Ad Campaign Testing. Why Low Budgets Don't Work?

We are all looking for ways to save money. Advertisers and small business owners are not exceptions: some of them are not ready to spend more than $50, $10, or even $5 to test their ad campaigns. But is it the right solution to set the lowest possible budget to test an advertising campaign?

If you’re still sure that $10 is a sufficient marketing budget, here is an analogy.

Flights are considered to be the safest way of traveling: only 1 flight in 16 million ends up in a plane crash. Even though so many people fear flying, the likelihood to die in a plane crash is less than 0.000006%.

Such a low risk is achieved due to strict safety requirements. Pilots need to fly over 1500 hours before getting a certificate of an airline pilot. Commercial planes undergo procedures of flight testing, and this lasts from several weeks to several years.

Bringing that experience to media advertising, you face a much higher risk of the online ad campaign’s failure without allocating a decent budget to testing. How would you know what marketing strategies work best without checking out all variables? An ad shown in an inappropriate place for inappropriate targets is worse than no ad at all.

What Should You Test? Things to Invest Your Advertising Campaign Budget in

There is no system inside an aircraft that won’t be checked during flight testing. The same applies to online advertising campaign: test everything that may influence your final revenue. However, you shouldn’t test everything at once.

Let’s assume that you created a new banner to run a display ad through the Demand Side Platform.

Read here about what a DSP is

First of all, you need to know how effective is a new copy and image. Set your best target audience for both banners and display them at the same place. Eliminating all other variables, you will be able to understand whether your new creative approach performs better than an old one.

After you made sure it performs well, you can change targeting options, publishers, try it on mobile, etc. and see what will happen. The most important metrics to take into consideration are views, ad conversion rates, CTR, return on ad spend, and retention rate. Thoroughly analyzing these stats, you take the best of each variable and compile the strategy that will definitely work.

If you have just introduced a new product or service, things are heating up.

It's hard to guess if the ad succeeds without experiments and sufficient advertising campaign budget. These experiments will help you to find a way to get the highest ROI and bring a ‘cash cow’ to your company. Especially it makes sense if you promote your business on a growing platform your competitors haven’t reached yet. That’s an investment, not an expenditure.

After you set up the ad campaign, run it for 24 - 48 hours without any adjustments, this time frame will be enough for determining underperforming variable. Search engine optimization, social media, email, and content marketing campaigns also need to be examined from top to toe before their final launch.

How long should it take to test one variable?

When it comes to online ads, 1 or 2 days are usually enough to gather significant data and determine underperforming variables. However, it depends on the primary goal you want to achieve.

Your one-metric-that-matters may vary according to your current goal. A measurement of views or CTRs may be conducted much faster than a measurement of conversions. Run your test campaign as long as it’s necessary to obtain a solid data sample to analyze.

What is an Advertising Campaign Budget Sufficient to Test Everything?

Setting low budgets on testing, you save money today but risk losing them tomorrow. Your marketing campaign turns into a shot in the darkness. All you can hope for is to hold the same position. But it’s hardly possible since the competition among small businesses is fierce and one must run as fast just in order to stay in place.

What testing budget is enough to reap the juiciest fruits from your advertising campaigns? There is a formula for it:

Test Budget = Est. Cost per Action x Min. Number of actions Required for Significance

Let’s say, you are testing a Facebook ad campaign. If the average cost per action on Facebook is $18.68 and the required number of actions is 50, then your test budget = $934.

But it doesn’t mean that you need to spend tremendous sums on testing. In general, it’s recommended to invest no more than 10-20% of the total advertising campaign budget. Statistically speaking, an average small business spends $9-10,000 per month on Google Adwords campaigns, so the right budget for this kind of media advertising falls within $900 and $2000.

To Summarize

The more you invest in ad campaign tests, the more you learn about your traffic, competitors, and the audience. This knowledge worth its weight in gold, so the numbers mentioned above are justified.

However, it is possible to decrease your budget for an advertising campaign by adopting programmatic solutions for media buying. In short, Demand Side Platform automates real-time bidding (RTB) and increases the cost-efficiency of your ads providing you with the most valuable inventory and optimizing the costs of each bid.

Read here about the RTB importance.