Date posted

20 Dec 2023

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Why you need to protect test budget in 2024

When it comes to determining your media budget, no two years are the same. And the same goes for what percentage of that budget should be ring-fenced for testing. 

One thing for certain though, is that this part of your budgeting process must not be overlooked.

Allocating a portion of your annual marketing spend specifically for testing is a non-negotiable for 2024 and securing this at the outset ensures that these initiatives are prioritised, without the CPA limitations often associated with tried and tested activity. Striking the right balance between proven tactics and new initiatives is what will drive both ROI and business growth in the new year.

If this isn’t already a standard part of your budgeting process, there’s no better time to start than now. Testing and seeing results is arguably easier than ever as platforms integrate AI into their technology – think Meta pushing broad audiences, allowing advertisers to gain quicker, more scalable learnings; or Google Analytics switching to a default data-driven-attribution (DDA) model, enabling advertisers to see the holistic impact of cross-channel activity. 

Simply put, not embracing this rapidly evolving landscape will mean you’re left behind.

Getting the most out of your test budget

Whilst there’s no one-size-fits-all approach, a good guideline to follow when assigning your test budget is the 70-20-10 rule:

  • 70% of your budget goes to strategies that you know perform well
  • 20% of your budget goes to new strategies to help you grow
  • 10% of your budget goes to experimental initiatives

Experimentation is the key differentiator between brands that plateau and brands that successfully innovate and evolve. By implementing new strategies, you can create stronger, more resilient brand equity to maintain a loyal customer base and attract new customers. 

But where do you begin? Start with a framework to manage your testing strategy:

  • Identify what you’re trying to achieve
  • Identify what would be a good or bad outcome
  • Decide how you’ll measure it and with which metrics/KPIs
  • Scale what works, kill what doesn’t

Measuring what works

The customer journey is becoming more complex and a ‘single source of truth’ is no longer a sufficient measurement solution. With more touchpoints, across more platforms and on more devices (not to mention the impending ‘cookieless future’), you must deploy a variety of data-led testing methodologies to paint the full picture of how your strategies are performing:

  • Incrementality experiments can be an effective way to identify the true added value of channels in your marketing mix (e.g. by conducting a brand search holdout test). 
  • GEO-targeted incrementality experiments are a great cookieless option for implementing incrementality experiments.
  • Google offers several self-serve and managed options including Brand Lift Surveys, and Search and Conversion Lift testing in-platform. Run these tests concurrently to identify the impact of your ads on brand perception, search behaviour and bottom-line performance. 
  • Conduct regular Meta reach analysis to identify how much of your reach is incremental. Avoid audience saturation to stretch your budget further.
  • View your results holistically. Leverage the powers of DDA and view/impression-assisted conversions to identify where your new activity is contributing to the customer journey.
  • The gold standard for optimising the performance of online and offline media in a single model is a Marketing Mix Model. This not only gives insight into how your marketing channels deliver value, but also provides recommendations to improve the efficiency of your overall marketing mix.

Test budget “vs.” proven tactics

When it’s hard to attach an immediate value or return, it can sometimes be difficult to secure an unallocated pot of money for testing. A common misconception is that test budget and proven tactics must compete, when actually they should complement each other. Both play a vital role in driving results.

To strike the right balance, you must first prioritise the activity you know provides a profitable ROI. This ensures you have a strong baseline to build from without putting performance at risk. Following that, you must then protect unallocated budget for new initiatives; channels, campaign types, audiences, creative concepts or propositions. By focusing on both strategies, you can drive short-term impact as well as long-term brand growth and revenue.

Failing to do so may mean that you miss out on the chance to explore new releases. The advertising landscape is continually developing and evolving with offerings like Google’s Demand Gen campaigns, Meta Threads, and the ability to buy  “out of phone” placements through TikTok all launching in 2023. Being ready (with budgets set aside) to move fast will enable you to gain early adopter advantage. 

Getting started

As you enter the new year, adopt a testing mentality by protecting test spend from the beginning and baking it into your budgeting processes. Maintain a ROI by establishing a baseline from proven activities. Be prepared to flex when things don’t work out; not every test yields positive results, but each outcome serves as a valuable learning opportunity.