How to Crack the New Twitter Ad Campaign Algorithm for Maximum Impact

If you’ve ever read any articles on PPC marketing using AdWords, you'll know all about their Quality Score algorithm — which, in a nutshell, rewards advertisers who create very engaging ads with much lower costs per click and more prominent ad placement. This makes a ton of sense because obviously Google doesn’t want to annoy their users with low quality ads.

Just this year, Facebook introduced a Quality Score of its own, called Relevance Score, that determines your ad cost and placement on Facebook. But what about Twitter? Does the Twitter ad campaign platform employ a similar algorithm for rewarding the most engaging ads and punishing junk ads?

Recently I discovered the existence of a Quality Score in Twitter Ads (or “Quality Adjusted Bids” as Twitter sometimes refers to it) and today, I’m going to share with you several ways to maximize your ROI on Twitter Ads by hacking this algorithm that Twitter uses to decide if your ads should be displayed or not, and how much you pay if people engage with your ads.

What is Twitter Ad Campaign Quality Adjusted Bids?

Twitter Ads does indeed leverage a Quality Score of its own and although there was no formal announcement, Twitter has recently confirmed that they use it. Check this out — it’s buried in a new section in the Twitter Ads Help documentation:

A few months ago, this section of the guide didn’t exist.

So what does Twitter Ads Quality Score actually do and how do you find out if your Quality Scores are any good or not?

Well for starters, you can’t actually see your “Quality Adjusted Bid” in your Twitter Ads Manager — it remains a hidden internal metric for now.

Regardless, Twitter Quality Adjusted Bid isn’t some arbitrary metric you can ignore, believe me. My research shows that, as with Google AdWords, increasing your Quality Score on your Twitter Ads actually earns you a huge “click discount”:

In fact, on average, for every 1 point increase in the engagement rates of your Ads, you see a 5 percent decrease in cost per engagement.

What does this mean for your Twitter Ads campaigns?

Well, if you can get engagement rates up to 60 percent or so, the cost per engagement becomes one penny. If you can get it to 36 percent, it’s two pennies. Check this out:

As your engagement rate and therefore your Quality Score continues to fall to 7 percent, you’re talking more like 8 cents, which is an 800 percent change.

If your engagement is really awful, like say 0.14 percent, you’re paying a whopping $2.50 per engagement, as shown here:

Yikes. That’s over 250 times more expensive than promoting a high engagement ad! Why overpay for your ads like that when you could just as easily boost your Twitter Quality Scores and get way better rates?

I’m going to show you how to do just that. Ready?

Hack the Twitter Ad Campaign Quality Score Algorithm

1. Stay fresh.

The above snapshot from the Twitter Ad Campaign Engagement panel shows the number of Twitter impressions accrued by one of my Twitter ad campaigns. Notice how the number of ad impressions per day declines over time. Twitter wants to show users the freshest content, so as time goes on, they’re less and less likely to bother showing my promoted Tweet.

Why would Twitter want to aggressively show content that’s over a week old? Keep in mind that ads on social are going to fatigue pretty quickly and you should plan different variations more often, rather than running the same ones for lengthy periods.

2. Promote your winners.

Rather than paying over $2 a click for promoting low engagement crap, promote your tweets that are already doing well.

With this tweet, for example, I ended up getting 1,500 retweets and 100,000 visits referred from Twitter to that piece of content — and all for $250.

The thing is, using paid promotion of high-engagement tweets on Twitter will often give your organic performance a boost, because people will want to share this awesome tweet they’re seeing with their own networks. You don’t pay for the RTs and engagements it gets after that.

On the other hand, if you’re promoting content no one wants to engage with or share, you’re going to pay more for each click, and you’re going to see little if any free organic engagement.

I don’t promote every tweet — far from it. I promote the top 1-3 percent of status updates with 15 percent or greater engagement rates, which typically results in Cost Per Engagement of one penny when I do.

3. Narrow your targeting.

You’re going to kill your engagement and Quality Score if you’re blasting your tweets out there to too wide an audience.

Remember, relevance is key to engagement. Go after micro-audiences of 100,000 or even 10,000 people using Twitter’s super powerful ad targeting options.

Twitter offers a ton of demographics targeting and there are many other amazing Twitter Ads targeting strategies you can use: keyword targeting, Twitter remarketing, device targeting, and Partner and Lookalike Audiences.

