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What Is a Daily Ad Budget and How Is Daily Ad Spend Created?

What Is a Daily Ad Budget and How Is Daily Ad Spend Created?

Managing digital platforms like Facebook, LinkedIn, or even Google listings can be challenging. Throw in the idea of running paid digital marketing campaigns and you may be in over your head.

You’re not alone if you feel this way. There is a lot of knowledge that goes into running a paid digital marketing campaign, from the keyword and industry trend research, to the time spent monitoring performance and ad budget. But if there is one aspect that is most often a roadblock, it’s understanding what daily ad spend is and how to set a daily ad budget.

What Is a Daily Ad Budget?

An ad budget is an amount that you set for each ad campaign to specify how much, on average, you'd like to spend showing your ad each day. Sound easy enough?

Digital Ad Budget Breakdown

To get your ads in front of your audience through a digital campaign, you’ll have to spend a few dollars. And so do other marketers. That’s why when you are setting your daily ad spend, you are setting a daily tap-out amount to tell Google how much you want to spend in competition with other marketers.

ad auction, industry knowledge, google partner, ad budget, spire, google

What’s an Ad Auction?

Say you went to a furniture auction with $100 cash. There are other people there with cash, and they are bidding against you to buy couches. 

The first couch comes up to the auction block. You bid and so do your competitors. The bidding continues above the $100 cash you brought with you. And the couch goes to one of your competitors. 

The second couch comes up to the auction block. You bid and so do your competitors. You win with a bid at $25 on the couch. You now have $75 left to spend on other furniture today. 

Another couch comes up to the auction block. You win the bid again, only this time it was $70 to win. You now have spent $95 of your $100 cash that you had allotted for the day. You call it quits and decide to come back tomorrow with another $100 since you know you can’t buy another couch for $5.

 

This is how your daily ad spend works. You set the daily amount you want to spend on each campaign. That daily amount, say $10, is then distributed accordingly to show the ads in that campaign. 

Daily Ad Budget: Calculated

Each time that there is potential to show your ad, it will go to “auction” against other companies bidding on the same target group. The total amount spent to show the ad to the customer, or the “bid,” is determined by how many other people you are bidding against and how much they are willing to pay.  

This amount is anywhere from pennies to a couple of dollars per click. But don’t worry, if your bidding strategy is to maximize clicks, you will only pay that amount if a user takes action and clicks on your ad. This cycle continues until you reach your daily ad spend limit, which in this case was $10/day. Your ads will not show again until the following day, when you have a renewed $10/day to spend 

Industry Knowledge

In some cases, the average cost per click may be over the amount that you set as a daily ad limit. That’s why it’s important to do research, be knowledgeable about what is happening in the industry, and continuously seek insights into what your competitors are bidding.  

So as you can see, your cost per click, or CPC, is never the same, which makes it critical to set a daily ad budget so you don’t pay more than you’d like to. You may also want to trust this calculating and monitoring to an expert.

As a Google Partner Agency and trusted guide for hundreds of organizations across Northern Ohio, Spire can create, manage, and report on the digital marketing your business needs to compete in the 21st century marketplace. Connect with our team today for help managing your digital marketing needs.

cost per click, industry knowledge, google partner, ad budget, spire, google

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