Tag Archive for: scaling spend

scale media spend

Tug of War: Balancing Scale and Efficiency with Paid Media Spend

scale media spend

Every business that runs a paid advertising strategy––whether that’s on Facebook, Google, or some other platform––does so with the aim of building a predictable, scalable, growth machine. And in theory, as long as the return on investment (ROI) remains above a certain level, brands should be willing to invest unlimited amounts into paid ad campaigns.

As a growth marketer, it’s common for founders, CEOs, and other marketing leaders to tell me that they have an unlimited paid media budget, provided the campaign demonstrates ROI above a certain predefined level.

But in reality, scaling a campaign isn’t as easy as that. If it was, everyone would be doing it. That’s why I also hear from a lot of leaders that they’re hitting a barrier, where any spending above a certain level sees advertising costs spike, and profitability plummet. 

Scaling a paid advertising campaign––no matter the channel––is hard. There’s a delicate balance to strike between volume and cost per acquisition – and it often takes an experienced growth marketing agency to get it right.

At Tuff, we’ve helped brands from all kinds of industries navigate these challenges. In fact, we’ve tested dozens of different strategies on well over 100 accounts. Along the way, we’ve learned a lot about scaling ad spend efficiently while driving real results. 

Here are three of the most important things we’ve learned:

  1. Diversifying channels is key to success
  2. Use a variety of metrics to measure the efficiency of different channels
  3. Model your paid media spend

Let’s unpack each of these three lessons in more detail. 

#1 Diversifying Channels is Key to Success

For many brands, paid advertising on Google and Facebook represents the vast majority of their marketing budget. It’s easy to see why – they’re the two biggest platforms (by far), are relatively easy to manage, and can be experimented with at relatively low costs. 

Both platforms boast powerful algorithms that connect businesses to their customers at various stages. Google Search is fantastic for capturing high-intent, bottom-funnel traffic that’s ready to purchase. Facebook’s platforms have impressive prospecting technologies that enable businesses to reach new audiences well-matched to their products and services. 

Many brands focus exclusively on Google and Facebook. And while it’s true that it’s important to establish profitable marketing strategies on both these channels, there’s a whole world of other channels out there that brands should be experimenting with.

Diversifying your marketing mix helps you mitigate the risks that come with being over-reliant on platforms like Google and Facebook. For many brands, Google and Facebook are like an IV drip that keeps their business going – turn them off, and the business will struggle to survive. 

Embracing new platforms helps you address this dependence, but it also enables your brand to reach new audiences, create more consumer touchpoints, and ultimately, drive increased revenue in a sustainable way.

At Tuff, we’ve been testing channel diversification by running paid campaigns on platforms including: 

What Did We Learn?

This answer won’t hold true for every business, but for the brands we’ve been experimenting with, we’ve seen particular success scaling media spend on both TikTok and Reddit. Here are some tips for success:

Diversifying Your Marketing Mix with TikTok

TikTok has rapidly grown to become the most visited site in the world, and contrary to popular belief, it’s not all Gen Z users: 59% of TikTok users are aged 26 or over. TikTok users also show a much higher rate of engagement than those on other platforms – we see an Engagement Rate of 5.3% on TikTok, compared to just 1.1% on Instagram. 

It’s easy to get started with TikTok advertising. Your TikTok creative doesn’t need to be high production value: users want to see ads that are native to the platform and leverage current trends, sounds, and more.

Dive deeper: How We Achieved a 12x ROAS on TikTok with $7K in Ad Spend

Diversifying Your Marketing Mix with Reddit

Reddit is best-suited to brands seeking to build a loyal community. Regardless of the industry you’re in, it’s almost certain there’s a subreddit that will enable you to advertise to a targeted audience of your prospective customers. 

Our tips for success on Reddit? Make sure your advertising is authentic and true to the platform. Imitate the language used by Reddit users, and don’t be afraid to have fun and make jokes. Want an example? Check out this ad from Bud Light. Content on Reddit changes constantly, so make sure you rotate your ads frequently, and take time to interact with users organically too. 

#2 Use a Variety of Metrics to Measure the Efficiency of Different Channels

It’s tempting to measure the efficacy of different marketing channels solely through metrics like last-click attribution, which attributes all of the revenue from a sale towards the last marketing touchpoint the customer interacted with before converting. This often shows a strong performance for Google and Facebook campaigns, with a positive ROI that indicates you should increase spend and scale the channel.

But to achieve any revenue at all, you need to create demand for your products and services. That’s done at the top of the funnel. If you’re measuring channel performance based solely on last-click attribution, it’s unlikely you’ll see strong results from the marketing platforms you use early in your customer journey.

Just because a platform doesn’t demonstrate last-click results, doesn’t mean that it’s not an important part of your marketing mix. Instead of using a last-click attribution model, use a metric like Effective Cost Per Thousand Impressions (ECPM) to better compare the performance of different channels. 

