Using a linear programming method can be highly useful to achieve the best outcome of a mathematical model. The objective of the model can be either maximizing profit or minimizing cost. In this study a solution which can be applicable for companies that have a limited budget and can’t reach their target audience has been investigated. This research aims to allocate advertisers’ total budget under restrictions regarding their objective criterion with linear programming method. In order to present the implementation a case study has been provided, a multi-channeled campaign is created for Coldwell Banker, which is a real estate consultant firm in Turkey. Optimum solution for such a cases studied using linear programming approach.

1. A.Can Bengisu
June 2016
a.can.bengisu@gmail.com
Budget Allocation for Online
Advertisement Spending with
Linear Programming
Advisor: Engin Aktaş Ph. D.

2. Content
● Introduction
● History of Internet
● Evolution of Advertising
● Digital Advertising
- Development
- Economic Effectiveness
- Ad Types
● Methodology
● Results & Discussion
● Conclusion

3. Indroduction
• 3,4 Billion Internet User
• Development of Digital Marketing
Industry
• Companies substantial investment
on Digital
• More Than 200 Google Partner
Digital Agency in Turkey

4. Problems
• Competition between Agencies
• Limited Budgets of Companies
• Variety in Company Goals and
Restrictions

5. Internet Users per 100 Inhabitants
Early History of the Internet

6. Internet Users by Country (2016)

7. Digital Advertising
Online Advertising Examples
● Target Methods
● Measurable
● Cheap (Pay per click)
● Easy to generate and control
● Brand Awareness
● Website Traffic
● Promote Social Media Accounts (Like, Follower)
Minority Report Advertising Scene

8. Development of Digital Advertising
Timeline of Digital Advertising
First Banner Ad: AT&T

9. Economic Effectiveness
Share of Global Ad Spend Advertising Revenue of Google
* Turkey’s export revenue was 143 Billion $ in 2015

10. 1) E-Mail Marketing
Types of Digital Advertising

11. 2) Search Engine Marketing (SEM): The type of method which advertisers buy traffic
through paid search listings.
Types of Digital Advertising

12. 3) Display Ads: Traditional way to show banners on websites
Types of Digital Advertising
Targeting Methods
● Gender
● Age
● Interest
● Location
● Website’s Category
● Website’s Relevant Context
● Past Visitors (ReMarketing)

13. ReMarketing: Is a way of method to reconnect past visitors.
Types of Digital Advertising

14. YouTube Ads: Video Ads or
Banners viewed on Youtube
Types of Digital Advertising
Gmail Ads: Type of display ad
shown on Gmail

15. 4) Social Media Ads
Types of Digital Advertising
Facebook Ads
Twitter Ads
LinkedIn Ads

16. 5) Mobile Ads: Form of advertising via mobile devices.
Types of Digital Advertising
Mobile Web browsing vs. Desktop
Mobile Advertising Examples

17. Methodology
Case Company: Coldwell Banker
Company Goal: To expand franchise
network, increase revenue and brand
awareness in Turkey
Problem: Limited Budget
Method: Linear programming method with
the help of Excel Solver for allocate limited
budget.

18. Linear Programming: Method to achieve best
outcome in a mathematical model with linear
equations and objective function.
● Invented by George Dantzig in 1947 for
planning problems in US Air Force.
● Applied to various fields such as business,
industry, engineering, economics etc.
Methodology

19. Advertisement Practices
1
2
3
4
1- Search Ads
2-Display Ads
3-Gmail Ads
4-Youtube Ads

20. Cost = Number of Clicks x CPC (cost per click)
Conversions = Phone Calls + Filled franchise form
Conversion / Cost = It is calculated by dividing total conversion to cost values for each campaign.
Advertisement Practices
Ad Performance Data Analysis

21. How to Calculate ROI’s * for Each Campaign?
How to Calculate Revenue?
Sales Ratio of Application Forms = %0,2
Franchise Cost = 103.000 TL
Advertisement Practices
*ROI: Return Of Investment

22. 24,58 X1 + 18,2 X2 + 3,95 X3 + 4,84 X4 = Z (Objective Function)
Advertisement Practices

23. Constraints *
1) Total Budget for all Digital Ads should not exceed 15.000 TL
2) Minimum 3000 TL should be spent on Display Ads
3) Minimum 400 TL should be spent on YouTube
4) Display Ads and YouTube Ads must exceed %60 of total budget
5) YouTube Ads should not cost more than Gmail Ads
6) Gmail Ads should not cost more than %10 of total budget
7) Minimum 1500 Franchise Application Form
*provided by Coldwell Banker’s budget planning department
Advertisement Practices
Variables: X1,X2,X3,X4
X1 = Search Ads
X2 = Display Ads
X3 = YouTube Ads
X4 = Gmail Ads

24. Advertisement Practices
Coldwell Banker needs to increase their revenue. Therefore their objective function
should be maximized regarding their objective criterions.
Excel Table
Excel Solver Add-in

25. Results
Table 10: Final Results
Table 11: Final Results of Variable Cells

26. Discussion
Sensivity Analysis Table
*Shadow price represents the contribution to the objective per unit.

27. Conclusion
• With the help of linear programming method their budget has
been allocated and limited budget problem has been solved.
• Sensivity Analysis report will help advertiser and company to
decide about their further marketing strategies.
• This method will be useful for all digital account managers
regarding their ad strategies and annual budget planning.