How Performance Increases Correlate To Budget Increases

Will expanding your ad budget guarantee better performance?

Last year marketing budgets fell to their lowest reported rate, having only accounted for 6.4% of company revenue. At the same time, marketing teams felt enormous pressure to rise to the occasion. Both a global pandemic and subsequent supply chain shortage created fierce competition between brands. To make the best of a situation, marketers had to think outside of the box to reach target audiences during the holiday season. This involved raising budgets in Q4 as well as showing greater appreciation towards new and recurring customers. Even with the added expenses, millions of brands saw the advantages of budget increases, both from a performance aspect and through ROI. Now the question is: should you continue to increase your marketing budget for better performance in the new year?

Before you roll out an ironclad marketing strategy for 2022, take a closer look at the relationship between performance increases and budget increases. You might be surprised to learn there is a close correlation between the two that can help you optimize in the best way for your brand.

It’s a little give and take

Marketing costs money, plain and simple. But there are ways to make better use of your budget in 2022. A lot of companies have chosen to cut back on marketing expenses due to the current financial climate, but in fact, they should be doing the exact opposite. If these times have taught us anything, it’s that the demand for online shopping has only increased throughout the pandemic. A mind-blowing 263 million American consumers shop online now, which is projected to increase to 291.2 million by 2025.

Like the old adage goes, “When the times are good, you should advertise. When the times are bad, you must advertise.” These days, it’s all about how you advertise. Let’s take Facebook Ads, for example. This platform reaches 59% of the world’s social networking population, and is continually one of the best advertising sources for audience targeting. Actually, it is the only social media platform to reach more than half of all social media users on a global scale. It also ranks third amongst the most-visited websites worldwide. These statistics not only prove the value of Facebook advertising, it also shows how budget increases on this platform can actually pay off if allocated correctly.

Marketers should delegate a good percentage of their quarterly budgets toward Facebook ad campaigns because it delivers an unrivaled level of reach. That is, of course, as long as you are running the best practices for optimization. There are businesses who still waste time and money on ineffective campaigns instead of targeting the ones that best captivate their audience. To fix this, you could comb through each ad auction, but that would take up sufficient time and resources. Today, the leading way to distinguish ad efficacy is through artificial intelligence. Within minutes, you’ll have a clear idea of which content speaks to your niche audience and which does not.

In general, you might have to spend a little more to get the results you need. By increasing ad budgets, you’ll have the opportunity to fine tune your current ad campaigns and generate better ones for the future. You’ll see the cost of marketing quickly pays off if you strategize correctly.

Get on board with consumer trends (even if it costs more)

The correlation between performance increases and budget increases is viable, even beyond the traditional means of advertising. But since the marketing landscape has changed drastically over the last few years, it’s important for businesses to improvise and adapt to growing social media trends as well. Lately, marketers have found significant success with influencers on TikTok. Some experts have even suggested spending less on Instagram and Facebook ads and more on this video platform due to its growing viewership.

Is TikTok suitable for your business?

TikTok’s expansive growth should exemplify its current value in the marketing industry. In 2021, TikTok surpassed Facebook as the most downloaded app worldwide. It shouldn’t come as a surprise though. This short-form video platform is entertaining, fun to make, and cost-effective. It attracts a variety of viewers, particularly younger generations that have lost interest in Instagram and Twitter in recent years. With that said, it’s crucial for businesses to gauge their target audience before making budget increases for TikTok influencers in 2022. As of now, 66% of TikTok users are under the age of 30. On top of that, content appeal differentiates between genders, as TikTok attracts more female viewers on a regular basis.

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These logistics should influence your ad spending in the new year. As you can see, a number of factors come into play when deciding whether TikTok advertising is worth the budget increase or not. Compared to Instagram and Facebook, TikTok is relatively new to advertising, which explains its higher rate of $10 per CPM. Even so, apart from Facebook ads, there is no other platform generating such high frequency right now. So for those reasons, we’d suggest that all businesses consider increasing budgets to improve visibility on both Facebook and TikTok in 2022 while viewership is at an all-time high.

Will budget increases pay off in 2022?

The short answer — yes. Keeping your budget in check is certainly a good way to run your business efficiently, but it doesn’t mean you’re earning top dollar on your investment. Don’t be scared to step outside your boundaries in 2022 and increase budgets for better performance. With the rise of TikTok as an advertising platform, you’ll want to allocate more time and resources toward content that drives consumer trends. For example, high-quality videos are the top-performing ad campaigns right now. Reports show that 86% of businesses use video as a marketing tool, up from 63% in the course of three years. Therefore, if you use your resources wisely, the budget increases will provide good results.

Amplify your audience with Lightning AI

Learn how Lightning AI can help your brand improve visibility through Facebook ads. Our innovative AI platform will analyze your current data and pinpoint new interest groups for optimal performance. We’ll help you invest your marketing budget in the right way so you can maximize profits and see greater performance in 2022. Contact us today to get started!