Budget Reallocation

Definition

Budget reallocation shifts spend across campaigns or channels based on marginal performance and capacity.

Example

Shift 10% of budget from a high-CPA prospecting campaign to a higher-margin retargeting campaign after verifying incrementality.

How to use it

• Use marginal ROAS, not blended ROAS, to guide shifts.
• Move budget gradually to avoid learning phase resets.
• Set guardrails to protect high-performing evergreen campaigns.
• Validate tracking before reallocating large budgets.
• Check inventory limits; scaling a saturated audience can raise CPM and hurt ROAS.
• Document the reason for each shift so you can audit outcomes later.
• Review creative readiness so new budget has fresh assets to scale.

Common mistakes

• Over-rotating weekly and destabilizing delivery.
• Moving spend without validating tracking quality changes.
• Reallocating to channels with saturated audiences and low incrementality.
• Chasing short-term ROAS spikes that do not scale.
• Ignoring seasonality and attribution lag when shifting budgets.

Why this matters

This term matters because it affects how you interpret performance and make budget decisions. If you use inconsistent definitions or windows, ROAS/CPA can look "better" while profit gets worse.

Practical checklist

• Write a 1-line definition for "Budget Reallocation" that your team will use consistently.
• Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
• Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
• Use a calculator that references this term (e.g., Marginal ROAS Calculator) to sanity-check assumptions.
• Read the related guide (e.g., Paid ads measurement hub: ROAS, MER, marginal ROAS, and incrementality) for context and common pitfalls.

Where to use this on MetricKit