Budget
Budget Allocation
The process of distributing ad spend across channels, campaigns, and audiences based on expected incremental return. Should be dynamic and updated weekly based on current performance data, not fixed in quarterly planning cycles. Optimal allocation requires understanding the diminishing returns curve for each channel and finding the spend level where marginal CPA across all channels is equalized. A well-optimized allocation improves blended ROAS without increasing total spend.
Why it matters
It is the highest-leverage decision in the account and usually the least evidenced, because reported channel ROAS is not comparable across channels.
In practice
Allocate on marginal return, not average. The question is what the next thousand dollars does, not what the last hundred thousand did.
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