And here’s an example of how I was able to increase Tweet engagement to a local event by over 3.5 times by leveraging geo-targeting – in this case, by narrowing the ad targeting people who live in South Florida:

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You can’t afford not to pay attention to the way Twitter ranks and prices your ads. Now go, optimize your Twitter Ads campaigns for Quality Score and tweet me to let me know how you make out!

Source; http://smallbiztrends.com/2015

Internet Marketing for Small Businesses

Using social media is no longer an option–it’s practically a requirement for small businesses who want to connect with their customers. While the tools change almost daily, the goal stays the same: interact with customers and create trust. If you’re late to the bandwagon (or just want the latest), start here.

Social Media

We now know that not every age group uses social media the same, and it’s important to know where your target market falls. For example, the 35-44 year old span uses Facebook and Twitter the most, while teens have twice as many social friends as this group. Knowing that the average social network user is 37 years old can be helpful when planning your social media marketing strategy. 

Does your business even need a website anymore?  Many say that a solid Facebook Page can serve the purpose of a static website, with better results. The key is to keep it interesting and continually expand your network. And where you might push your product on your website, a hard sell is less well-received on a Facebook Page. 

Despite the flurry of social media contests, they may not be as effective as marketers want to believe. Giving away something for free makes it difficult to target the people that enter, and simply having someone Like your Facebook wall or retweet a message isn’t all that valuable, says Social Times. People who enter social media contests aren’t likely to stick around after the contest is over, so think it through the next time you want to give away an iPad to get more customers.

Managing Your Reputation Online

Your reputation is no longer in your own hands; it’s now in the hands of your customers. And if they’re not happy, there are dozens of places they can complain about you. The key is to monitor and manage what’s being said about you online, and remain transparent in your response. What not to do? Don’t argue with your customer, and don’t fake positive reviews of your business. 

When you do get a bad review online, take appropriate steps to address the issue. First, contact the customer and see if you can amend the situation one on one. Then, apologize, remembering that the customer is never more right than when they’ve publicly blasted you. A free product or gift card can go a long way to soothe ruffled feathers. Next, ask the customer to repost a revised review, considering the efforts you’ve made toward amending the situation. 

SEO Best Practices

Even if you’re a newbie to search engine optimization, you should still use analytics to better understand where traffic to your site is coming from. Free tools like Google Analytics go a long way in telling you what pages people like, how much traffic you’re getting, and what keywords draw in the most visitors. Analytics should be a part of your overall internet marketing strategy, as you can see which tools are working the best. 

Are your keywords outdated? If so, you’re missing out on higher rankings on search engine results. Freshening up your keywords to what’s being searched for now can go a long way to put you in Google’s favour. Use your analytics (see above) to make sure your new keywords are getting the traffic you want. 

Where Google+ Will Fall

With so many social media users and business owners still on the fence about Google+, many ask how Google will weigh search results using its social site. Will Google give higher priority to content produced through Google+? If so, it’s sure to lose users faster than Google Buzz or Wave. After such social failures, Google would do well to tread lightly. 

Despite the question of whether Google will turn to a despot with the adoption of Google+, Chris Brogan says to jump on the bandwagon anyway. By connecting with others on the platform, small businesses can expand their networks, even if Google+ isn’t quite ready to roll out business profiles.

Conclusion

When David Meerman Scott wrote his book, The New Rules of Marketing & PR, in 2007, social media was innovative. If you were using it, you were light years ahead of the competition. Now, the gap is closing, with more companies using social tools to market. But small businesses are still behind, with around half not using social media at all. It’s not clear why so many are reluctant to get social, but Scott provides some tips for getting started. The key, he says, is sharing valuable content and avoiding hype. Focus instead on how your products can help others.

Source; http://smallbiztrends.com

5 Steps for Successfully Measuring Social Media ROI

By now most companies are realizing the value of having a solid social media strategy, and for many that means spending more and more time and resources on that strategy. It may have started innocently enough where looking at your metrics and posting an interesting article every day was enough, but now more money needs to be spent.

Simply put, understanding and measuring social media ROI can help give you an insight into how much money or valuable feedback you’re really making.

Measuring Social Media ROI

Unfortunately, calculating this number isn’t quite a “simply put” situation. This can be so time consuming that companies are still pushing this task to the side. Not only is it time-consuming, but trying to calculate costs for a project like social media is difficult by nature. It’s tough to know how much money you make off of something that focuses so heavily on brand reputation and connections, not sales.

