As Google and Microsoft Ads managers, one of our primary client-facing jobs is to discuss budget allocation with clients as part of our proposal or ongoing engagement. This conversation can range from “I have no idea what to spend, can you help me please Obi-Wan” through to “give me five good reasons, backed with scientific data and a lien on your car as to why you’re proposing this amount of spend”.
Budget is complex and nuanced and intersects with many individual business factors. However, it’s important to come to the conversation prepared. Not only does a thorough budget preparation process create trusting client relationships, it also sets the tone for a well-executed campaign.
When you have an existing account with data but you need to know what your theoretical maximum spend could be and you’re designing a campaign, we see it as a four-step process:
The first step to calculating a budget is to consider the maximum spend potential that could have happened in that account when looking at the last 30 days data.
There’s a great article here explaining how this can be effectively calculated. In case you didn’t want to dig through all of that, we simplified it to make it easier, so if you had an account with the following metrics, you’d calculate maximum spend potential as follows:
However, while we were on a roll, we even built you a little calculator you can use here instead of building your own spreadsheet (so bookmark this page – and feel free to share it with joyous abandon!).
Metrics Last 30 days:
The formula then becomes:
Of course, there are some key considerations before you run off into the sunset to propose this Max Spend Last 30 Days number as the new monthly budget.
Once the maximum possible spend has been determined, and takes into account other extenuating factors for the business sales cycle, then it’s important to talk about KPIs and business drivers.
Personal drivers are the things that get you excited when you open your computer in the morning, and those that could potentially impact your budget recommendations include:
The budget needs to be more than just a proposed amount of spend. HOW will it be spent?
They’re just a few of the budget pacing questions you need to answer before making robust recommendations to your clients.
Budgets aren’t set and forget. They are an iterative and cyclical process that involves a feedback loop and an active account review cadence.
So, make sure you confirm a reporting plan with your clients. Data is just data unless you make sense of it for your clients, so make sure that your reporting process helps your clients to make sense of the information you’re giving them.
Some questions you’ll need to ask clients, and yourself
When you design a budget proposal for a client you’ll need to consider the following areas: