Introduction
Whether you're a performance marketer, channel manager, or agency strategist, this guide teaches you how to use Fospha’s analytics to easily identify where your budget is working hardest, and where to shift spend to get even better results.
It is designed to help you identify opportunities for reallocation of budgets between channels and achieve greater efficiency in paid media efforts.
This guide is designed for performance marketers, channel managers, and agency strategists who are looking to make budget reallocation decisions to unlock incremental revenue, boost or maintain ROAS, and optimize overall marketing spend.
This guide aims to answer these questions:
How to increase paid media channel efficiency by moving budgets across channels?
How can I shift spend between channels to unlock more budget for growth?
How do I design and implement a budget test with Fospha?
How Frequently Should You Use Fospha for Best Results?
Quarterly: Review long-term and seasonal trends to plan for your next quarter.
Monthly: Perform cross-channel optimization to ensure that your planned budget works as efficiently as possible.
Weekly: Check individual channel performance and make smaller adjustments as necessary.
When To Use Cross-Channel Optimisation
Cross-channel optimization is a powerful strategy that you can employ when you’re either meeting or exceeding your blended targets but are faced with budget constraints. If you find yourself needing to reallocate funds from one channel to another without increasing your overall budget, this approach can help you maximize efficiency and maintain or improve your performance.
Situation: You're hitting or beating your blended targets.
Challenge: You cannot secure additional budget and must shift funds between channels.
Frequency: Monthly
Setting and Understanding Targets in Fospha
Having good performance targets is essential for maximizing the value of Fospha's analytics platform, and your marketing budget.
Performance targets available in Fospha:
Target | Fospha Calculation |
Cost Per Purchase (CPP) | Total Cost / Total Purchases |
Customer Acquisition Cost (CAC) | Total Cost / New Purchases |
Return on Ad Spend (ROAS) | Total Revenue / Total Cost |
When setting performance targets, it's important to establish:
Blended ROAS/CAC and CPP targets (provided by you)
Paid ROAS/CAC and CPP targets (calculated by us)
In Fospha, we believe that Blended ROAS is key for understanding past performance because it offers a holistic view of your overall marketing spend across all channels, not just paid efforts. While individual channel ROAS can be misleading, especially in cases of diminishing returns, Blended ROAS provides a more accurate reflection of how effectively your budget is performing.
You can provide blended values to our customer success team, who can assist with calculating the appropriate paid targets.
For more details on the difference between Blended and Paid targets, visit this page:
How to Choose Comparison Periods
Best Practice
Year-on-Year Comparison: Compare the same period this year and last year to capture seasonality trends.
Good Enough
Period-on-Period Comparison: For shorter timeframes, compare similar weeks or months to track short-term performance.
Could be useful for example if your business is completely different this year than last year, making year-on-year incomparable.
Example:
Use "This Month/This Month Last Year" to identify long-term trends, or "Previous Month/Previous Month Last Year" for more recent adjustments.
When to Perform This:
Perform this monthly for cross-channel optimizations and weekly for quick performance checks.
For more details on how to enable accurate period comparisons, visit this page:
Scenario Overview
This guide will walk you through a specific example of moving budgets from Google PMAX to TikTok, based on data insights from the Fospha platform. This example will demonstrate how to identify underperforming channels and reallocate resources to more efficient ones.
These guidelines apply to all ad channels, not just Google or TikTok. At Fospha, we prioritize fairness and accuracy to ensure each channel gets fair credit, improving results across your entire marketing mix.
Dashboard Overview
Dashboard | Use Case |
Channel Health Check | Assess channel performance against targets for the past month vs. Year-on-Year (YoY). |
Spend Strategist | Identify where to allocate budget, validate headroom, and opportunities to scale within ROAS target. |
Reporting Dashboard | Analyze what drives performance within specific channel segments. |
Optimization Dashboard | Review best/worst performing campaigns to decide on budget reallocation. |
Reporting Dashboard | Measure the impact of tests and budget changes. |
Step 1 - Start With Blended Performance
To get the most out of Fospha data, it’s essential to understand how your blended performance is tracking against your targets. Focusing on Blended ROAS gives you a clearer picture of your overall marketing spend across all channels, avoiding the misleading nature of individual channel metrics. This approach helps ensure you’re making informed decisions about whether to increase spend, pull back, or optimize for better results.
Step 1.1 - Determine the Right Period for Analysis
More Than a Week into the Month:
Comparison: Look at a month-to-date performance this year compared to the same period last year.
Purpose: This will give you a broad view of whether you're on track to meet your targets and how your business is trending overall.
Less Than a Week into the Month:
Analysis: Focus on last month's performance.
