How to Plan Digital Ad Spend – Your Strategic Budget Guide

user iconLauren Underwood
calendar iconJun 22 2022
category tags iconDigital Marketing, PPC
Featured image for How to Plan Digital Ad Spend – Your Strategic Budget Guide

Companies looking to get the most out of their online advertising campaigns may find that creating an effective digital advertising budget is challenging. With the goal of each campaign to produce a higher return on investment (ROI) and return on ad spend (ROAS), it’s important to properly plan your budget from the beginning so that it will get your company the highest revenue.

Most companies set a budget for spending on ads where they hope to get the most conversions before the budget runs out. As digital marketing experts, our goal is to get our clients to reach their highest ROI potential by using the most effective types of advertising first regardless of overall budget. You may actually be surprised to learn that where you typically get the most conversions is not necessarily where you want or can spend the most money. This is the genesis of the Bullseye Method of planning ad spend.

With so many different types of ads to choose from, how do you keep track of how they all work and which ones will effectively help you achieve your goals? And what UX journey needs to happen to get conversions?

7 Types of Ads to Consider for Your Digital Marketing Advertising Budget

To find out, let’s first dive into what a marketing advertising budget should look like, we have to discuss the different types of digital advertising available. One of the most important parts of putting together an effective paid advertising campaign is choosing the right types of ads that will both perform well and represent your brand effectively.

Nowadays, there are so many different types of advertising methods, and they all tend to have different types of creative needs, as demonstrated in the table below:

Type of Ad

Bid Type

Ad Creative Type(s)

Search Pay-per-click (PPC) Text Ad/Shopping Ad/Local Map Ad
Social Media Cost-per-click (CPC)/Cost-per-mille (CPM) Image/Video
Programmatic CPM Banner/HTML5/Video/Article
Retargeting/Search CPC/CPM Banner/HTML5/Video/Article
Native CPM Image/Headline/Article
CTV/Video/YouTube CPM Video/Banner
Contextual CPC/CPM Banner/Video

Let’s dig a little deeper into what all these types of ads entail and how you can maximize your ad campaign with the best and most relevant ad creatives for your business.

1. Paid Search Ads

When you’re researching something on Google, you may notice that sometimes the top three to five spots are taken up by ads before you see the top organic search results. These usually appear as a text ad, consisting of a headline, description, and a URL to the destination site. These paid search ads, also known as “PPC ads”, can be one of the most effective ways to boost conversion rates on your website.

digital marketing ad budget

Because paid search ads are only triggered by user search queries, you only pay for the ad when someone clicks on your ad listing. In our years of experience, we have found that these are the best direct-response ads you can buy, which is why Paid Search is at the center of our Bullseye Strategy. Since they are triggered by search activity, these ads will show results relevant to the person searching. If the ad is relevant enough for them to click on it, you pay for that click in exchange for a potential conversion on your site.

Implementing paid search advertising for your website first involves keyword research. Once you know what your website needs to rank for, you can bid on specific keywords in the hopes that your paid search ad will be featured at the top of a user’s search engine results pages (SERPs). Bidding higher than your competition means your ad should appear higher in Google SERPs, while bidding less often means your ad will be ranked second, or not even rank at all.

Paid search ads can also be used as a map ad in Google Maps, local map packs, or local service ads. Google Map ads work similar to normal paid search ads in that the sponsored ad appears at the top of the rankings once a user searches for a local service. In this way, these ads can help to promote businesses, restaurants, and other establishments based on a user’s location.

google service ad

Additionally, click-to-call ad extensions are another type of paid search ad that lets users tap a button with your company’s phone number, either on a cell phone or computer, so that they can directly dial your company. This allows potential customers to reach your business more easily, increasing the chances of that potential client converting.

One of the reasons paid search advertising can be so effective for your ROI is because it inherently targets qualified people with purchase intent. This can be especially helpful for small businesses looking to outrank their competition, but can also be very competitive in major metro areas.

