Few things keep digital advertisers up at night more than the looming threat of mismanaging advertising dollars.
For advertisers that must adhere to strict campaign budgets, this fear isn’t just about missing performance targets because they drove too much ad spend to under-performing campaigns.
These advertisers must carefully optimize their advertising campaigns to hit both key performance indicators (KPIs) and target budget caps as well.
Budget pacing can help advertisers avoid major spend swings (or worse yet, surprises) throughout the budgeting cycle.
Whether you’re a digital marketing in-house or at an agency, budget pacing will give you more control over campaign performance and spend.
What is Budget Pacing?
Budget pacing is the process of tracking and optimizing elements of your digital advertising campaigns in order to control the rate at which the campaigns spend. The purpose of budget pacing is to achieve a target budget and/or performance goals by the end of the budgeting cycle.
How do I Pace Campaign Budgets?
Optimally, every digital advertiser would be given an unlimited budget to spend so long as they achieved their target return on investment (ROI) goals. But this is far from reality.
Many digital advertisers are required to adhere to strict budget constraints when running pay-per-click (PPC) campaigns. Not only that, many digital advertisers are expected to pace spend relatively evenly throughout the budget cycle. This ensures ads are “seen” throughout the duration of the advertising cycle even though this does not typically drive the best ROI results.
If it’s imperative you hit specific budget targets, these three processes can help you achieve your goals.
Establishing expectations upfront with a client or stakeholder before you touch a single campaign will help guide your pacing and optimization strategy.
If your client or stakeholder is demanding you hit a target budget at all costs, but also gives you a strict KPI target, they’ll be disappointed with their results. Why?
Imagine a client directs you to spend $3000 each month while maintaining a $20 or less cost-per-acquisition (CPA). You achieve this for a few months, but find yourself facing a seasonal decrease in traffic come the winter. While you’re still maintaining a $20 CPA, you’re unable to spend more than $1200.
Widening your campaign targeting may drive $3000 worth of spend, but it attracts less qualified traffic to your campaigns causing leads to decrease while CPA increases over $20. You could choose to not spend the full $3000 and risk getting your client’s scorn for failing to allocate their budgets fully and properly.
Setting expectations with your clients or stakeholders up front can help alleviate tough conversations when inevitably one of your goals isn’t hit.
One of the biggest reasons spend issues can quickly grow out of control is lack of frequent and consistent oversight of campaign performance.
It can be easy for a digital advertiser to set aside internal performance reporting (for the purpose of making optimization decisions) when they’re mired down by a lack of time, too many tasks, or the wrong technology. Worse yet, some advertisers don’t have a system in place for budgeting and merely make calculations in their head or optimize by gut feel.
But even with systems and processes in place, the most advanced advertisers can make tracking mistakes as well. A slight flaw in an Excel formula or a mistyped budget number can create a spend disaster.
Whether you use Excel, scripts, or software, reviewing your budgets at a high level should be quick and easy, while providing the option to dig down into more granular detail if you need it. At the very least, we recommend that your budgeting report include the following:
- Budget Cycle Length
- Budget Cap
- Spend to Date (for Current Budget Cycle)
- Available Budget Remaining
- Percentage Budget Spent
- Recommended Daily Spend (to Achieve Budget Cap)
- Important KPIs
We recommend implementing tracking redundancies to make sure you can uncover spend discrepancies or errors quickly. Automate if at all possible, and of course, look for a solution that supports all of your channels and networks (see the Pros and Cons of Common Budget Management Solutions for a more detailed analysis.)
Reporting on your campaign spend is only half of the “budget pacing” equation. To effectively manage campaigns budgets, you need to optimize your campaign elements/settings to adjust for under- or over-pacing budgets.
The campaign elements you optimize will depend on your goals.
If your objective is to hit a target budget regardless of KPIs, then simply adjusting your campaign or ad set daily budgets up or down to match your recommended daily spend will suffice.
Comparatively, if your goal is to hit both a target KPIs and a set budget cap, your optimization techniques will need to be more refined and even then you may have a difficult time hitting both (as we cover in the “Establishing Expectations” section).
- Eliminate non-converting networks, campaigns, keywords/placements/audiences, ads, etc.
- Reallocate budget allocation to different campaigns depending on performance
- Reduce daily budgets (with caution)
- Refine “too-broad” targeting strategies
- Add negative keywords, audiences and/or site exclusions regularly
- Evaluate and adjust bidding strategies
- Test driving spend to lower cost ad networks/channels (if ROI can be maintained/improved)
- Test new ad networks, campaign strategies, ads, keywords/placements/audiences
- Increase daily budgets to well-performing campaigns (if impression share lost due to budget or audience share metrics indicate opportunity)
- Expand targeting strategies while still maintaining relevancy
- Evaluate and adjust your bidding strategies
- Expand into additional lower cost ad networks/channels (if ROI can be maintained/improved)
- Test accelerated delivery of your ads
Shape takes the work out of budget pacing by delivering data-driven campaign spend recommendations automatically. Spend with confidence with budget management software designed for digital advertisers. Try us out by managing one client free.