Customers are exposed to all kinds of different marketing touchpoints as they progress through your marketing funnel. Countless studies back this up: various platforms work in synergy together throughout your customer journey, building brand awareness, educating prospective customers on your value proposition, and driving conversions. Every single touchpoint plays an important role – not just whatever one customers happen to see last.

Not measuring the efficacy of your advertising spend this way can have knock-on impacts that can be catastrophic for your overall marketing mix. In our experience, it’s unlikely that platforms like TikTok, Reddit, YouTube, and Google Display will drive positive last-click attribution – but they are absolutely essential to drive demand.

An Example: Google Search vs. TikTok

Let’s take a look at a trade-off we see all the time: Google Search vs. TikTok Ads. 

It’s likely that your Google Search campaigns will have a lot of last-click attributions – after all, it’s a bottom-funnel, high-intent channel: people are literally searching for what you sell. Your TikTok campaigns probably have a significantly lower number of last click attributions – people are unlikely to convert when they’re relaxing, scrolling through TikTok videos on their phones. 

So, you decrease your spend on TikTok, and increase it on Google Search, expecting your sales to increase. Easy win, right?

Wrong.

TikTok (a top-of-funnel platform) is giving Google Search (bottom-funnel) a major assist. It introduces prospects to your brand, showcases the value of your products and services, and might even be the reminder that the consumer needed to search for your products on Google.

If it wasn’t for TikTok, and other top-of-funnel channels like it, you probably wouldn’t have the sale at all. So by decreasing your investment in TikTok, you’re effectively shrinking the potential audience for your product in the future – not a wise choice. 

How To Measure the Efficiency of Marketing Channels

The key to effectively measuring the performance of different marketing channels lies in regular reporting that uses a variety of different metrics. After all, it’s simply impossible to measure the effectiveness of something as complex as a growth marketing strategy with just a single metric. 

We use last-click attribution, first-click attribution, ECPM, and more. Another hack? Ask your customers how they found you. Include a “how did you hear about us?” field in your checkout flow or demo booking process – you might be surprised at what your customers tell you.

Another thing to keep in mind: generating demand takes time. It’s not an overnight process, and you’ll want to give it at least three to five months to start showing results. Over time, a well-executed growth strategy will see your overall marketing metrics improve significantly – from Customer Acquisition Cost (CAC) to Revenue. 

Learn more: From Google Ads to Reddit: How We Tested 7 Different Acquisition Channels to Get Better Applicants for Sabio

#3 Model Your Paid Media Spend

One thing every business values is predictable growth. That’s why it’s important to model your media spend. 

There’s a wide variety of ways to model spend, but the end goal is always the same: to accurately project future revenue. Now, every approach to modeling comes with a series of pros and cons, and it’s up to you to decide which is the best fit for your business. 

At Tuff, we often use historical data and plug it into an equation like this:

Last-Click Sessions x Conversion Rate x Average Order Value = Projected Revenue

Taking this approach to modeling enables us to understand how much traffic we need to drive in order to hit our goals. Once that number is locked in, we can start planning where we need to invest to achieve the desired traffic levels necessary to hit our revenue goals.

Ready to Start Scaling Your Paid Media?

Paid media is unquestionably a major growth driver for brands of all shapes and sizes, but it shouldn’t represent your entire growth marketing strategy. Instead, consider your paid media strategy as just one part of your wider marketing funnel, and work with the understanding that each individual component of your strategy is inextricably linked.

There’s no need to commit to aggressive spending goals upfront – instead, make adjustments to spend as you go along, making sure that you use a variety of different metrics to inform your decision-making. 

It’s impossible to guarantee performance, but one thing you can be certain of is consistent learning and improvement. As you analyze the performance of your marketing stack, refine your strategies, and implement best practices, you’ll notice incremental improvements. Over time, these compound to produce a significant impact on your overall marketing performance. 

Are you struggling to scale up your paid media channels? Set up a call with our team – solving these complex challenges is what makes us tick.  

working to increase budgets on different ad platforms

How To Scale Ad Spend Quickly (Without Spiking Costs)

working to increase budgets on different ad platforms

Scaling effectively is one of the hardest things to do with your Facebook ads. As a growth marketing agency, one of the problems potential partners come to us most often with is that they’ve gained some sort of traction with their Facebook ads, but don’t know how to efficiently ramp up spend. 

To someone not well versed in Facebook advertising, this seems like an easy solution. You’ve got campaigns that are working, so just jack up your daily budgets and start counting your profits! Makes sense right?

If only it were that easy….

Anyone who has experience running Facebook ads knows just how fragile account performance can be. A number of different factors can take your performance for a roller coaster ride, and changing ad spend is one of the largest ones. Growth Marketers are on a seemingly endless quest for stability and predictable results. While that quest will likely never be completed, being mindful of how we adjust our spending on Facebook and our other ad channels will get us one step closer to the promised land of steady results.

