Facebook Ads Budget Allocator
SKILL.md
HOW_TO_USE.md
sample_input.json
expected_output.json
skillsfacebook-adsSKILL.md
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# Facebook Ads Budget Allocator
Not all dollars are equal. Spend them where they work hardest.
## Core Philosophy
**The last dollar in Campaign A might buy you 0.5 conversions. The first dollar added to Campaign B might buy you 2.**
This is marginal efficiency—and most advertisers ignore it completely. They either:
1. Spread budget evenly (democratic, but dumb)
2. Put everything in the "winner" (efficient until diminishing returns hit)
3. Never reallocate (set and forget)
**Every campaign has a point of diminishing returns.** At low spend, conversions are cheap. As you scale, you exhaust the low-hanging fruit and CPA rises. The goal is to find the sweet spot for each campaign—then balance across all of them.
**Budget allocation is not a one-time decision.** It's a continuous optimization as campaigns mature, audiences saturate, and creative fatigues.
---
## Required Context
### Must Have
1. **Campaign Performance Data (Last 14-30 Days)**
- Campaign names
- Daily/total spend per campaign
- Conversions per campaign
- CPA per campaign
- Trend direction (improving, stable, declining)
2. **Current Budget Allocation**
- Total daily budget
- Budget per campaign
- Any budget constraints or caps?
3. **Business Constraints**
- Target CPA or ROAS
- Maximum acceptable CPA
- Any campaigns that must run (brand, seasonal)?
### Strongly Recommended
4. **Historical Data**
- How has CPA changed as spend changed?
- Any campaigns recently scaled up/down?
- Performance at different budget levels?
5. **Campaign Context**
- Campaign objectives (prospecting vs retargeting)
- Audience sizes per campaign
- Creative freshness
### Nice to Have
6. **Future Plans**
- Planning to scale total budget?
- Any new campaigns launching?
- Seasonal considerations?
---
## Budget Allocation Framework
### Phase 1: Current State Assessment
**Campaign Efficiency Categorization:**
| Category | CPA vs Target | Trend | Assessment |
|----------|---------------|-------|------------|
| 🟢 Star | Below target | Stable/Improving | Scale priority |
| 🟡 Potential | At target | Stable | Maintain, monitor |
| 🟠 Declining | Above target | Declining | Reduce or fix |
| 🔴 Failing | Far above target | Declining | Pause or major change |
**Efficiency Score Formula:**
```
Efficiency Score = (Target CPA / Actual CPA) × 100
>100 = Outperforming
100 = At target
<100 = Underperforming
```
---
### Phase 2: Marginal CPA Analysis
**The Marginal CPA Curve:**
```
CPA
│
│ ╱ Diminishing returns zone
│ ╱
│ ╱
│ ╱
│ ──── ← Sweet spot
│______________________|___________________ Spend
Low spend High spend
```
**Estimating Marginal Efficiency:**
When you have historical data at different spend levels:
| Spend Level | Conversions | CPA | Marginal CPA* |
|-------------|-------------|-----|---------------|
| $1,000 | 50 | $20 | - |
| $2,000 | 90 | $22 | $25 |
| $3,000 | 120 | $25 | $33 |
| $4,000 | 140 | $29 | $50 |
*Marginal CPA = Additional spend ÷ Additional conversions
**What this tells you:** Going from $3k to $4k costs $50 per incremental conversion, even though average CPA is $29.
---
### Phase 3: Diminishing Returns Indicators
**Signs You're Hitting Diminishing Returns:**
| Indicator | What It Means | Threshold |
|-----------|---------------|-----------|
| CPA increasing with spend | Audience exhaustion | >15% CPA increase when doubling spend |
| Frequency rising | Same people seeing ads repeatedly | Frequency >2.5 per week |
| CPM rising | Competition for limited audience | >20% CPM increase |
| Conversion rate dropping | Lower-quality traffic | >15% drop in CVR |
| Delivery slowing | Can't spend full budget | Underspending by >20% |
**Saturation Formula (rough estimate):**
```
Weekly saturation % = (Weekly Impressions ÷ Audience Size) × 100
<10% = Plenty of headroom
10-30% = Moderate saturation
>30% = High saturation, diminishing returns likely
```
---
### Phase 4: Reallocation Decision Matrix
**Budget Movement Rules:**
| From Campaign | To Campaign | Decision Logic |
|---------------|-------------|----------------|
| 🔴 Failing | 🟢 Star | Move immediately |
| 🟠 Declining | 🟢 Star | Move 50%, monitor |
| 🟡 Potential | 🟢 Star | Move cautiously, test impact |
| 🟢 Star A | 🟢 Star B | Move to lower marginal CPA |
| Any | New Test | Allocate 10-20% for testing |
**Reallocation Guardrails:**
| Rule | Rationale |
|------|-----------|
| Never increase budget >30% at once | Disrupts algorithm learning |
| Keep minimum 7 days between changes | Let changes stabilize |
| Maintain $50+ daily per campaign | Below this, learning suffers |
| Don't kill retargeting for prospecting | Full funnel matters |
| Reserve 10-20% for testing | Don't over-optimize to status quo |
---
### Phase 5: Budget Scaling Scenarios
**Scenario A: Scaling Total Budget by 20-50%**
| Priority | Action |
|----------|--------|
| 1 | Add to 🟢 Star campaigns first |
| 2 | Scale each by 20-30% max |
| 3 | If still have budget, test new campaigns |
| 4 | Monitor marginal CPA weekly |
**Scenario B: Cutting Total Budget by 20-50%**
| Priority | Action |
|----------|--------|
| 1 | Cut 🔴 Failing campaigns first |
| 2 | Reduce 🟠 Declining campaigns |
| 3 | Protect 🟢 Star campaigns |
| 4 | Maintain minimum viable spend on retargeting |
**Scenario C: Maintaining Budget, Improving Efficiency**
| Priority | Action |
|----------|--------|
| 1 | Move spend from 🔴🟠 to 🟢 |
| 2 | Consolidate similar campaigns |
| 3 | Find and fix creative fatigue |
| 4 | Test new audiences/creative |
---
### Phase 6: Funnel Budget Framework
**Budget Distribution by Funnel Stage:**
| Stage | Role | Typical Allocation | CPA Expectation |
|-------|------|-------------------|-----------------|
| **Prospecting** | Acquire new customers | 60-70% | Higher |
| **Retargeting** | Convert warm audiences | 20-30% | Lower |
| **Retention** | Re-engage past customers | 5-15% | Lowest |
**Funnel Health Check:**
| Imbalance | Risk | Fix |
|-----------|------|-----|
| Too much prospecting | Ignoring cheap conversions | Increase retargeting |
| Too much retargeting | Audience will exhaust | Increase prospecting |
| No retention | Missing repeat purchases | Add customer campaigns |
**Ideal Ratio Test:**
If prospecting CPA is more than 3x retargeting CPA, you're probably under-investing in retargeting.
---
### Phase 7: Impact Projection
**Estimating Reallocation Impact:**
| Metric | Formula |
|--------|---------|
| Expected conversions gained | Budget moved ÷ Destination CPA |
| Expected conversions lost | Budget moved ÷ Source CPA |
| Net conversion change | Gained - Lost |
| Efficiency improvement | Net change ÷ Lost × 100 |
**Example Calculation:**
- Move $1,000 from Campaign A (CPA $50) to Campaign B (CPA $25)
- Conversions lost: $1,000 ÷ $50 = 20
- Conversions gained: $1,000 ÷ $25 = 40
- Net gain: +20 conversions
- Efficiency improvement: +100%
**Conservative Adjustment:**
Assume destination campaign CPA will rise 10-20% when budget increases. Adjust projections accordingly.
---
## Output Format
```
═══════════════════════════════════════════════════════════════════
FACEBOOK ADS BUDGET ALLOCATION ANALYSIS
Account: [Account Name]
Analysis Date: [Date]
Period Analyzed: [Date Range]
═══════════════════════════════════════════════════════════════════
📊 CURRENT STATE OVERVIEW
────────────────────────────────────────────────────────────────────
**Total Daily Budget:** $[X]
**Total Monthly Budget:** $[X]
**Target CPA:** $[X]
**Current Blended CPA:** $[X]
| Campaign | Daily Budget | % of Total | Conversions | CPA | vs Target | Status |
|----------|--------------|------------|-------------|-----|-----------|--------|
| [Name] | $[X] | [X]% | [X] | $[X] | [+/-X]% | [🟢/🟡/🟠/🔴] |
**Funnel Distribution:**
- Prospecting: [X]% ($[X]/day)
- Retargeting: [X]% ($[X]/day)
- Retention: [X]% ($[X]/day)
═══════════════════════════════════════════════════════════════════
📈 EFFICIENCY ANALYSIS
────────────────────────────────────────────────────────────────────