Nevertheless, it can be done (hint: It’s not about counting up likes or follows). Digital Marketing Consultant Shane Barker gave a detailed article with a few ideas. Below are a few of those thoughts mixed in with some of our own ideas for measuring social media ROI. Remember, no number is going to be perfect, but it’s good to have an idea.

What Are Your Conversion Goals for Social Media?

The first step is simple: Don’t forget to really take the time to think about what you want people to do or get out of your social media efforts. For some the number of followers or likes may matter, but for most this should not be the end-all-be-all. Good conversion goals might include having people click on a link or sign up for a newsletter, for example. It’s as simple as that.

Once you know your goals, it’s important to have a system for tracking your conversions. For major networks like Facebook and Twitter there are already built-in analytics to help you track where your conversions are happening. Things like reach, website traffic, and customers are great metrics to look at to find out more about your conversions. For most companies this is where social analysis stops, but taking things one step further can help give you a better understanding of ROI.

Give Your Conversions Rough Monetary Values.

Knowing the average lifetime value of your customers is important. Ask yourself: How much is a customer worth overall?

This is where Barker offers a great formula with this mentality in mind. Simply take your average lifetime value and divide that by the total number of users. Multiply that number by your number of new customers and you’re set with a monetary value for each customer conversion.

Give a Monetary Value to the Benefits You’re Gaining from Social.

Once you have your number for the value of each conversion, multiply that by however many of them actually complete a conversion. For example, if each conversion is worth $20 and you had 100 customers subscribe to your blog, then your benefits would be 20X100. That’s $2,000 that your social media channel is worth.

How Much Do You Actually Spend on Your Social Strategy?

Another easy step for measuring social media ROI is to be sure to think about how much you’re actually spending on your current social efforts. In the last step you considered the benefits that maybe didn’t have monetary value, but if you have hired a social media expert, paid for ads on social media, etc., then that all needs to be included in your calculation.

Do the Math.

The last and final step to measuring social media ROI is to take all of the numbers and data and then come up with a rough estimate. Take your total profit and then subtract all costs. To get a percentage, take this number and multiply by 100 and then divide by your costs.

Finally, I recommend doing this for each social network separately if looking at your social media as a whole isn’t helpful. Because each social network is so different, you could easily find ROI numbers that are also very different.

The Takeaway

In the end, it’s important to remember that just because social media is so important doesn’t mean that it will be beneficial to you regardless. You have to work for it, and if you’re spending more than you’re making then you aren’t really getting any true benefit in the end.

In other words, social media can be beneficial for every single type of company, but only if done correctly. In order to make sure you’re on the right path, calculating and measuring social media ROI is a must.

Source;http://smallbiztrends.com/2015/

10 most popular ways to monetize your website

It’s not a myth that you can make money with your website. A lot of websites on the Internet are made for one simple reason – to generate income.

Whether you are trying to get rich or just looking for some funds to cover the hosting/domain expenses, here are some of the ways to do so.

Keep in mind that some of the ways are more or less passive while some other techniques require on-going work. Make sure you pick something that suits well with your website.

1) Affiliate Marketing

Affiliate marketing is a very popular way to make money through your website/blog. In short, you sell someone else’s product(s) on your website. When your website visitor clicks on your affiliate link and buys the product – you’ll receive commission.

The commission is usually 30% – 70% of the product or service price. So if you promote an e-book that costs £100, you’ll get £50 for referring the buyer (just an example).

Where can I find products to promote?

• Commission junction
• ShareASale
• Clickbank (high payouts, but lack of GOOD products to promote)

2) Pay Per Click Advertising

Google has made a program called Google Adsense for publishers (bloggers, website owners) and advertisers (business owners, marketers, product owners).

This system is quite simple. You place a code on your website that will start displaying relevant ads to your website. For example, if your site is about pets (dogs & cats), Google Adsense will start showing your visitors ads for cat food, dog training and so on.

When someone clicks on the ad, you will receive money for this click. It’s usually £0.5p to £5 per click, but when your site has enough traffic – you can make hundreds if not thousands of dollars per month.

How to apply for for Google Adsense?

