The 60/40 Google Ads Budget Allocation Rule

Regine: 00:00:11

Hi everybody.

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It's Regina here from Starter PPC.

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Today we're going to talk about

budget allocation per campaign.

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So how much daily spend should

be given to each campaign?

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I just want to start out by saying

there's no hard and fast rule here.

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There's no magical right answer

and, and the formula where I can

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say X percent to this campaign and

X percent to that campaign, right?

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Just because.

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Everybody's business is different.

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Every industry is different.

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Even seasonally things change.

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Things can even change if it's a

new account versus an old account.

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Right.

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also how much budget you have matters,

how big your market size matters,

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whether it's raining outside, whether

you're wearing pants, I'm just kidding.

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I will tell you that There is a rule

of thumb, like a formula that we tend

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to default to, and then there's a

million exceptions on top of it, but

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I'm, going to talk through the formula

and then I'm going to talk about a

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couple of the interesting exceptions.

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So the formula that we tend to

default to is the 60 40 rule.

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60 percent of your budget would go towards

campaigns that focus on getting new users.

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cold traffic, fresh meat, and 40

percent of your daily budget would

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go towards warm users, right?

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That people that were, most of them

were already on your website, or

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they've already heard about you

elsewhere, so they're searching

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for your brand name, most likely.

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that is something that we

tend to kind of default to.

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This is true when we're launching a

fresh new account with zero history.

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And this is true when we're scaling an

account that's been with us for two years.

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However, there are many exceptions to that

rule, which I'll get into in a second.

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when I say new users and new customers

and cold traffic, what I'm talking about

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is things like inbound search, right?

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So inbound search would be a campaign

where someone's searching for

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Tools, if you're selling tools and

they don't really know about you.

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They're just searching for tools.

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So inbound search, for example

that would be cold traffic.

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An example of very cold traffic would

be like, DSA dynamic search ads is

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another type of search campaign.

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That's really highly automated.

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So we do run those quite a bit,

but not with brand new accounts.

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We would usually wait and

run those a little bit later.

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Another example of cold traffic

account would be like outbound

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display outbound video.

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When I meet, when I say outbound, I mean

that you're choosing an audience, like

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an in market audience, which is one of

those buckets that Google has, right?

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Like Someone who's in

the market to buy tools.

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They've been searching for tools recently.

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They've been looking at pictures of

tools on the internet and watching

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videos full of tools on YouTube.

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And we decide to go after people that

are in market for tools and we show

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them images, lifestyle images of people

using your tools that, that'd be like

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an outbound display or video, right?

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Outbound video showing video to

like commercials basically to

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people that are looking for tools.

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Let's see, what am I missing?

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Shopping.

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Shopping is a little tough

because to shopping tends to be.

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Mostly outbound, right?

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Cause if you're on the shopping page in

Google, you're not necessarily looking

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for a specific brand most of the time.

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Although people could type in

a brand name into shopping.

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So shopping is a little bit of everything.

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Some shopping campaigns are more

outbound than others, right?

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Like standard shopping tends to go after

the cold traffic, whereas like a Pmax.

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Feed only campaign or what used

to be called smart shopping.

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It tends to do whatever it wants.

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So if it can find warmer traffic

over in the shopping area, it's

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going to go after that first.

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So someone who's in the shopping

area looking for brand or a user who

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was recently on the website, and now

they're looking for tools they're

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searching shopping network for tools.

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The smart shopping is going

to go after those people

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really hard compared to fresh.

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People.

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So it's a little bit warmer, but it's

still, considered a cold traffic campaign.

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Most shopping campaigns

is mostly cold traffic.

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Whereas standard shopping, you know, it's

not really going to distinguish between

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someone who was recently on the site.

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It's not going to necessarily go

after branded traffic any harder

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than it would somebody just searching

for tools who just popped up.

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middle of nowhere and

decided to buy tools.

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smart, so standard shopping tends

to be kind of a heavy lifter.

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It goes after that cold traffic.

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Obviously warm traffic campaign

examples of those would be video

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remarketing, display remarketing PMAX

full PMAX campaign, Tends to do like.

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80 percent warm traffic.

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If it can, it's going to try to go

after the, the easiest traffic first

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and then whatever money it has left,

it's going to go after cold traffic

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and you don't have much control or

even insight over how much of its

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money is it spending on, each activity.

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So that's something to watch out for.

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What am I missing?

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What campaign types am I missing?

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Those are like the main ones

that we tend to stick to.

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We don't hear it sort of PPC.

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We don't tend to do like.

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Smart campaigns much.

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we'll run like local ads, but

those are just an extension now.

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So they're kind of part of an inbound

campaign or part of a shopping campaign.

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So it has become.

