Ad Budget Allocation Optimization

Overview

Budget allocation distributes a total advertising budget across campaigns to maximize overall returns. Uses the equal marginal returns principle: allocate until the marginal CPA (or marginal ROAS) is equalized across all campaigns. Handles diminishing returns and budget constraints.

When to Use

Trigger conditions:

• Distributing a fixed budget across multiple campaigns or channels
• Identifying diminishing returns and optimal spend levels per campaign
• Rebalancing budget after performance changes

When NOT to use:

• When optimizing bids within a single campaign (use bidding strategy)
• When there's only one campaign (nothing to allocate across)

Algorithm