What Advertisers Need to Know About Digital Ad Budgeting

Budget management, one of the most critical and complex workstreams in digital advertising, continues to pose significant challenges to advertisers, particularly at scale. Due to the unpredictable nature of market trends, and ever-evolving consumer behavior, it remains increasingly difficult to accurately forecast which strategies will yield high returns. 

If this strategic challenge wasn’t enough of a burden, the diversity of available advertising publishers has traditionally sapped time and resources—particularly at scale—by forcing advertisers to manually adjust campaigns on a daily basis. The result? High risk of overspend or underspend, which in turn leads to high risk of poor business outcomes, not to mention client and internal team turnover.  

If overspending is draining your resources, or you find yourself leaving leads and opportunities on the table, it’s time to take control over your budgeting process and embrace new solutions for optimizing your advertising budgets more efficiently and effectively.

Are you tired of paying credits or leaving too much money on the table? Let's take a look at some frequent issues encountered in advertising budget management

Advertisers face an all-too common dilemma: either pay too many credits at the end of the month, or leave too much money on the table. Both under and overspending in advertising can have significant consequences for your business. 

If a company underspends, they risk missing out on potential customers and losing market share to competitors who are more heavily invested in their advertising efforts. This could lead to slower growth and lower revenue. On the agency side, this also means you aren’t delivering on the client’s stated objectives, which opens the door to churn and undermines your agency value proposition. At scale, this issue compounds to a significant business risk. 

On the other hand, overspending can deplete resources that could be better utilized in other areas of your business. This could potentially lead to financial instability, especially if the returns on the advertising spend do not meet expectations. Therefore, it's crucial for businesses to find an optimal budget balance to ensure sustainable growth.

What are some common problems that cause over- or underspending in the first place? There’s a number of factors that contribute to an ineffective budget. Here’s some common issues we see in numerous verticals, from legal and automotive to multi-family and beyond:

Seasonality: Consumer behavior often varies throughout the year, influenced by holidays, weather, and other seasonal factors. Allocating budgets based on these fluctuations can significantly enhance the effectiveness of advertising campaigns.

Targeting and audiences: Campaign and creative settings, such as geo-targeting, can also impact the efficacy of your advertising budget. Too confined a setting might limit the reach of your ads, leaving out potential customers outside the specified region. Consequently, it's important to reassess and potentially widen geo-targeting settings to optimize exposure.

Operational challenges: At scale it is often simply too cumbersome to manage daily budgeting and pacing.

Lack of clear reporting and insight: For agencies and strategists running high volumes of campaigns, it can be difficult to identify which accounts need attention.

Ad scheduling: Restricting ads to specific days or times could potentially miss out on connecting with a segment of your target audience. Analyzing consumer behavior data can assist in determining the optimal times for serving ads and avoid any unnecessary confinement.

Misconfigured budgets: Misconfiguration in ad settings, like choosing an incorrect bid strategy, can lead to poor performance and inefficient budget use. Using the wrong bid strategy for your advertising goals (like focusing on clicks when awareness is the goal) can lead to wasted ad spend. Regular reviews and adjustments based on campaign performance can help avoid such pitfalls and ensure your advertising budget is well-utilized. Furthermore, Facebook and Google have their own algorithms to try and effectively spend budget the most efficiently. Sometimes if big changes are made—i.e. large budget changes and bidding strategies based on conversions—-the publisher will limit spending for a few days while it "learns.”

Keywords are too limiting: Using the wrong keywords can attract irrelevant audiences, leading to clicks that provide no return on investment. As these clicks accumulate, advertising costs increase while conversion rates and profits decrease. Choosing the right keywords that effectively target the right audience will reduce unnecessary expenses and maximize the efficiency of the advertising budget.

Understanding the critical impact of over- and underspend: A potential use-case 

A potential use case offers a helpful illustration of some of these concepts. Let’s say you’re an agency specializing in the legal vertical, and you’re running a seasonal advertising campaign. Accounting for seasonality can help in strategizing and budgeting for these campaigns. Divorce and family law-related web traffic typically sees an upturn after the winter holidays. Similarly, searches related to personal injury might see a spike during the early months of winter and around major holidays. 

Unpredictable search volume trends and high keyword costs, particularly in legal spheres where personal injury keywords may range from $200 to $700 per click, can also pose significant challenges to manually pacing campaigns. By foreseeing these trends, law firms can effectively allocate their resources to maximize visibility and engagement during these peak periods.

Automation can help strategists in this field—among other verticals—by automatically allocating resources to ensure campaigns have enough budget to maximize visibility and engagement during peak seasons.

Overcome key budget management concerns and gain control with automation 

No matter the size or intricacy of your budget, advertising teams can tackle key work streams and processes with automation. Automation enables advertisers to overcome each of these challenges, and key advances in automation have allowed advertisers to control strategies and budgets more effectively than ever. Here are the three key work streams to look for as you plan your automation approach:

• Automate your pacing to key KPIs: The right automation platform will allow you to manage to the dollar AND to your specific KPIs, whether that be awareness, clicks, or other metrics.
• Reporting and notifications: Budget management is a key leading indicator of campaign success. Automation platforms can identify specific areas of risk and help you prioritize where to put focus.
• Recommendations and forecasting: Look for automation technologies that get you out of the daily grind and into a more strategic and predictable strategy.

Taking control of your advertising budgets

Optimizing your approach to budget management will be a critical factor in giving your business an edge. By harnessing the power of automation, advertisers can gain a more robust understanding and control of their budgets, as well as maximize their reach and return on investment.

Curious how some of our partners are already leveraging automation to streamline their budgeting strategy? Here’s a testimonial from one of our partners, Click Here Digital: “Managing budgets in Fluency is much easier than what we were doing in a previous platform. That’s a resounding opinion—company-wide at Click Here Digital—I find it incredibly easy.”

Ready to get started or learn more? Book a demo with our team today.