Purpose: When it’s too early to assess the current month, last month’s data provides a reliable baseline to gauge your current position.
Step 1.2 - Evaluate Performance Against Targets
If You're Hitting Blended Targets:
Focus: Identify channels where you can scale up spending, especially those with headroom for growth.
Optimize: Enhance the performance of channels already exceeding targets to create more opportunities for scaling up your most successful efforts.
If You're Missing Blended Targets:
Focus: Direct your optimization efforts towards channels that are underperforming relative to your targets.
Budget Adjustment: Consider reallocating budgets across channels to boost overall performance and get back on track.
Step 1.3 - Prioritize Channels for Optimization
Start with High-Spending Channels:
Purpose: Begin with the channels where adjustments can have the most significant impact on your overall results.
Work Down:
Approach: After addressing the high-impact areas, move on to optimizing smaller channels. This ensures that your efforts yield the greatest possible return across the board.
Step 2 - Assess the overall health of your paid media channels
Dashboard: Channel Health Check
Goal: Evaluate how your paid media channels are performing against targets.
Action:
Navigate to the Channel Health Check dashboard within the Fospha platform.
Set Date Ranges for comparison: Select the most recent full month (e.g., July 2024) and compare it to the same period from the previous year (e.g., July 2023) to get a relevant year-on-year analysis. Examples of how to choose the right date ranges: https://help.fospha.com/en/articles/9824121-yoy-analysis-with-fospha
Filter for a specific market you want to analyze or select 'All' for an overall blended view of your paid media channels.
Filter for Paid Media to focus exclusively on your paid media marketing efforts.
Analyze performance against paid targets: The main focus here is to see whether your channels are hitting or missing their targets. This gives you a straightforward view of what's working and what needs attention. This high-level view helps simplify decision-making and avoids over-complicating the analysis with too many metrics.
Consider Share of Spend, ROAS, and Share of Conversions: While performance against target is critical, it’s equally important to consider other metrics like shifts in share of spend, ROAS, and share of conversions. If a channel is contributing a significant portion of overall conversions—even if it's not hitting its paid targets—you may still want to maintain or even increase spend. A channel's high share of conversions indicates that it plays a critical role in driving volume, so reducing spend too quickly could disrupt overall performance.
Balance Efficiency with Scale: Not every channel needs to meet or exceed its targets. Larger channels often drive significant volume but may have lower efficiency. In contrast, smaller channels might deliver higher ROAS but lack the scale to impact overall performance. A holistic view is key—understanding that some channels can underperform while others compensate in terms of efficiency or scale.
Make the final decision based on how the channel is performing against target:
Channels hitting targets should be optimized to scale where possible.
Channels behind targets should be evaluated for their role in driving volume and conversions before deciding to adjust spend. Prioritize efficiency but ensure you're not sacrificing essential traffic drivers that contribute significantly to your conversion goals.
We are using Demo data in this tutorial, so make sure to check with your own data by following the links below!
Demo Scenario Overview
Channel | Share of Spend (July 2023) | Share of Spend (July 2024) | ROAS (July 2023) | ROAS (July 2024) |
Google Performance Max | £281,274 | £371,037.7 | 8.0 | 9.1 |
Paid Social (TikTok) | £10,039.4 | £12,726.2 | 0.5 | 72.2 |
Example Insight
Despite a large spend increase, Google PMAX saw only a slight ROAS improvement, indicating inefficiencies, while TikTok's spend increase led to a dramatic ROAS boost, highlighting it as a highly efficient channel with strong growth potential.
Step 2.1- Assess Channel Segment Performance
Dashboard: Reporting
Goal: The goal in assessing channel segment performance is to say, can I spend in my channel across all funnel stages, while still hitting my overall paid media target
Action:
Navigate to Reporting to determine which channel segments are driving the most performance.
Analyze Segment Performance: Compare segments like Awareness, Conversion/Prospecting, Conversion/Retargeting, to validate where to focus budget shifts.
We are using Demo data in this tutorial, so make sure to check with your own data by following the links below!
Step 3 - Spend Strategist
Dashboard: Spend Strategist
Goal: Validate the decision to reallocate budget. Identify channel segments to reallocate to.
Action:
Navigate to the Spend Strategist dashboard.
Apply filters to view the performance of Google and TikTok channel segments (as examples) over the last 90 days. Make sure you look at the right channel segment that’s driving opportunity (check the Step 2.1 for validation).
Analyze the spend curve and identify channel headroom for scale.
Analyze the spend curve and identify channel saturation points.
Spend Strategist Refresher
Spend Strategist is a robust budgeting tool designed for marketers to forecast and rationalize budget allocations across channels by predicting essential metrics, including ROAS, new conversions, and revenue, at varying spend levels. Utilizing historical spend data, it provides actionable insights to maximize marketing efficiency and impact.
