This guide explores the common reasons for overspending in digital ad campaigns. It provides insights from industry practices and MGID platform specifics.
Introduction
Managing advertising budgets effectively is crucial for achieving marketing goals and avoiding unexpected excess spending. Before we dive into overspending, keep in mind that MGID Ads operates mostly on a cost-per-click (CPC) model and less often on a cost-per-mille (CPM) model.
Reasons Why Overspending Occurs
- Case 1: Post-Display Clicking
As you might know, the CPC model focuses on delivering clicks rather than just impressions. It ensures that our clients pay for actual user engagement rather than mere ad impressions. Despite the ad no longer competing in auctions, it can still be clicked by users who saw the ad before the campaign was paused or completed. This post-display clicking is a fundamental reason why overspends may occur, especially when ads continue to engage users after the campaign has technically ended or is paused.
- Case 2: Ad Delivery and Timing
Once a campaign reaches its budget cap, the ads should ideally stop showing. However, due to the nature of digital distribution across numerous publisher sites, already served ads might still be visible to users for a period of time. This can lead to additional clicks and charges, even after reaching the budget limit. It is important to note that charges may exceed the set budget due to these late clicks.
- Case 3: Campaign Pausing
Similar to budget capping, manually pausing a campaign doesn't immediately remove all ads from circulation. Ads served before the pause can still accrue clicks, leading to charges that could push spending over the budget.
- Case 4: High CPC and Low Budgets
Setting a high cost-per-click (CPC) with a low daily budget can exhaust your budget quickly, especially in competitive bidding environments. If the budget depletes too early in the day, any delayed clicks that occur after the budget is spent will result in overspending. This scenario is common when advertisers aim to maximize exposure but underestimate the volume of responses or the competitive nature of the bidding landscape.
Managing Overspends
Here are some basic recommendations to avoid overspending:
- Monitor and Adjust in Real-Time: Regularly review campaign performance and adjust budgets and bids based on actual spending and results.
- Set Realistic CPCs: Align your CPC with your budget and market conditions. A too-high CPC combined with a low budget can lead to rapid budget depletion.
- Understand Delayed Charges: Educate yourself and your team on how digital ad distribution works and why charges might occur after campaigns are paused or budgets are reached.
- Increase Budgets Gradually: If you're consistently overspending due to quick budget depletion, consider increasing your budget incrementally to better gauge the optimal spending rate without posing too much financial risk.