Ecommerce businesses, especially, can benefit from paid search advertising, since it allows these types of companies to directly target exactly who they want to advertise to. Sharing your online store’s inventory feed with Google Ads delivers the right product at the right time to shoppers looking for exactly what you have in stock, and it tells them your price before they even click.

Since paid search campaigns can be closely monitored for ROAS, your budget should not be set in stone, but uncapped as long as its profitable. Once your marketing professional or agency alerts you that market cap is achieved, additional budget will only cut into your ROAS/ROI.

2. Social Media

In today’s world, social media advertising is considered essential in most industries because many users are active on platforms like Facebook, Instagram, TikTok, LinkedIn, and Pinterest. One of the many key benefits of social media advertising is its ability to increase brand awareness and drive sales. Since posts can be liked, shared, and commented on by audiences, these social channels are great for driving traffic back to your site through both paid social and organic social ads.

Choosing the right social advertising method for your company will depend on your goals and audience. Paid social advertising involves a variety ad types (reels, content, posts, etc.) that you pay to boost in order to reach specific audiences. These ads are typically labeled as “sponsored” or “advertisement” on social media platforms, but a great creative department can make them look like a natural post in the social feed.

paid search advertising budget

On the other hand, organic social ads usually involve hiring an influencer to share posts, stories, or videos about your product or service. As a rapidly growing advertising practice, organic social ads help you gain exposure to your followers. This type of word-of-mouth marketing can help build a loyal brand following, and it can be a lot easier to receive feedback from a wider audience. You also don’t have to pay the social platform for influences, although it is important to consider your audience before choosing which influencers to advertise through.

Additionally, new social platforms are joining the market all the time in a variety of formats, giving businesses plenty of ways to advertise their products and services, as well as build a brand community to keep your audience updated as much as possible. The key questions to ask yourself before choosing social advertising is which platforms your audience is on, and which types of ads would be the best at achieving your goals.

3. Programmatic Advertising

Programmatic advertising refers to how an ad is purchased and placed, rather than how the ad appears visually to the user. Content publishers looking to earn money will “open up” ad space for real-time auction on their website. To maximize their revenues, they will use standard banner ad sizes where thousands of advertisers can then bid to win that space. Whichever ad bids the highest is the one that will end up appearing on the page.

Fortunately, this is all handled automatically with ad servers in micro-seconds. For advertisers, this means that your bid is competing with others and calculated in real-time bidding (RTB) auction, which is a process that automatically determines the most revenue-effective option for the publisher.

To target the right people and win the ad auction in the right moment, advertisers build programmatic audiences using 3rd party cookies and then add the demographic data CPM to the auction CPM price. The final bid is data CPM plus bid CPM. Generally, the more niche your audience is, the higher a data company, like Nielson, Factual, or LiveRamp, will charge. However, for advertisers wanting to optimize their ad spend, adding a few dollars to the overall CPM to make sure their ads only deliver to the right audience is often worth paying a little more for.

Programmatic ads can be delivered in multiple forms, including banner ads, native ads, and CTV/OTT ads. However, no matter how brilliant the ad’s design is, programmatic ads are all about building the right audience first. Ad space from publishers can be purchased many ways, but with programmatic ads you get the advantage of layering on the proper geofence, online behavior, or demographic data so you can effectively target the right users and achieve the best ROAS possible.

digital advertising budget plan

4. Retargeting Ads

You may also consider using a retargeting campaign as part of your advertising strategy to target users who previously interacted with your site. This type of advertising works by using cookies to track your website visitors and retarget them with ads containing relevant content in an attempt to bring them back to your site to convert.

Retargeting campaigns can often be very affordable and effective strategies for targeting users who have interacted with your brand in the past. Those who have already demonstrated interest in your products or services are more likely to convert if their interest is reignited, and they are encouraged to return to your website to finalize their purchase.

