenario 2

The solution: When set to “Budget” the adjustments applied are more conservative and attempt to align with the budget share allocated. Looking more closely, “Jupiter” retains the budget allocated, making sure that the strategic campaign is still driving value, while other groups such as “Mercury” are adjusted due to over-allocated budget ensuring the overall budget is attained.

Based on the adjustments, the majority of spend will still remain on the most strategic campaign. While this strategy will generate fewer clicks than the previous scenario, setting the slider to “Budget” would still yield roughly an additional 230 clicks due to reallocating budget that was not being spent.

Scenario 3: Both Budget Attainment and Clicks are Equally Important

The problem: When a campaign manager has equal priorities between both budget attainment and clicks, they may choose to keep the slider in the middle. Setting the slider to the middle setting would result in the following more balanced budget distribution:

The solution:
Under this setting, balances of groups such as “Mercury” and “Brand” are reduced due to being over-allocated. The “Jupiter” budget is reduced by roughly half to maximize overall clicks by moving the additional budget to “Moon” and “Mars” that have limited budgets and have lower average CPCs resulting in over 322 additional clicks on the same budget.

Budget Distribution Dissemination

The scenarios in which budget distribution works best seem complex, considering how the algorithm will distribute budget based on campaign or account priorities. However the implementation for Acquisio Turing users is as easy as moving the slider from left to right. With this simple action, the results can be impressive. Depending on the value of a conversion on an account and the conversion rate of a campaign, generating an additional 230 clicks, for example, can be significant additional revenue every single month. Talk to your Acquisio account manager today to start using budget distribution AI or start a free trial with Acquisio.


Image Credits

Feature Image: Unsplash/Nathan Dumlao

Jason MacDonald

Jason MacDonald

Jason’s 15+ years of experience in design and development has lead him to a career in Product Management with Acquisio. Working with customers to identify and solve campaign management challenges using artificial intelligence makes Jason not only our VP of Research and Development, but also our AI superhero!

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