• Apply for AdSense

3) Selling Ad Space

As the name says, all you need to do is sell the ad space. You set up a price, let’s say: “Banner at the sidebar will cost £xxx per month”. You will get payed upfront and the price depends on your traffic. If your site gets ton loads of traffic from different sources, the banner ad price can go up as £3000 per month. However, if your site doesn’t have much traffic, don’t expect much.

Where can I let others know that my website is selling ad space?

• BuySellAds – The most popular one
• AdvertiseSpace

4) Sell your own digital product (ebook for example)

Selling your own product is awesome because there are no middle mans, no one is going to take the “cut” – it’s only YOU and the CLIENT. You sell directly through your website and you’ll get paid directly. While it looks quite simple, it’s actually not.

It takes a lot of time to create a good product that you can actually sell through your site. So make sure it’s well-made and polished before you throw it out on your webpage. In addition, a perfectly optimized landing page for the product is essential to higher your conversion rates.

• Additional resource: How to sell products on your website.

5) Donation / Becoming a sponsor

Setting up donation buttons or simply asking additional funds from your readers is another way to monetize your website. It’s easy to set up, but you have to be aware that it’s not so easy to make money with it. Unless you find a sponsor(s) who pays a lot! However, before you throw up your donation buttons, make sure that your visitors will see why you need those donations(hosting expenses, new product creation, researching costs etc…).

How to set up donation buttons?

• How to take donations on your website – The right way.

6) Accept sponsored posts & articles

Once your site is getting good amount of visitors monthly, you can offer sponsored posts and articles. There are a lot of advertisers who would be interested in writing sponsored posts for your website.

Another option is make money through reviewing something. Here’s an example: You have a website about Apple products -> marketer from Apple sees your site and contacts you.-> He/she offers you a free iPhone 5 if you make a comprehensive review and post it on your site for followers to read. This is an extreme case, but I’m sure you get the point…

Win=Win situation? Yep.

For further reading:

• How to make money through sponsored posts and reviews – About.com

7) Generate “Leads” for other companies

Generating leads means you help other organisations or companies to make money. It can be a simple e-mail submit or telephone number, a lead is a lead.

Scenario: Let’s say you have a website about teaching and learning math. You can easily set up links to different schools and universities that offer people to learn math. When YOUR visitor submits their e-mail or a phone number to university for application – you’ll get paid.

It’s very similar to affiliate marketing, but your visitor doesn’t necessarily have to buy something. A short contact information is more than enough.

Where can I find such offers?

• MaxBounty
• Neverblue
• Peerfly

8) Build an “Email List”

Building a “list” means that you gather your visitors emails. 90% of the websites that get some sort of traffic use that technique.

You’ll not make any quick money, but it’s definitely something long-term (and profitable). But make sure you first create relationships with your followers by simply offering great information and/or help for FREE. Spamming different offers through emails is never a good idea.

How exactly does it work?

• Listbuilding 101
• How to build a list with your website

9) Set up an online store

You don’t always have to create a website about something. You can just create a “tool” for your business – an online store.

Bricks and Mortar businesses are becoming more and more popular since the rise of the “Internet era”. If you have enough dedication to make it work, try it out.

How do I create a successful online store/shop?

• Launch a successful online store by Ecommercefuel
• 4 ways to build an online store by WikiHow

10) Sell your site for someone else

I usually don’t suggest people to do that, but site flipping/selling is becoming a very lucrative business model. If you are into short-term projects and more into “quick buck” you can implement it as well.

… but you also have to know that your site has to either get a lot of traffic or generate money through different monetization methods.

The site value is usually based on the income. If your website is making £500 per/month through selling ad space, you can sell the site for £6000 – £11000 (12x – 22x monthly income).

Where can I sell my site?

• Flippa – The most popular website market
• Digitalpoint forum
• FEinternational

Source; http://websitesetup.org/33-ways-to-monetize-website/

9 Ways to Improve Social Sharing on Business Videos

Creating a video is a great way to showcase your business or service. The time and effort you put into this marketing material can really pay off — if people watch it. So how do you tap into the power of social sharing online?

To find out, we asked nine members of Young Entrepreneur Council (YEC) the following:

“What is one tip you have for getting more social sharing and views on business videos?”