Not only can retargeting ads lead to more conversions, but they can also often be purchased at a positive ROI. This type of campaign is especially helpful for eCommerce websites, as evidenced by sites like Amazon, Walmart, and Wayfair. Since cookies can be used to create personalized ads for users, advertisers can use both visual and text ads related to what users have read or added to their cart in the past. After budgeting for paid search ads, retargeting ads are typically the next best strategy to use when following the Bullseye Method.

5. Native Ads

Native advertisements are usually placed to match the look and feel of a site’s surrounding content. Because these ads are integrated into a content platform to “blend in”, they can be effective at engaging audiences, making users more inclined to click ads. They are also typically meant to educate an audience rather than create a direct response from users. For example, if a user is researching something, native ads can provide a link to an article while also using company branding to indirectly advertise.

Native ads can appear in the form of in-feed advertisements, recommendation widgets, product placements, or recommended articles. Since they are made to feel less intrusive and cause less interruption during user navigation, this type of advertising can appear much more trustworthy to a user. Sometimes, users may not even realize they are clicking on an ad.

Because these ads are a “soft” sales approach to acquiring a sale or new customers, these are considered top-of-the-funnel (TOFU) ads. These ads should be considered only for branding and awareness and not measured for direct-response performance. For this reason, most companies will leave these out of the budget, or only sprinkle a few of them in if they have enough budget left over after covering the inner circles of the bullseye.

6. CTV/Video/YouTube

Video advertising is expanding rapidly for digital marketers, and includes any video ads promoting a product or business purchased through a digital platform. Today, these ads can be seen while a user watches a YouTube video, a reel on Instagram, or even watching TV on a streaming platform like Roku or Hulu. Overall, these videos tend to feel more like commercials, but also come with a lot of creative opportunities.

Creating a budget and executing a video ad campaign is actually the easy part for most brands. The hard part is creating a video ad. Video creative can become time-consuming and costly, especially when considering how long it can take to plan and create an enticing advertisement with good production value. Ideally, these videos should be visually appealing and emotionally enticing, while sharing a message about the brand to the audience. They also typically run for a certain period of time depending on ad length. On YouTube, ads can last anywhere from 6 to 60 seconds, with common intervals of 15, 30, and 45 seconds on shows with commercial breaks.

Because mobile video consumption continues to be on the rise, video advertising has become a very popular means for advertisers to reach their audience, increase clicks to their site, and drive sales. Over the next few years, we expect that digital media buyers and traditional TV stations will be competing over this expanding landscape.

7. Contextual Ads

Contextual advertisements are placed on a web page based on the content on those pages. This is done with contextual targeting, which means that ad space is bid for based on keywords on the web page.

Unlike programmatic and behavioral targeting, which place ads based on a user’s actions prior to reaching a web page, contextual ads target users based on the environment in which they are browsing. For this reason, contextual advertising can be much easier and more affordable, yet still relevant to the user.

In 2018, the 3rd party cookie war began with GDPR. Over the years, privacy concerns have also caused brands like Apple, DuckDuckGo, Google, and Firefox to block cookies or device tracking from their browsers and apps. For advertisers, this has given a resurgence to contextual ad targeting once again because it only relies on content and not cookies. With cheaper CPM’s and nearly the same audience intent level, contextual ads can and should survive without cookies, and they should be considered a middle of the funnel approach in your budget planning.

Ad Budget Planning with the ROI Bullseye Method

Now that you know what type of ads your digital advertising budget may include, it’s time to figure out what ads are right for you, and where your business can ideally spend the most money. Ad budget planning will vary by industry, so it’s important to keep in mind that your spend amount on certain bullseye rings may look different depending on your branding versus your conversion goals. However, we always suggest starting with the center and expanding out as you max out direct-response budget and move to more awareness ads as budget allows.

The goal for most B2C and B2B companies is to fill up the red ROI target as much as you can first. What converts in the middle may not convert at a positive ROI, which gives you more revenue and budget to invest in the other rings. This is why maximizing the bullseye first and taking outer rings into consideration when buying ads will allow you to better plan and optimize your paid advertising strategy, leading to a higher ROAS.