### Campaign Efficiency Scores
| Campaign | Efficiency Score | Trend | Marginal CPA Est. | Headroom |
|----------|------------------|-------|-------------------|----------|
| [Name] | [X] | [↑/→/↓] | $[X] | [High/Med/Low] |
### Diminishing Returns Assessment
| Campaign | Saturation % | Frequency | CPM Trend | At Limit? |
|----------|--------------|-----------|-----------|-----------|
| [Name] | [X]% | [X] | [Trend] | [Y/N] |
═══════════════════════════════════════════════════════════════════
💰 REALLOCATION RECOMMENDATIONS
────────────────────────────────────────────────────────────────────
### Recommended Budget Changes
| Action | Campaign | Current | Recommended | Change | Rationale |
|--------|----------|---------|-------------|--------|-----------|
| [↑/↓/→] | [Name] | $[X] | $[X] | [+/-$X] | [Why] |
### Summary of Movements
| From | To | Amount | Expected Impact |
|------|----|--------|-----------------|
| [Campaign] | [Campaign] | $[X] | [+/- X conversions] |
═══════════════════════════════════════════════════════════════════
📊 PROJECTED IMPACT
────────────────────────────────────────────────────────────────────
**If recommendations implemented:**
| Metric | Current | Projected | Change |
|--------|---------|-----------|--------|
| Total daily conversions | [X] | [X] | [+/-X] |
| Blended CPA | $[X] | $[X] | [+/-$X] |
| Monthly conversions | [X] | [X] | [+/-X] |
| Monthly spend | $[X] | $[X] | [No change] |
**Confidence Level:** [High/Medium/Low]
**Assumptions:** [List key assumptions]
═══════════════════════════════════════════════════════════════════
📋 IMPLEMENTATION PLAN
────────────────────────────────────────────────────────────────────
### Week 1
- [ ] [Specific budget change 1]
- [ ] [Specific budget change 2]
### Week 2
- [ ] Monitor performance
- [ ] Check for CPA changes in scaled campaigns
### Week 3
- [ ] Evaluate results
- [ ] Make secondary adjustments if needed
### Ongoing
- [ ] Weekly budget review
- [ ] Monthly reallocation analysis
═══════════════════════════════════════════════════════════════════
⚠️ RISKS & CONSIDERATIONS
────────────────────────────────────────────────────────────────────
| Risk | Likelihood | Mitigation |
|------|------------|------------|
| [Risk] | [High/Med/Low] | [How to address] |
**Do Not:**
- [ ] Increase any campaign budget by more than 30% at once
- [ ] Make changes more frequently than every 7 days
- [ ] Reduce retargeting below minimum viable level
- [ ] Ignore learning phase on newly scaled campaigns
═══════════════════════════════════════════════════════════════════
🎯 NEXT REVIEW
────────────────────────────────────────────────────────────────────
Schedule next budget review: [Date - 2 weeks out]
Key metrics to track:
1. CPA by campaign (is scaled campaign holding?)
2. Marginal efficiency (are diminishing returns setting in?)
3. Funnel balance (is prospecting feeding retargeting?)
═══════════════════════════════════════════════════════════════════
```
---
## Common Scenarios
### Scenario 1: "One campaign is crushing it, should I put all budget there?"
**Analysis:** Check for diminishing returns. What's the marginal CPA at current spend vs. 2x spend?
**Verdict:** Scale by 30% max, monitor for 7 days, then decide. Going all-in often triggers diminishing returns.
### Scenario 2: "My retargeting has amazing CPA but small volume"
**Analysis:** Retargeting is limited by prospecting. You can't retarget people you never reached.
**Verdict:** Maintain retargeting budget, invest more in prospecting to fill the funnel. Retargeting CPA will stay low.
### Scenario 3: "Every campaign has similar CPA"
**Analysis:** Either you've optimized well, or you haven't tested enough variation.
**Verdict:** Look at marginal CPA and headroom. The campaign with most headroom (lowest saturation) should get more budget.
### Scenario 4: "Boss wants to double the budget overnight"
**Analysis:** Doubling budget typically increases CPA 20-40% short-term.
**Verdict:** Push back. Scale 30% per week maximum. Set expectations for temporary CPA increase during scaling.
### Scenario 5: "Need to cut budget by 50% immediately"
**Analysis:** Protect highest efficiency campaigns, cut lowest performers.
**Verdict:** Cut failing campaigns first. Reduce (don't eliminate) declining campaigns. Protect stars and retargeting.
---
## Limitations
1. **Cannot predict exact marginal CPA** - Estimates based on patterns and assumptions
2. **Algorithm behavior varies** - Meta's delivery optimization affects actual results
3. **External factors impact performance** - Competition, seasonality affect outcomes
4. **Historical data may not predict future** - Past performance isn't guaranteed
5. **Cannot account for creative changes** - New creative changes the equation
6. **Audience sizes are estimates** - Actual reach varies
---
## Quality Checklist
Before delivering recommendations:
- [ ] All campaigns categorized by efficiency
- [ ] Marginal CPA estimated where data allows
- [ ] Diminishing returns indicators assessed
- [ ] Funnel balance evaluated
- [ ] Specific dollar amounts for changes
- [ ] Impact projections with assumptions stated
- [ ] Implementation timeline provided
- [ ] Risks and guardrails documented
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