Here’s what YEC community members had to say:

1. Use Three Cameras and a Good Editor

“Of course you want a snappy title to generate views, but the simple touch of having different camera angles and a smart editor makes a world of difference. This could be the difference between someone watching your video for 30 seconds versus three minutes.” ~ Rob Fulton, Exponential Black

2. Be Informative

“Remember, most people share not to help you so much as to help themselves. So, how can you make people share your video in their own best interests? Make it informative and helpful. If the video has good insights and information, and the person can help their followers by sharing, they’re likely to “be the hero” and share it with others.” ~ Andy Karuza, Gossip App

3. Cultivate Community

“If you haven’t built up a community, don’t expect anyone to care unless you pay for it. Even then, it won’t get much. Build an online community around your niche. It will help you in the long term. Note: When creating a video, make sure that it grabs the attention of the viewer every 3-5 seconds. We have short attention spans and get distracted easily.” ~ John Rampton, Host

4. Highlight Your Expertise

“You’ve made a video about your business, which means you have a target audience in mind and an attention grabbing idea behind the effort. What else would they find useful? Provide actionable insight to their issues so that when they come across your content, they will be more likely to share it with others and spread positive feedback.” ~ Stanley Meytin, True Film Production

5. Keep It Brief

“In most cases, your video should never be longer than a few minutes. Get to the point quickly and immediately show the value your video will provide. If you can’t cover everything in one video, create a series.” ~ Andrew Schrage, Money Crashers Personal Finance

6. Promote Your Video

“The best way to get more social sharing and views on a business video is to promote it. Many businesses focus on content creation so much that they forget about content promotion. If people aren’t aware that your video exists, they can’t share it. Get creative: Share it during Twitter chats and share with your strategic partners, but — and this is important — explicitly ask your social network to share it.” ~ Sean Kelly, HUMAN

7. Be Interesting

“Make it interesting. There’s no substitution for great content. One way we’ve done this is through variable data in video. A company called Switch Merge came up with this technology and we love it.” ~ Justin Gray, LeadMD

8. Feature Concise and Clear Benefit Statements

“The end user wants to know “What’s in it for me?” in order to watch and share your video. So make sure you clearly outline that.” ~ Daniel Wesley, DebtConsolidation.com

9. Add Pre-Made Sharing Links

“Though YouTube already makes it easy for you to share a video you just watched, as a viewer I might also turn to the description section to learn more about the video and then share it with a quote from that description. Use services such as Click to Tweet to get your audience to share your video more often and watch your views count climb.” ~ Firas Kittaneh, Amerisleep

Source; http://smallbiztrends.com/2014/

What Twitter’s Mute Button Means for Small Businesses

My remote’s mute button and I are best buddies. We tag team the task of watching a show and muting the commercials — all from the comfort of my favourite recliner. Why do I mute commercials? It’s simple: They’re usually annoying or irrelevant. When the program I’m interested in returns, I’m able to un-mute my TV, and life is good once again.

This May, Twitter caught on to the beautiful idea of muting and introduced a new Twitter mute button feature to its users. Basically, muting on Twitter hides an account’s tweets and retweets from your Twitter stream so you’ll no longer receive push notifications from that user. However, muted users can still favourite reply to, and retweet your tweets. You just won’t see any of that activity on your timeline.

While this mute feature is great for blocking your overly opinionated cousin, it’s not so great for businesses. If a business is muted, its engagement will be hindered because customers won’t see any live tweets of industry events or responses to questions or complaints.

So what can you do to prevent your small business’s account and tweets from being muted? Below are five key tips to consider:

How to Avoid Being Muted

Tell Followers When You’re Live Tweeting an Event

Live tweeting an event is a fantastic way to gain followers, showcase your knowledge, and offer tips and tricks. However, live tweeting overwhelms certain followers. To avoid this, announce the times you’ll start and stop live tweeting beforehand so users can mute and unmute as they see fit.

Keep Your Content Focused

Identify the content that attracts followers to your account and track the activities that also may have caused a drop in followers (like frequent event tweeting).

Use Analytics

Turn to your Twitter analytics to see follower growth and user engagement. Build on the messages and the activity that drive growth and engagement, and cut out those that hurt it.

Have a Defined Twitter Personality

The Twitter mute button makes it easier for followers to silence your voice. So it’s even more important to pay attention to the narrative of your tweets. Make your followers want to read your tweets.

Create Visual Content

Tweets with visual content are read, shared, and liked more frequently than text-only tweets. Add meaningful images such as screen shots, photos, infographics, or videos to complement the rest of your tweet.