Key Feature Updates
Insightful Prediction Ranges with AI-Powered Spark Insights: The Spend Strategist now leverages AI to offer dynamic prediction ranges instead of single-point estimates. Through the AI-powered Spark Insights pop-up, users receive contextual guidance on the most likely outcomes and potential risks when adjusting budgets, enabling data-backed decision-making with confidence.
Maximum Observed Spend Indicator: Each channel segment now displays the maximum tested spend, allowing marketers to push budgets incrementally while following Fospha’s best practices. This feature provides clarity on spend limits based on historical data, helping avoid inefficiencies and account for factors like learning periods when moving beyond tested budgets.
Understanding Spend Strategist Curves
Saturation Curve: The saturation curve illustrates the relationship between spend and predicted revenue, helping users identify the optimal spending range to achieve or surpass target ROAS.
Green Line: Represents the forecasted revenue response as spend increases, showing the point at which additional spend yields diminishing returns.
Yellow Dotted Line: Indicates the target ROAS for paid channels, serving as a benchmark for effective spend.
Red Vertical Line (Daily Avg Last 7 Days): Highlights the average daily spend over the past 7 days, offering a recent spending reference point.
Blue Vertical Line (Saturation Point): Marks the threshold where increasing spend does not substantially improve revenue or efficiency, guiding marketers to avoid over-investment in diminishing returns.
Understanding the RAG Status System in Spend Ranges
Once you select a spend level, Fospha displays a range of predicted outcomes associated with the low, most likely, and high outcomes for metrics such as conversions, new conversions, or revenue. Each of these predictions is accompanied by a RAG status indicator:
Red: Below target, highlighting a significant risk of underperformance.
Amber: Near target, indicating moderate risk and potential for improvement.
Green: On or above target, suggesting strong performance.
The scale of the RAG status is dynamically adjusted based on your overall performance over the last 90 days, allowing you to consider blended performance as context when planning your next steps. This system provides a quick visual guide to help you assess the potential impact of your spend adjustments more effectively.
We are using Demo data in this tutorial, so make sure to check with your own data by following the links below!
Demo Scenario Overview (Tiktok Performance)
ROAS Target vs. Current Spend Level:
Visual Analysis: The yellow dotted line representing the ROAS target (12.7) is significantly below the green line of predicted revenue, which suggests that TikTok is currently performing exceptionally well relative to its target. This indicates that at both current and higher spend levels, TikTok is far exceeding the desired ROAS.
Future Predictions: The predicted ROAS at the selected spend of £493.2 is an impressive 65.97, which is substantially higher than the target ROAS of 12.7. This strong performance in numerical terms confirms that TikTok is highly efficient in converting spend into revenue.
Saturation Point Validation:
Saturation Curve: The green line, which represents predicted revenue, continues to rise without flattening significantly as spend increases, indicating that TikTok has not yet reached its saturation point. The graph suggests that there is still room for additional investment in this channel without encountering diminishing returns.
Current Spend Analysis: The red line shows that the current average spend over the last 7 days (£328.4) is below the recommended spend. This indicates that there is still headroom for increasing the budget, with the opportunity to maintain or even improve the high ROAS.
Conclusions:
Strong Performance: Both the visual evidence (an upward-sloping predicted revenue line) and prediction analysis (ROAS of 65.97 vs. target of 12.7) clearly show that TikTok is performing exceptionally well. The channel is not only meeting but vastly exceeding its ROAS target, making it a very efficient channel for ad spend.
Strategic Implication: This analysis shows that TikTok is a prime candidate for additional investment. With its current efficiency and room for scaling, reallocating more budget to TikTok from underperforming channels could significantly enhance overall marketing ROI.
Budget Recommendation: Given the clear indication that TikTok has not reached its saturation point and the channel’s excellent ROAS, it is advisable to increase the budget for TikTok. The recommended spend increase to £493.2 is supported by the current performance metrics, and there may even be potential for further scaling beyond this amount.
Demo Scenario Overview (Google Performance)
ROAS Target vs. Current Spend Level:
Visual Analysis: The yellow dotted line representing the ROAS target (12.7) is consistently above the green line of predicted revenue (which represents the actual ROAS performance) at all levels of spend. This gap indicates that Google PMAX is failing to meet the desired ROAS target, even as the budget increases.
Numerical Analysis: The predicted ROAS at the selected spend of £20,611.9 is only 4.74, which is significantly below the target ROAS of 12.7. This substantial underperformance in numerical terms confirms that Google PMAX is not delivering the expected return on investment.
