Budget Reallocation Rules

Budget Reallocation Rules

Table of Contents

• Rule 0: Minimum Data Eligibility
• Rule 1: Channel Classification
• Rule 2: Calculate Budget Changes
• Multi-Week Adjustments
• Decision Matrix
• Required Output Format

Rule 0: Minimum Data Eligibility

A channel is eligible for budget changes only if it has >=50 conversions in the analysis period.

Channels below threshold: classify as INSUFFICIENT_DATA -> MAINTAIN.

Rule 1: Channel Classification

Classify each channel into exactly one category. Apply rules in order (first match wins):

PAUSE (100% decrease)

Any condition triggers:

• User states channel has been negative for 3+ consecutive weeks
• User states no improvement after optimization efforts for 3+ weeks

DECREASE_HEAVY (45% decrease)

Any condition triggers:

• ROAS < 50% of target AND Net Profit <= 0
• CPA > 150% of max AND Net Profit <= 0
• All three fail: ROAS < 100% AND CPA > 100% AND Net Profit <= 0
• User states channel has been negative for 2 consecutive weeks

INCREASE (use user-specified cap, default 15%)

All conditions must be met:

• ROAS >= 115% of target
• CPA <= 80% of max
• Net Profit > 0

DECREASE_LIGHT (25% decrease)

Any condition triggers (if not already classified):

• ROAS < 80% of target
• CPA > 120% of max

MAINTAIN (0% change)

Does not meet any above criteria.

Rule 2: Calculate Budget Changes

Step 1: Calculate Decreases (apply in full)

DECREASE_HEAVY: decrease = current_spend * 0.45
DECREASE_LIGHT: decrease = current_spend * 0.25

Step 2: Calculate Freed Budget

freed_budget = sum(all decreases)

Step 3: Allocate to INCREASE Channels

Distribute proportionally by Net Profit:

weight = channel_net_profit / sum(net_profit of all INCREASE channels)
proposed_increase = freed_budget * weight

Step 4: Apply Caps

Per-channel cap: Use user-specified value if provided, otherwise default to 15%.

max_increase = current_spend * increase_cap
final_increase = min(proposed_increase, max_increase)

User reallocation limit (if specified):

• Applies to increases only, not decreases
• If sum(proposed_increases) > user_limit: scale increases proportionally

scale_factor = user_limit / sum(proposed_increases)
final_increase = proposed_increase * scale_factor

Step 5: Calculate Unallocated Savings

unallocated = freed_budget - sum(final_increases)

Report as "available for reserve."

Multi-Week Adjustments

If user provides historical context, adjust the classification:

Without historical context, use single-week classification only.

Decision Matrix

Required Output Format

1. Classification Table

| Channel | ROAS | % of Target | CPA | % of Max | Net Profit | Classification |

2. Calculation Steps

Show: freed budget, allocation weights, proposed vs. capped increases, unallocated savings.

3. Final Reallocation Table

| Channel | Current | Change | New Budget | Classification |

Include "Reserve" row if unallocated > 0.