Businesses can begin to determine whether their tweets are being muted with link-tracking tools, such as Bitly. While these tools won’t tell you directly whether you’re being muted, you can deduce that if your clicks had a 3 percent CTR and then dropped to 1.5 percent, you may have been muted and should adjust your strategy.

Likewise, if you’re seeing “unfollows,” you may have been muted prior to being unfollowed. Businesses should track the number of unfollows to see what types of content are driving followers away.

How to Win Back the Muters

Though being muted is an unfortunate occurrence, there are ways to win back the muters. Businesses can reach these audiences via Promoted Tweets, Twitter retargeting, and email marketing.

One retargeting tool, Perfect Audience, allows businesses to deliver ads to users who have visited their website. Businesses should also tap into the power of email marketing in concert with their Twitter ads to remind followers of all the great tweets they’re missing out on.

Although the Twitter mute button is successful at cutting out the excess “noise” on Twitter, it can be harmful to businesses. However, small businesses can avoid being silenced by posting relevant and engaging content — but not excessively.

If you do find yourself on someone’s muted list, remember that you can always work to win them back via Twitter or email marketing.

Trouble Determining PPC Budget Numbers? This Will Help

Everyone knows that you want your PPC budget to be just enough to make you a profit. But you have to have an initial budget to test how much you can get for each dollar you put into paid search advertising, or pay per click advertising (PPC).

Having this budget ready to go before you start creating your PPC strategy is crucial. Your budget may very well change over time, so it’s important to understand how to set a budget and why it matters. Fortunately, it doesn’t have to be as overwhelming as many may think.

Setting Up an Estimated PPC Budget

The reason that so many people dread determining PPC budget numbers is because there are many different ways to get to your rough estimate. In the end, your goal is to perfect your budget, but your initial PPC budget has to be a good solid estimate.

SEO agencies can help you perfect your budget in the end, but it helps a lot to have your own idea of a PPC budget before you even speak with an SEO agency. It’s not completely necessary, but again, that ballpark estimate will help speed up your path to success.

Below are two choices you have for coming up with a good initial budget.

Choice #1: Think About Your End Goal

What you need to do here is think of an end-goal. Whether it be to have a certain amount of sales dollars, producing a number of leads, etc. Once you have your end goal in mind, think about the target CPA and do the math from there. In other words, work backwards.

Wordstream wrote a great article discussing the importance of working in a specific order to come up with your budget. You have to first know the answers to the following questions:

• What is your goal cost per lead? Ex: $30 per lead.
• What is your new client goal per month? Ex: 150 per month.
• What is your average close rate of leads? Ex: 12% close rate.

Once you know the answers to these questions, you can start putting some numbers together to come up with a rough PPC budget. Using the numbers from the questions above, this is the way that the math would look:

1. Find how many PPC leads you need. For 150 clients from a 12% close rate, you need to do this math: 150/0.12 = 1,250 PPC leads.
2. Determining PPC budget. Take your number of leads and multiply that by your goal cost per lead: 1,250 leads X $30 cost per lead = $37,500.

Of course the value of a lead will depend on several factors including geography, bounce rate, interaction, etc. So there are ways to better control this quality (such as using negative keywords).

Choice #2: Analyze Your Past PPC Campaigns

If you had a PPC campaign in the past, you can use some of that data to help you determine where to set your budget this time around. Look at what worked and what didn’t for the goal you had in mind. For example, if you had a goal cost per action (CPA) of $200, go look at what you spent previously and see what met that mark.

Once you have narrowed down what worked, look at the impression share. Those with low impression share will give you the chance to earn more volume by having a larger budget (or increasing your bids). You then need to ask yourself, “How much additional budget will I need based on the current impression share?”

When you add up all of your estimates you’ll have a rough budget.

The Takeaway

Once again, the above options are very basic in nature. When you start working with an SEO agency or expert you can start to get into quality aspects and other factors that might come into play. Until then, having an idea of your budget is an important thing to keep in mind as you start talking to more professionals or creating a strategy.

Robert Brady, head of PPC at Righteous Marketing, said it best when he talked about the importance of understanding your own budget:

“Optimization implies choosing better options over less desirable options. Without knowing all constraints, of which budget is a MAJOR one, it is very difficult to make the best optimization decisions.”

Source;  http://smallbiztrends.com/2014/09/determining-ppc-budget.html