Saturation Point Validation:
Visual Saturation Evidence: The green line, which flattens as spend increases, suggests diminishing returns—indicating that the Google PMAX campaign has hit or exceeded its saturation point. The blue vertical line further confirms this by marking where additional spending does not translate into proportionally higher revenue.
Current Spend Analysis: The red line (average spend over the last 7 days at £10,939.6) is close to this saturation point, suggesting that the current budget allocation is already inefficient and that any further increase would likely exacerbate this inefficiency without achieving the target ROAS.
Conclusions:
Underperformance: Both the visual evidence (flattening predicted revenue curve) and numerical analysis (ROAS of 4.74 vs. target of 12.7) clearly show that Google PMAX is underperforming. The channel is failing to meet the ROAS target by a significant margin, indicating that the current strategy is not cost-effective.
Strategic Implication: This combined visual and numerical analysis provides strong evidence that Google PMAX has reached its spend efficiency limit. The channel's inability to meet its ROAS target at higher spending levels justifies the need for budget reallocation to optimize cross-channel performance and maximize overall marketing efficiency.
Budget Recommendation: Given the evident saturation and significant shortfall in achieving the target ROAS, it is advisable to reduce the budget for Google PMAX. This budget should be reallocated to other channels or campaigns that demonstrate better efficiency and growth potential.
Step 4 - Adding campaign-level insights
Dashboard: Optimization
Goal: Identify specific campaigns for budget reallocation.
Action:
Go to the Optimization dashboard.
Filter for campaigns under both Google PMAX and TikTok.
Identify the worst-performing Google PMAX campaigns and the best-performing TikTok campaigns based on ROAS and revenue performance.
We are using Demo data in this tutorial, so make sure to check with your own data by following the links below!
Demo Scenario Overview (Google Campaigns Performance)
Optimization Dashboard Refresher
Y-Axis (ROAS): Indicates how efficiently each campaign is converting ad spend into revenue. Higher ROAS values are preferable.
X-Axis (Revenue): Represents the total revenue generated by each campaign.
Bubble Size: The size of each bubble indicates the total cost (spend) of the campaign. Larger bubbles represent higher spending campaigns.
Campaign Insights:
Underperforming Campaigns (Red Bubbles): Campaigns with low ROAS and larger bubble size (like the highlighted one) should be considered for budget reduction to free up funds for more efficient campaigns.
High-Performing Campaigns (Green Bubbles): Campaigns with higher ROAS and moderate costs should be targeted for increased spend to maximize returns.
The highlighted campaign (Performance Max - Shopping UK) has a revenue of £41,002.5, a ROAS of 2.5, and a cost of £16,363.2. Despite generating decent revenue, the relatively low ROAS indicates that this campaign is inefficient in converting spend into revenue, making it a prime candidate for budget reallocation.
Budget Recommendation
Consider reallocating budget from underperforming campaigns, particularly those with low ROAS and high costs (as represented by larger red bubbles), and redirect funds to more efficient campaigns with higher ROAS to improve overall marketing performance.
Step 5 - Design a test
Using Fospha Data Before The Test
Identify Opportunities: Use Fospha’s Saturation Curves in Spend Strategist to spot headroom opportunities or new channel testing potential.
Define Success Metrics: Determine what success looks like before starting (e.g., achieving a specific ROAS or reducing CAC).
Budget Planning: Calculate how much more you can spend based on headroom and targets (CPP, CAC, ROAS). Consider starting with smaller increases to mitigate risks.
Performance Comparison: Compare year-on-year performance and benchmarks to validate that the chosen activity is the right candidate for testing.
Test Best Practices
Isolate Impact: Conduct only one test per market to ensure clear, isolated results.
Test Duration: Minimum 28 days for existing activities.
Fospha Attribution: Ensure a minimum 14-day baseline before including Fospha Attribution in the test.
Consistency: Maintain consistent activity levels in non-test channels to avoid skewing results.
Our Customer Success team is here to assist with test design and implementation, ensuring you follow best practices. Sticking to these guidelines is crucial for making a meaningful impact.
Step 6 - Reporting: measure test impact on KPIs over time
Dashboard: Reporting
Goal: Confirm the impact of your budget reallocation.
Action:
Use the reporting Dashboard to compare lead KPIs such as ROAS, Conversions and Revenue.
What Good Looks Like
Blended Performance: Blended KPIs should either remain stable or improve over time.
Channel-Specific Revenue: Revenue growth in the channel receiving additional budget should outweigh any revenue decrease in the channel from which funds were reallocated.
Additional Consideration: It’s beneficial if revenue changes align between Last Click and Ad Platform metrics, providing a clearer picture of the impact.