Budgeting is telling your money where to go instead of wondering where it went.
Here’s a hypothetical for you: Let’s say your client has decided to invest in a website redesign so that they can improve lead generation, and you’re responsible for managing the project. Naturally, one of the first questions you have is, “How much is this website redesign going to cost?”
The answer, of course, is “it depends.” Are you simply switching to a new template and adding some new CTAs, or are you migrating your entire site to a new platform?
If only there were a way to organise your answers to all of these questions; a place where you could enter in estimated costs for all of your line items, and then compare your projected budget to what you actually end up spending…
What you spend and where you spend will depend on what you’re trying to accomplish. This is especially true when it comes to paid advertising like search and display ads, social media ads, and so on.
Generally the majority of money you spend on paid efforts is usually calculated based on volume of clicks or impressions. Because of this, you’ll often want to put more budget toward campaigns with higher-volume offers and audiences. An example, a tweet or Facebook ad promoting a lead generation offer that leans more top of the funnel will likely receive more clicks than something that falls more toward the middle or bottom of the funnel.
Your paid advertising costs will also change depending on how wide of an audience you are attempting to reach. For example, in Twitter advertising, you have the option to target your campaigns based on users’ interests or keywords searched for. Interests are a much broader category, whereas smaller pockets of users are searching for any given keyword, therefore your interests-based audience is going to be much larger and require a larger budget.
The budget is the least glamorous, yet most important part of any campaign. The good news is that budgeting is not difficult – it just takes a little time and attention. And once you have a solid budget on paper, you will discover what I call the wonders of budgeting. You will have a living road-map to victory.
A budget is a living document – if you change one number, everything must change with it. And you will make so many changes that doing the math with a calculator yourself is impractical.
Here’s where the need for a budget management software comes up, which helps the agencies to track spend on regular basis for either under-spend or overspend.
Budget Management Software basics
Your campaign budget is the total amount covering expenses across your campaign’s ad groups. Generally you can set your budget on a daily or monthly basis. The daily option lets you control how quickly your budget is spent. And with the monthly option, you can set a monthly maximum that depletes as customers click your ads. Ad Agencies primarily charge their clients in 3 ways:
- Flat fee
- % of budget spend
- Performance based
Agencies are given a standard budget usually on a monthly timeline to manage their budget spend for their clients. In this scenario, it is a mandate for the agencies to track spend on regular basis for either under-spend or overspend.
These are a few important features any agency would be looking for when opting for a budgeting tool:
Pacing helps you track your client budget throughout the day and shows how much you have spent according to your monthly budget. For example, if the click rate is higher than expected, you might end up spending more than planned. So pacing will help you have a track on your daily limit so that you don’t end up overspending and under-spending.
Budget is spent on various accounts and campaigns across various channels and medium. Budget in native interfaces allows notification only account or campaign levels. We are providing a solution which can be multi level across multi platform campaigns and accounts. This opens up possibilities for agencies to monitor spend across platforms and provides a single point solution to management.
In flat based and performance based pricing models, there is need where once campaign spend needs to be notified for the agency to take action on particular % spend on the budget. These features help agencies maintain spend and not get penalised by their clients for overspend and under-spend.
The need for the dashboard arises when the Agencies manage multiple clients across various campaigns and accounts in one single platform. This opens up possibilities for agencies to monitor spend across all their clients in a single dashboard at the same time to track if they are over-spending or under-spending.
Setting your budget goal is pretty simple, but it is amazing how many campaigns get this wrong. If you are running in a tight race, your goal should always be to budget to zero. How embarrassing is it when you fall behind your targets by 1 percent and have $100,000 left in the budget allocated by your client? You do not want to overspend if you can help it, but you certainly do not want to lose with money left over that could have made the difference. If the goal of your campaign is to win, the goal of your budget should be to get to zero dollars in the bank by the end of the month.
Tracking your expenses is one of the key factors in making your budget work for you. If you do not know how much you have spent each month, you cannot tell when you have overspent. Even the small expenses can cause you to blow your budget. So, picking the right Budget Management Software matters the most when the idea is to do budgeting the right way for your agency.