Budget Reallocation
Budget reallocation is the process of shifting spend from low-incrementality channels to high-incrementality channels. SpendSignal recommends reallocations that improve total portfolio performance rather than optimizing individual channel optics.
The Short Version
Taking money from losers and giving it to winners to boost total profit.
Visual Explanation
What Are Marginal Returns?
Your best channel eventually stops working. Understand diminishing returns.
Prerequisites
Siloed Optimization
Facebook team optimizes Facebook. Google team optimizes Google. No one optimizes the whole pie.
This leads to 'local maximums' where each channel looks good, but the business is leaving 20-30% of potential revenue on the table due to misallocation.
How it works
Identify marginal returns for all channels
Cut spend from channels with low marginal impact
Reinvest that capital into channels with high marginal headroom
Common Misconceptions
Moving budget based on Last-Click ROAS (Often moves money to retargeting, hurting growth)
Making too many small changes (Noise) vs fewer strategic shifts
Ignoring constraints (You can't spend infinite money on Branded Search)
Frequently Asked Questions
QHow often should I reallocate?
Major strategic shifts: Monthly. Minor tactical tweaks: Weekly. Daily reallocation is usually counterproductive due to volatility.
QWill reallocation hurt my agency relationships?
It creates accountability. Smart agencies welcome it because it helps them deploy budget where it actually drives results.