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What Is Budget Allocation?

AI Budget Allocation is an automated technology that can optimise marketing spending based on its effectiveness.

This technology redistributes a fixed part of your campaign budget between ad sets so that the more effective ones would receive more money. The effectiveness of each ad set is estimated by number of conversions and their costs.

The rest of the campaign budget is distributed in equal proportion between all ad sets not to have them turned off.

 

How does it work?

AI Budget Allocation is based on a mathematical algorithm called epsilon-Greedy.

With this program, the daily campaign budget remains fixed throughout the test. The algorithm evenly allocates the epsilon part of the budget (the smaller one) between all ad sets within the campaign. That allows the ad sets to stay at an above-zero level. The rest of the budget (which is calculated as the whole minus the epsilon part) is distributed between ad sets in proportion to the rating of their results (by CPC, CPI, CPA, ROI).

 

Patrick Luk
July 5, 2017

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