Step 1: Direct Response

The first step in the Bullseye Method is the large red target in the middle. This is where you want a direct response from your audience—in other words, this is the ideal spot for your audience to convert. It’s important to cultivate positive customer interactions and use advertising that’s more likely to have the highest ROI potential, like paid search or Facebook form ads.

Although this stage of the bullseye is where you’re more likely to see the most conversions, it’s also the place you want to spend the least amount of money. This is because advertising types that foster high ROI potential, like paid search, come with a smaller audience target. They are the best ads to get someone to convert, but there are only so many people looking for your product or services every day.

For this reason, it’s important to move through each stage of the bullseye to maximize your ad spend as much as possible. The customer journey doesn’t always start at Direct Response, but it’s important to be present for those easy wins. For B2B and longer sales, the customer journey starts with Awareness. This is why you might only have a fraction of your ad budget in the center of the bullseye and the majority of your ad budget focusing on broader interest and awareness advertising.

Step 2: Customer Action

bullseye method action

It’s also important to nurture and follow up on customer connections. Having positive interactions with your audience, both during and after the purchase stage, can determine whether that customer will come back. If you don’t foster customer loyalty, you’re less likely to earn conversions from repeat customers when using retargeting ads.

Unfortunately, people may find banner ads obnoxious—especially if they are unrelated to what they are interested in. If your goal is for customers to convert or engage with you ads, then you need a way to encourage users to purchase your product or service so that they believe it is the right solution for their needs. But, you need to do it in a way that doesn’t turn them off, like intrusive advertisements may do.

This is where the customer action bullseye ring comes in and where you can target your audience with retargeting advertising. The way to budget this is to set a frequency cap of how often you retarget people. For example, by only serving someone an ad two to four times a day for five days, you keep you budget under control and keep your brand from being one of those annoying ads that follows users all over the web.

During this phase of the Bullseye Method, the customer will hopefully decide to purchase what you are trying to sell in your ads. By using a retargeting campaign, you can retarget customers that have interacted with your brand before but didn’t necessarily convert, in the hopes that they will be influenced to change their minds this time.

Step 3: Possible Interest

bullseye method interest

Until your customer is aware of a problem that needs to be solved—ideally, with your product— they may not show interest in spending their money just yet. That’s why the next ring in the Bullseye Method is possible interest.

This step aims to educate and inform potential customers to increase the likelihood that they will consider shopping with your brand. An ideal marketing message for your brand would address a problem or pain point and highlight why your brand is the solution. Doing so can show customers what differentiates your brand from others.

Using programmatic and contextual advertising in the form of static banners, animated HTML5 ads, and videos, is a great way to get an online user interested in your product or service. Customers who were made aware of your product or service in the awareness stage may start to do more research on what your brand sells and what potential competitors also have to offer.

Contextual and programmatic ads also create touchpoints where customers can interact with your brand while browsing, thus fueling your retargeting audience and moving them further down the sales process. As the one advertising, your goal is to get the user to click on your call-to-action and get them closer to converting a sale.

Step 4: Brand Awareness

bullseye method awareness

Finally, the outer-most ring in the Bullseye Method is Brand Awareness. Companies in the awareness ring typically advertise with broadly targeted ads. These can run on social media, websites, YouTube, CTV, or other places. The audience you advertise to may be users who already know about a product or industry but are generally unaware and unfamiliar with your company.

Although this is not the location on the bullseye where you’ll see the best click-to-conversion ratios, it is where you can start the customer journey to find future customers and spend the majority of your budget, since the available audience size and inventory is nearly endless.

The goal may not necessarily be for the customer to convert now. Instead, the goal is to keep your brand at the top of the customer’s mind so that when they decide to make a purchase later, they know where to go and what brand to choose. With a little more interest, the customer can start moving closer to the center of the bullseye.

Creating the best marketing advertising budget for your business may be a challenge your first time. Fortunately, this is something we do every day at Rank Fuse Digital Marketing. We specialize in all areas of online advertising and love helping companies build their strategy for success. Contact us today at help@rankfuse.com to learn more.

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