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like an add on.

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now that you know the difference between

the two campaign types, I want to talk

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about some of the issues that we run into.

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oftentimes our clients will say,

Hey this campaign isn't working.

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I can see that it's not bringing a return.

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Please turn it off.

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And we spend a lot of our

energy saying, no, no, no, no.

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We can't turn that campaign off.

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Okay.

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Here's why this is happening.

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let me show you with an example.

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We will allocate money, for example,

towards a remarketing campaign.

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Okay.

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So down here, we've got remarketing six

czar a day, almost seven czars are, is

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like New Zealand new South African rams.

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That's what they are.

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So our client is based

out of South Africa here.

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Okay.

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Video remarketing is a campaign that

tends to not get very many clicks.

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And when it does, Google has trouble

tracking that user through to the sale.

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It's a really interesting phenomenon.

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I don't want to get into the

technical details right now.

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If you run any video campaign, any display

campaign, whether it's to remarketing

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audience or not, or a standard shopping

campaign, these three campaign types

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tend to be much less likely to be able

to track the users than something like.

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brand campaign, right?

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Brand is oftentimes the last

click before the sale, right?

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People have already they know about you.

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They're looking for you.

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They're ready to buy.

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It tends to have like

a one click conversion.

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our clients will come and say, Oh,

look, these aren't bringing a return.

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Look, I can see here in the return on

ad spend column that it's getting the

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lowest return compared to the rest.

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So let's take the money from these

campaigns and give it to these campaigns.

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Well, that messes up our 60 40 rule,

first of all second of all, we just can't

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rely on the tracking to tell us whether

these campaigns are working or not.

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what we want to do is we want to

trust that we need to spend at least

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half, at least 50%, ideally 60 percent

of our daily efforts doing the hard

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work of looking for new users.

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To try to build awareness and bring

them into the site and then less than

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50 percent ideally 40 percent Nurturing

those users and bringing them back.

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Okay, so we have to look at the account

holistically because some campaigns

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are better at tracking than others.

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And we can't rely on this particular

column on a per campaign basis to

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tell us what's most profitable.

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Sometimes, oftentimes you shut off these

campaigns that aren't good at tracking

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and suddenly the other campaigns take.

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It happens all the time.

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In fact, sometimes with clients, we do

what they ask because we try to explain

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it to them and they don't understand.

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So we turn it off and prove with

data that it brought down the

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return for the overall business.

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And then they say, yep, go

ahead and turn it back up.

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All right.

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I want to talk about some

exceptions to the 60 40 rule.

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For example, an exception might be A

financial planning business, right?

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So financial planner has

a very long sales cycle.

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Somebody might take months before

they decide to hire this person.

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And there's a lot of

competition out there too.

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And you're selling yourself, right?

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You have to build trust before

this person's ready to hire you.

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Maybe you've even talked to them

and they're still not ready.

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So there's still kind of in your pool.

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You're still advertising

to them for months.

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This would be an example of

a business where we wouldn't

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mind spending more than 40%.

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On warm traffic, just a little bit

more, maybe we might skew it towards

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remarketing because it's such a long

sales cycle that we have to make sure

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we're investing properly into converting

the leads that we did find, because

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each lead is so expensive and they

take so many touch points before they

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convert that remarketing is really

important for that particular business.

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So we make sure to try to max

out as much of the warm traffic

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campaigns as we can, and we might do

50%, 50 percent for example Other

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exceptions are like, let's say we

have a brand new Google ads account.

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It doesn't have any history.

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Well, first of all, it's probably not

going to run remarketing yet because

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it takes Google well, Google has to

build a list of like recognized users,

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I think about a thousand people.

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And so depending on what your ad spend

is, when you first get started, that

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could take a month or two or three,

also depending on your cost per click.

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sometimes there is no

remarketing in the beginning.

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\ we'll take that money and

we'll just put it into cold.

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outreach efforts.

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oftentimes that's hard because for

the first month or two or three

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with brand new clients, they expect

wild returns right out the gate.

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And sometimes there's this.

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Uphill battle in the beginning with

Google ads where you have to build

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that remarketing list, you have to do

lots of cold prospecting, you have to

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nurture these people and you have to

start to get recognition for your brand.

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And so the first few months is

less profitable than it will be.

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We will oftentimes in those

cases build the campaigns, but

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we won't give them any budget.

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We'll give them like a dollar.

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And then when they start to spend,

we'll allocate a few more dollars

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from other campaigns into those.

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And make sure, by the way, while

we're on the subject, that you're

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not overspending on remarketing.

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We use these columns over here,

average impression frequency per

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user, to decide how how much to spend.

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For example, this video

remarketing campaign on the

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top is, is doing pretty well.

