How Budget Pacing Helps Your Online Advertising Campaign (2024)

When you set a budget and launch a campaign, the campaign bids on auctions based on a number of factors. It proceeds to bid in auctions until it reaches that budget; it then stops bidding in auctions. As an advertiser, you would like your creatives to be viewed by users evenly over the course of a day (or a specified period in a day) to increase your chances of reaching the most possible potential customers, but budgeting alone does not account for this concept.

Budget pacing is a tool which governs how often ExactDrive bids in auctions, with the primary goal of spending the campaign's budget evenly across the allotted time period. There are two primary types of pacing; Daily Pacing and Lifetime Pacing.

If pacing is not applied, campaigns will attempt to purchase as much inventory in the shortest time possible until they meet the specified budget amount. This may not be beneficial (if you spend your entire budget between midnight and 5 a.m., a large portion of your intended target audience may never even see your creatives, as they will not serve after 5 a.m.).

As stated above, you can apply pacing to a campaign on either a daily or lifetime basis, or both. Daily budget pacing determines how frequently a campaign bids with the goal to serve the right amount of impressions each day. Lifetime pacing reviews the activity of the previous days in the life of the campaign as well as the days remaining, and adjusts the campaign settings to win more or fewer auctions and serve more or fewer impressions each day. Lifetime and daily pacing act independently of each other but drive towards the same goal; keeping the campaign on-budget within the right timeframe.

Daily Budget Pacing :

This option allows you to spend your budget evenly over a day or part of a day. The amount that a campaign is spending is updated several times per hour (about every 15 minutes) to determine if it is on pace (if it will meet the daily budget amount at the current win rate), below pace (if it will fall short of the daily budget amount at the current win rate), or above pace (if it will exceed the daily budget amount at the current win rate). The systems then adjusts the time between auctions that the system does not offer any bids to either participate in more or fewer auctions, and subsequently win and serve more or fewer impressions to meet the daily budget.

For example, assume a campaign's daily budget is $100 for the day. Based on the settings of the campaign, it may purchase that amount of inventory by 10 a.m., forcing it to remain dormant for the remaining 14 hours of the day so as not to exceed the daily budget. To ensure that a campaign serves ads at a nearly constant rate over all 24 hours of the day, daily pacing extrapolates the win rate (the frequency at which the campaign wins bids and serves creatives) and then deactivates the bidder (i.e., puts the bidder to "sleep") for short periods between successful bids. Because the bidder is only active (awake) part of the time, it can only participate in some auctions, win only so many bids, and can therefore only spend so much budget. The sleep and awake periods vary during the day, with the goal being to spend the last portion of the daily budget at the end of that day.

Lifetime Budget Pacing:

This option allows you to spend your budget evenly over the life of the campaign. Lifetime pacing requires the use of start and end dates, a defined lifetime budget amount, and the use of daily pacing. Like daily pacing, lifetime pacing adjusts the frequency with which the bidder participates in auctions in order to meet the defined lifetime budget amount; if it is trending over budget, it participates in fewer auctions, and if it is trending under budget, it participates in more auctions.

For instance, if a campaign over-or-underspends it's daily budget for one or more days, lifetime pacing increases or decreases the daily budget for the remaining days of the flight so as to bring the entire campaign in line with the final budget goal. Therefore, a campaign with a lifetime budget of $5,000 and a 10-day flight should spend $500 per day; if it spent more than $500 on one day, lifetime pacing will compensate by reducing the daily budget over the next few days to get budget pacing back on the right track.

If you have any additional questions please feel free to contact us.

Written by Scott Bagguley

Digital Sales @ ExactDrive. Has pain in his left-foot from power dunking. Owns salt water fish. Happily married.

FAQs

How Budget Pacing Helps Your Online Advertising Campaign? ›

Budget pacing is a pivotal strategy in PPC campaign management, guiding the distribution of ad spend over time to ensure optimal visibility and impact. It's a tactical approach that combines monitoring PPC spend and adjusting ad placements to meet campaign goals efficiently.

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Why is the budget an important element of the advertising campaign? ›

Your budget helps you align marketing strategies with business goals and funnel money into marketing campaigns with the highest return on investment (ROI). We'll explore the steps for creating a marketing budget, what your marketing spending may look like, and how to track your marketing budget and gauge its success.

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What is budget pacing in advertising? ›

Budget pacing refers to tracking–and managing–the rate at which a digital advertising campaign consumes its budget. It is the lifeblood of effective digital advertising campaigns because it provides the framework for how your client's campaign budget is spent over time, helping to ensure optimal campaign performance.

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What are the main benefits of campaign budget optimization? ›

Campaign budget optimization can help if you want to:

Set a campaign budget with flexibility in how that budget is spent across ad sets.
Get the most results possible from your campaign, at the lowest cost.
Simplify campaign setup and reduce the number of budgets you have to manage manually.

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What are the benefits of advertising budget? ›

Importance of Advertising Budget

Advertisem*nt helps a company reach out to larger audiences and introduce them to its products and services. Because of this, the sales increase, which enables the company to earn more profits.

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Why is budgeting important in digital marketing? ›

Your digital marketing budget outlines the funds you can allocate to marketing initiatives. It helps you track expenses and revenue to determine strategies' return on investment (ROI). Since digital marketing is constantly evolving, it's crucial to have an agile budgeting approach to deal with financial fluctuations.

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Why is budget important in media planning? ›

A media budget ensures organisations do not overspend and select the right media channel to promote the organisation. The media budget is set based on various factors like the size of the organisation, industry sector, medium of media channel used, and the total annual revenue of the organisation.

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What is the budget pacing formula for campaigns? ›

Calculated as % of budget spend / % of time elapsed. If the ratio is close to 1, you're on pace to spend your budget for the month. If it's over 1, you're overspending.

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What is pacing in advertising? ›

Pacing is the speed or rate at which an ad campaign uses up its predefined number of impressions or spends its predefined budget during its run-time.

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What is the purpose of pacing in a programmatic advertising campaign? ›

Campaign pacing represents a model which is used by campaign delivery engines to make sure that the campaign goal is reached by the time the campaign is scheduled to end, by serving the right amount of impressions to the right audience. There are two common pacing rules: evenly distributed and front loaded.

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What is a good advertising budget? ›

You should spend 2–5% of your sales revenue on marketing.

But we should clarify that our 5% rule applies to most years, not all, and covers most of your marketing, but not all. There will be times when you have to spend more to get what you want and need, but those are special projects.

What are the important method of advertising budget? ›

Effective budgeting for advertising requires an in-depth understanding of the qualitative and quantitative background behind the advertising. There are various methods of budgeting: percentage of sales method, competitive parity method, objective and task method, and the Dorfman-Steiner Theorem.