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New Optimization process after changing budget?

stellardealsco
Just visiting

Hi there,

I currently want to pump more money in my campaigns; however, I'm not sure if changing the budget would mean that the algorithm has to find the best audience again. In consquence, it would take me longer to reach my ROAS and other metrics again. 

 

I am looking forward to an response

Erik 🙂

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pinterestmarketingexpert
Jack-of-all-trades

Hello @stellardealsco and welcome to the PBC!

I've managed hundreds of Pinterest ads management and increasing you ad spend does not affect the algorithm. There are definitely some things that affect the algorithm but not this.

When it comes to money and advertising for your business you might be feeling nervous about how much to invest. How do you know if your investment will pay off? Here are some guidelines to figuring it out.

The best practice according to Pinterest, that gets the highest returns (and I have seen this with my clients too) is 3.5 x your average cost per acquisition.

So if you sold a $100 hat or piece of jewelry the math would look like this.

Assuming you have a 75% gross profit margin (meaning net sales minus cost of goods sold) or your gross margin is $75 dollars for every $100 sale.  The questions you have to ask yourself are:

  1. On average how much does it cost you to make one sale to earn $75?
  2. What would you be willing to invest to earn $75 gross dollars?

For the sake of this post let’s assume you’d spend $25 in Pinterest ads to earn $50 in sales. So you could get a 3:1 ROI.  (Of courses you’d rather spend $1.00 but given the level of competition almost every business faces common sense and your historical #s have to be applied.)

According to Pinterest your daily budget should be $25 x 3.5 = $87.50 per day or $2625 per month. 

With that level of spend you’ll create enough volume that the Pinterest algorithm will find you the right audience at the right time in their buying journey and it will learn how to “sell” your products to your best buying audience. 

At that spend you’d expect to make more than 1 sale per day obviously because you’d need to or you’d be going backwards. 

If your overall goal was a 3x ROI from Pinterest that means you’d be looking for:

$2625 x 3 = $7875 in new sales per month. 

This means you’d have to sell 78.7 products @ and average price of $100.

That is how Pinterest ads work.

Listen folks this part is very important. If you don’t invest enough you will not be set up for success. Whether you like it or not Pinterest has an algorithm and it needs to gather information about you so you will have more success in the long run. 

Thinking you will put in $10 a day and expect a 4 to 1 or 6 to 1 ROI is very likely not going to happen because you’ll never feed a big enough volume of data into Pinterest for it to learn how to sell your products to your best buyers at the right times.

Furthermore, if you sell seasonal goods like just for summer or Christmas then start your campaign early because it still takes 2 to 3 months to ramp up and you have to be mindful of when people are most likely to use your product.  If they need a fishing hat in July they are on line in May looking, planning, seeing what is out there. 

Pinterest users are planners so you need to start promoting to them at least one/two months before the season.  That is how you connect with Pinterest users in their buying journey; when they open to new brands and looking to discover new ideas.

I hope that helps! 

Please click the button ACCEPT AS SOLUTION if this answers your question.

Thanks! 

 

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1 Reply
pinterestmarketingexpert
Jack-of-all-trades

Hello @stellardealsco and welcome to the PBC!

I've managed hundreds of Pinterest ads management and increasing you ad spend does not affect the algorithm. There are definitely some things that affect the algorithm but not this.

When it comes to money and advertising for your business you might be feeling nervous about how much to invest. How do you know if your investment will pay off? Here are some guidelines to figuring it out.

The best practice according to Pinterest, that gets the highest returns (and I have seen this with my clients too) is 3.5 x your average cost per acquisition.

So if you sold a $100 hat or piece of jewelry the math would look like this.

Assuming you have a 75% gross profit margin (meaning net sales minus cost of goods sold) or your gross margin is $75 dollars for every $100 sale.  The questions you have to ask yourself are:

  1. On average how much does it cost you to make one sale to earn $75?
  2. What would you be willing to invest to earn $75 gross dollars?

For the sake of this post let’s assume you’d spend $25 in Pinterest ads to earn $50 in sales. So you could get a 3:1 ROI.  (Of courses you’d rather spend $1.00 but given the level of competition almost every business faces common sense and your historical #s have to be applied.)

According to Pinterest your daily budget should be $25 x 3.5 = $87.50 per day or $2625 per month. 

With that level of spend you’ll create enough volume that the Pinterest algorithm will find you the right audience at the right time in their buying journey and it will learn how to “sell” your products to your best buying audience. 

At that spend you’d expect to make more than 1 sale per day obviously because you’d need to or you’d be going backwards. 

If your overall goal was a 3x ROI from Pinterest that means you’d be looking for:

$2625 x 3 = $7875 in new sales per month. 

This means you’d have to sell 78.7 products @ and average price of $100.

That is how Pinterest ads work.

Listen folks this part is very important. If you don’t invest enough you will not be set up for success. Whether you like it or not Pinterest has an algorithm and it needs to gather information about you so you will have more success in the long run. 

Thinking you will put in $10 a day and expect a 4 to 1 or 6 to 1 ROI is very likely not going to happen because you’ll never feed a big enough volume of data into Pinterest for it to learn how to sell your products to your best buyers at the right times.

Furthermore, if you sell seasonal goods like just for summer or Christmas then start your campaign early because it still takes 2 to 3 months to ramp up and you have to be mindful of when people are most likely to use your product.  If they need a fishing hat in July they are on line in May looking, planning, seeing what is out there. 

Pinterest users are planners so you need to start promoting to them at least one/two months before the season.  That is how you connect with Pinterest users in their buying journey; when they open to new brands and looking to discover new ideas.

I hope that helps! 

Please click the button ACCEPT AS SOLUTION if this answers your question.

Thanks! 

 

2 Kudos