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I think it's spending, showing

videos about seven times

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for every user every month.

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seven times here.

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I think this one needs to be slowed down.

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I think just seeing the video 33 32

times in a month is just too many times

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and we might as well save a dollar or

two by taking it away from this campaign

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and moving it to other campaigns.

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fine tune it over time to make sure

we're not overspending because we don't

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want to just exhaust the audience.

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Do keep in mind there's multiple

videos inside of each campaign.

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So it's not like they're

seeing the same video 32 times.

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It's rotating through those videos.

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And and we try to add videos as

often as our clients give us videos.

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anD one way that you can try to help

prevent overspending on video remarketing

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campaigns is we always add a cap, right?

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Frequency capping here in the

settings limited to right now, three

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impressions and one view per day.

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A view is when somebody watches.

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beyond the skip ads button.

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So we try to cap it.

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We might need to just either

lower this cab or just move

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money away from that campaign.

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Either one would work.

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We might do some of both.

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Another example of an exception

to this rule would be brand.

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So again, if you're a brand new

brand, maybe you're really small,

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maybe you're just starting out.

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There might not be very much

brand traffic searching for you.

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So you might decide to hold off on brand.

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Like if your budget is very limited in the

beginning and There's not a significant

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body of people that are searching for you.

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Don't bother with brand because

You want to have enough data in

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each campaign too, so that the

algorithm can start to gain patterns.

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If you're not getting like a couple of

conversions a week or, at least like five

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or six conversions a month at a minimum.

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it's probably better just to not

bother setting up a brand campaign

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and put your money into Hold

outreach until you have that body

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of people that are looking for you.

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And you can see if you pull

up these columns, search

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impression share and click share.

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This is a pretty good gauge for

the brand campaign to, to figure

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out how big the market size is.

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You can also go into the

keyword planner tool, which is

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up here in tools and settings.

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You can type in your brand name and

Google will try to estimate how many

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people there are out there that are

searching for your brand name every month.

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But here you can see And this is the

other of the exception to our 60 40

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rule is when you have so much brand

that you could max it out at 100%.

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But we never recommend that.

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In fact, we try to not go over 80%.

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I think this one's a little

bit too high here, right?

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80%.

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Some people push it to 90.

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It's just that it

becomes very inefficient.

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Meaning that last 10 or 20 percent of

the clicks that you could be getting

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if you put more money into brand.

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It doesn't go as far and you might as

well spend that money on cold outreach,

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some exceptions where we like, where

we'd go, ah, brand is maxed out.

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Let's not put more money into that warm.

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Traffic area.

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We don't really need to.

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It's not gonna be as efficient as just

using that money for cold prospecting.

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I don't use these columns much

for the inbound search because

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it really confuses me how it can

have 12 percent of the search.

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The total available search

impression share being used up.

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And yet 80 percent of the

total available click share.

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Google needs to explain that one.

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I was trying to figure it out before

I hit record and I think that, it

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might mean that the click through rate

is much higher than the competition

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because it sounds like we're not

maxing out the search impression

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share, the total available search

impression share for these keywords.

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We're not even close.

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so we have low impressions.

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But we have high clicks compared

to the total click share.

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I think that means we're really efficient

with the impressions that we do get.

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that's my theory.

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I'm going to go with that.

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Anyways, I just use these columns mostly

to figure out how much we're maxing out on

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the brand because this is a pretty closed.

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Target audience, this is

a pretty specific keyword.

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There's just one or two keywords

in these campaigns, whereas inbound

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search is all over the place.

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This gets very complicated to

decide who's being targeted.

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What even is the total available

impression share on 50 keywords

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that are all, you know,

broad match or phrase match.

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So that's why I don't use those

columns for this campaign.

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These types of campaigns.

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Okay.

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Well, those are my thoughts

around budget allocation.

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I hope the 60 40 rule provides sort of

a, at least a starting place for you

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guys when you're trying to decide whether

to keep that cold, standard shopping

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campaign that doesn't look like it's

doing much, or whether to turn it off.

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Just keep in mind, if you turn off

that campaign, make sure you're,

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keeping a very close eye on the other

campaigns to see if they suffer.

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You might be better off just finagling

the budgets on that campaign rather

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than shutting it off completely.

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And try to decide how much money is...

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Efficient to allocate towards

those cold traffic campaigns.

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And we do find that 60, 40

on an overall account is.

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Is where it's at, and these are big

numbers because it's czar, but I think

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if we added them all up and divided

it by divided them between cold and

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warm, I think you would find the 60

allocation or at least something to it.

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All right, well, that's

all I've got for today.

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Thank you for watching.

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If you like this video, don't

forget to hit like and subscribe.

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See you guys later.