Before you can begin increasing your spend on Facebook you need to answer an important question.

Is my ad account ready to start scaling?

One thing we really stress here at Tuff when looking at budgets for our social ads channels is that adding additional budget at an underperforming channel or campaign won’t help your results. There are many problems in life that can be solved by throwing money at them, but poor advertising results isn’t one of them. 

There are three stages to running campaigns on Facebook when you’re looking to achieve success at scale:

  1. Traction 
  2. Scale
  3. Profit

To sum these steps up, traction is where you put in the work to achieve consistent profitable results, scale is where you increase budgets steadily while still maintaining profitability, and profit is where you swim in your money Scrooge McDuck style.

You’ve got to walk before you can run. The traction phase is where you define what profitability looks like from an account results standpoint. This benchmark will vary greatly depending on your business model. It could be a specific cost per lead, ROAS number or cost per new customer. Whatever it is, you need to understand this tipping point before considering scaling up your budget. This should really be figured out before running ads at all, but that’s for another blog post.

Once you’ve defined your profitability metrics, you’ve got to go out and hit them. Go test audiences, ad creative, and copy combinations until you’ve determined the targeting and messaging needed to hit your profitability metrics.

Before you start scaling, you’ll want to be sure you’re hitting these numbers with some consistency. With how volatile Facebook advertising can be, it’s very likely that you can hit these goals one day, and not even come close the next. You’ll want to see results above your profitability threshold for a significant amount of time before you begin scaling. The amount of time will be different depending on what budget level you start at, but a good rule of thumb is 2-3 weeks of hitting KPIs before increasing your budget.

So now that we’ve got traction, it’s time to look at increasing our budgets, which is the whole reason you’re reading this article. As I mentioned earlier, scaling up too quickly can shock the Facebook algorithm and tank your results, so we always look to scale methodically to avoid that. There are two methods of scaling that we use, which we refer to as vertical scaling and horizontal scaling. We use a combination of these to increase overall budget. Let’s get into what they are. 

Scaling vertically

Vertical scaling is the easiest way to increase your ad spend on Facebook. When you scale vertically you’re taking your existing campaign structure and increasing the daily budgets for those campaigns or ad sets. In reality, this is just fancy marketing speak for taking your budget and making it larger, but there is some nuance involved.

It is possible to kick your ad sets back into the “Learning Phase” if you increase your budgets too quickly. An ad set being in the learning phase is an indicator that the algorithm is still working to stabilize your results. While in this state you can expect more volatility and higher than normal costs per action. An ad set leaves the learning phase after about 50 conversion events, at which point performance stabilizes a bit.

Needless to say we want to get out of the learning phase as quickly as possible and stay out of it.

learning phase in ads manager

“Large edits” to a campaign or ad sets will move ad sets back into the learning phase, with large increases to budget being one of those possible edits. Specifically, more than a 20% increase in spend to a campaign or ad set will be enough to get sent back to learning phase time out. 

All of this is to say keep your daily spend increases to 19% or less of your budget if your ad sets are out of the learning phase. If your ad sets aren’t out of learning just yet, it’s probably a good idea to wait for that to happen before increasing spend.

Scaling horizontally 

There is always going to be a point when scaling your existing structure starts to yield diminishing returns. As much as we’d like to scale effective campaigns and ad sets to infinity, there comes a point where you’ve maxed out the amount of spend you can pump into a campaign structure before you have to expand outward to find new efficiencies.

Horizontal scaling is where you look for opportunities outside of your existing structure, usually in the form of new audiences, to spend budget. Audience testing is a huge part of being successful with Facebook advertising and chances are if you’ve made it to the point where you are scaling up your budget, you’ve done your fair share of audience testing already (remember finding traction?)

You’re definitely going to want to find these avenues of potential scale before you need to, so as you’re scaling vertically, it’s always a good idea to test new audiences to see if you can gain traction outside of your existing structure. 

When introducing new ad sets, it’s generally best to set the daily budget equal or lower than what your other campaigns/ad sets are at. The last thing you want to do is introduce a new audience at a really high daily budget only to see no traction and burn through a significant amount of ad spend without much return.

Once you see traction from a new audience, you can apply the vertical scaling principals I outlined earlier in the article, rinse and repeat.

Conclusion

Facebook loves consistency when it comes to running an ad account. Want to make a big change to an existing campaign? You’re usually going to get punished in the form of higher costs for a period of time. When scaling up your spend, make sure to stay below that 20% per day threshold to avoid having your ad sets get kicked back into the Learning Phase. Seeing rising costs as you’re scaling your existing structure? It’s probably time to look to scale horizontally with some new audiences.

Want to learn more about how we help our partners achieve results at scale? Set up a call with our team to discuss how we can apply our growth marketing expertise to your business! We’d love to hear from you!