How to Design a Client-Winning Budget Proposal for Paid Search

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!).

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.

1. The Law Of Diminishing Returns (also known as more-of-the-same-input-doesn’t-promise-an-equal-uplift-in-output). Just adding more money to your budget doesn’t necessarily mean you will get the same return as before. Some bid strategies are better than others at managing this, and we’ll be discussing that in a future article for you all.
2. Ensure that your budget recommendations are adjusted to take into account the history of the account (the same time last year, or the sales cycle for the business and/or vertical) and also any events or special days that will be coming up (eg. Black Friday). Be sure to allow for any uplift or downturn in demand that will be expected to result from these events.

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:

• Budget to try and improve key metrics, even if hitting business KPIs. For example, extra budget flexibility to test X or Y strategy
• Flexibility to adjust budgets according to market conditions, such as competitors, news events, sales, etc.
• Budget to run experiments between channels

The budget needs to be more than just a proposed amount of spend. HOW will it be spent?

• Will it be spent evenly throughout the month?
• Will it be tapered to spend more at the start or end of the month?
• Will it even be designed as a month-to-month budget (doesn’t always work well with retail seasons!) or on a different cycle?
• Does historic data suggest some periods or days of the week that should be avoided or targeted?
• Are there sales periods that should be considered?
• Does the business have shut down/holiday periods where they need to reduce or eliminate spend?
• How will you share the budget between the campaigns?
• How will you move budget between the campaigns and based on which events?
• If they have multiple locations or are a franchise, do you need to spend budget evenly between them or do you need to ensure you spend set amounts per location?

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

• What feedback cadence and process is reasonable for the account size?
• What data is important to feedback (hint: will be related to the KPIs you already got them to sign off on!). Death-by-Data is real – don’t drown your clients.
• What mechanism will be used to collate data and to provide reports? We often use and recommend Google Data Studio for this – it’s free and pretty simple to set up, with plenty of templates floating around the internet.
• Who do you need to contact with your reporting if you want to discuss anything mid-cycle? Ie.. budget changes or increases or decreases in spend?
• Know who you’re reporting to both directly and indirectly and what pressures are on them. Big companies can be surprisingly opaque with more internal politics than a season of Survivor.