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Rethinking Budget and Bidding: A Comprehensive Marketing Guide to Optimising AI in Digital Marketing

Discover how agencies are shifting their campaign management approaches to maximise results while expanding into new strategic areas. They are focusing on the inputs they can provide to steer AI and help brands scale successful campaigns against finance-approved ROI thresholds. Additionally, innovative agencies are leveraging AI to increase budget agility across channels in real-time, and adopting value-based bidding to optimise for KPIs like profit and customer lifetime value.

Plan for success

In addition to expanding into new strategic areas and engaging with clients in novel ways, agencies' methods of campaign management have evolved. This frequently entails the establishment of new centers of excellence that mix AI technology and human knowledge.

Create new teams to become specialists in artificial intelligence

The Wavemaker U.K. developed an entirely new business unit devoted to generating best-in-class tactics for Google's newest campaign type, Performance Max, which runs across all of its ad channels and inventory. To test and expand Performance Max for the agency's customers, the team brings together professionals in AI, predictive algorithms, creative, measurement, and first-party data. Extensive testing has resulted in a 53% increase in conversions and a 19% cheaper cost per click compared to traditional channel-specific marketing.

"We developed an innovative approach to test, challenge, and deeply understand how Performance Max can work for agencies and clients," said Dan Roberts, Wavemaker's head of paid search. "We know that Performance Max is the future of performance advertising, and brands that master it now will be the winners in the coming years." We've finally discovered the winning recipe."

Pay attention to the inputs

Unless AI is fed data and insights that are unique to a brand, the outcomes will be comparable to everyone else's. To direct AI and optimise outcomes, prominent agencies are concentrating on the unique inputs they can supply, such as high-quality conversion statistics and creative assets.

According to Michael Beresin, chief operating officer of the firm Labelium, human-guided AI produces the finest marketing results. Customer behaviour, according to Beresin, can be "an inscrutable mess of tangled spaghetti" that resists efforts to form a cohesive tale. AI can assist agencies and companies in making sense of the chaos.

"Google has given everyone this Formula One car of solutions," Beresin remarked. "They've made it more democratic." But does that mean that everyone is now winning the race? Now, winning the race requires having the best tyre strategy, pitting strategy, and fuel strategy. To outperform and outcompete the competition in digital marketing, it requires having better feeds, better audience analytics, better conversion definition, revenue definition, and more."

Budget flexibility

To assist clients in effectively adopting and scaling AI technology, agencies should collaborate with organizations' marketing and finance departments to demonstrate how contemporary marketing is not an expensive item on the balance sheet. Rather, it is an investment that adds directly to profit, income, and even increasing lifetime value. According to Kantar, CMOs who convert marketing measurements into business effects are 37% more likely to report revenue increases than executives who only speak the marketing language.

Using finance-approved ROI benchmarks, agencies are assisting businesses in scaling successful AI-powered campaigns. This does not imply abandoning early marketing planning and budgeting, but it does need that businesses and agencies to reconsider the artificial "caps" on digital media spending that might limit campaign success. Budget-agile marketers are 25% more likely than non-agile marketers to rate their performance as superior to industry competitors, and 42% of budget-agile marketers say their agency partners have a significant influence on the adjustments they make after initial budget planning (compared to 31% of non-agile marketers).

Increase sales volume by using agile budgeting

Tinuiti is an excellent example of an agency collaborating with businesses to demonstrate the added value of marketing. Tinuiti's customer Etsy does not have a set marketing budget. Rather, Etsy's analytics team includes data scientists and financial analysts who collaborate with marketing departments. This methodology enables teams to take advantage of opportunities as they emerge.

When the epidemic struck in early 2020, the strategy was put to the test and proved useful. Etsy increased its marketing techniques, and in several successive quarters, volume nearly doubled.

"Etsy became one of the only places where you could find those critical supplies, like face masks," says Obele Brown-West, chief solutions officer of Tinuiti. It was a one-of-a-kind task to meet such high demand. How can we keep growing and being top of mind for all of the various things that customers might require regularly? We had the one-team approach, the dynamic marketing budget, and measurement frameworks in place to continually test, learn, and improve based on the data."

Innovative agencies are embracing artificial intelligence to increase budget agility across channels in real-time. Agencies can locate the highest ROI conversions across a larger range of channels, inventory, and formats by implementing cross-channel Smart Bidding.

In both Performance Max and App campaigns, Agency PMG employs cross-channel bidding.

"We saw an opportunity to supplement the single-channel approach to maximize performance," said PMG's head of search, social, and commerce, Jason Hartley. "With a more holistic, flexible approach across channels, AI assists us in identifying the next highest-value opportunity, regardless of where the customer spends time."

Improve your AI-powered bidding

In addition to maximising budget agility through cross-channel bidding, the next development of AI-powered bidding will focus on sophisticated tactics that are tightly related to real-world business outcomes.

Google's AI-powered bidding is currently used by more than 80% of marketers to boost ad effectiveness. However, not every consumer adds the same value to a brand's bottom line, which is where agencies come in. Agencies may assist companies in properly defining which conversions have the largest commercial effect and utilise this knowledge to improve their customers' bid strategy.

Value-based bidding can help you generate more quality leads

Croud's agency team believes in the potential of AI and actively collaborates with companies to implement the most efficient Smart Bidding tactics. Croud worked with one customer, a large worldwide B2B organisation, to discover the variations in business value between internet and phone-generated leads. Croud then added relative values to each conversion activity, instructing Smart Bidding to prioritise value above volume.

Croud and its customer increased incremental, qualified leads by 40% after adding context to AI-powered bidding and using Performance Max campaigns.

"By automating the exploration, testing, and optimisation of untapped Google properties, Performance Max has enabled us to achieve effective and incremental growth at scale," noted Conor Kingscott, PPC strategy director at Croud. "Because not all conversions are created equal, the synergy of then overlaying value-based bidding ensured that the growth was validated and aligned with business goals and value."

Kris Tait, Croud's US Managing Director, elaborates on how AI is transforming the job of agencies: "If you think about the last century, it was a knowledge economy." You have to be a profound specialist in a certain subject to be at the top of your profession. We are transitioning to the conductor economy as AI progresses. This entails being able to locate knowledge and uncover ideas without understanding everything about a subject."

"In this new world, agency services shift toward consulting and strategy," Tait concluded. Some organisations may find this difficult to comprehend since they have been so focused on outputs and performance. However, the future will need people to retrain themselves to think much more strategically."

Optimise for business results

Innovative agencies are assisting companies in going even further by leveraging artificial intelligence to optimise the customer lifetime value or profitability associated with each conversion. If a brand is unable to disclose data such as product margins with third parties, everything can be indexed to relative values. When agencies assist clients in understanding the worth of their consumers and combine that information with AI, they can begin to reallocate advertising budgets to the most profitable pockets of demand in real-time.

In conclusion, implementing AI in digital marketing can lead to improved business outcomes and increased sales volume. To succeed, it's essential to plan for success, create new teams specialising in AI, pay attention to inputs, and remain flexible with budgeting. Agile budgeting can increase sales volume while improving AI-powered bidding, and value-based bidding can generate more quality leads. DigitalxMarketing’s goal is to optimise business results and incorporates AI technology. Contact us so your businesses can stay ahead of the curve and achieve greater success in the ever-evolving landscape of digital marketing.

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