The increased uptake of AI and automation among marketers presents many opportunities, but also risks – chief amongst them a significant increase in ad budget mis-spend. Budget wastage has become increasingly challenging to detect due to shifts in how marketers gauge online success, an over reliance on technology, and a lack of comprehension of what is happening “underneath the hood” of campaigns.
According to research conducted by Proxima, as much as 60% of marketing budgets are wasted due to many businesses investing their advertising budget blindly on Google without having clarity on the quality, relevance, or placement of their ad campaigns.
Google has undergone significant transformation, with AI progressively assuming control over campaigns, reducing manual intervention for marketers. Marketers are urged to adopt “ad and match” functions, which use automation to determine what content is presented to consumers, rather than configuring it manually.
Numerous marketers are running campaigns either solely relying on Google’s own tools like Performance Max (or PMax) or using AI-enabled ad tech platforms to manage various aspects such as bidding, budget optimisation, audience targeting, and creative copy – or a combination of both. This trend is arguably resulting in the creation of an opaque ‘black box’ of paid advertising, leaving marketers in the dark as to how to effectively manage digital marketing campaigns themselves.
To achieve success, marketing professionals need to be both creatively minded and data-focussed – being able to create compelling content and copy, as well as understand the data that drives success. This is becoming essential when Google is constantly shifting the goalposts on how its ad platforms, algorithms and reporting capabilities are all set up.
Many marketers are witnessing stagnation or decline in paid search results due to inflation of cost per click (CPC) rates, heightened competition, obscured metrics, Google’s alterations, and the introduction of new products – all contributing towards poor outcomes.
Inadequate digital ad strategies, coupled with poor execution and a lack of understanding and measurement of performance metrics, can result in budget wastage. Without a clear strategy, actionable insights, established policies, and cross-functional collaboration, inefficiencies in digital spending persist – undermining a brand’s competitiveness and leading to further wastage.
Identifying the source of wastage
For a number of businesses, a significant portion of their marketing budget is squandered unknowingly when marketers rely on AI and automation to manage campaigns at scale, and don’t understand at a granular level what is happening with their spend.
The marketing of Google’s Performance Max is compelling—setting goal-based campaigns and letting Google’s Smart Bidding handle bidding, budget optimisation, audience targeting, creatives, and attribution. However, without an understanding of the mechanics behind the technology, at a granular level – such as the specific keywords that are being bid on, rates, creative copy and content, and quality scores – the results delivered may fall short of expectations.
Introducing more AI and automation into ad tech platforms and tools that marketers use to manage campaigns will only lead to greater unknown wastage. In conjunction to this, there are also a number of technical factors contributing towards mass wastage of marketing budget – such as the use of broad keywords, irrelevant ad copy, or failing to track and respond to performance data. Understanding the right keywords for example, which drive traffic at a competitive cost per click, is vital for crafting a successful campaign that avoids wasted advertising spend.
When in-house marketing teams outsource performance marketing to agencies, they can further remove their ability to receive detailed reporting on where a campaign is seeing success – resulting in unidentified inefficiencies, draining more budget from overall ad spend.
Strategies to tackle wastage
Addressing wastage requires navigating technology without succumbing to data overload. All marketers aim to avoid wasting marketing funds, to enhance their campaign ROI. To achieve this, it’s essential to implement effective strategies, utilise suitable tools, and understand what’s really driving their success at a more granular level.
Businesses should view automated tools as systems requiring ongoing supervision and direction. Without this fine-tuning, these tools will churn out subpar results – so marketers must ensure they are regularly monitoring automated tools to evaluate performance and make adjustments as needed to avoid budget wastage. We saw this when we supported notonthehighstreet manage the automation of its paid search optimisation, and were able to increase ROI by 140% during the transition of its paid search management to be in-house.
Exploring various bidding strategies to determine which one best aligns with your campaign objectives is essential – as selecting the wrong type for your marketing campaign can result in further wastage of ad spend. Considerations should encompass campaign goals, budget constraints, competition levels, and the specific ad types and channels utilised.
Looking beyond “headline” performance metrics, such as “Cost Per Acquisition” or “Return on Ad Spend”, to grasp the underlying factors driving these metrics enables marketers to identify inefficiencies. The risk posed by AI and increased automation is that they may amplify, rather than reduce, wastage.
Google’s revenue incentive for increased ad spend necessitates a reevaluation of ad campaigns to manage performance effectively. It’s time to scrutinise and manage the true drivers of performance to combat excessive spending.
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ABOUT THE AUTHOR
Luke Boudour, Chief Experience Officer at GOA Marketing
Luke has over a decade of experience leading the execution of multi-channel strategies both agency-side and in-house. Whilst working at eCommerce retailer Not On The High Street as Head of Growth, Luke was responsible for building and cultivating an in-house digital team, ultimately furnishing multi-million-pound improvements in profit. In partnership with GOA, the two improved performance by 140% in the first five months. Over a four-year period, they delivered the marketplace a 102% improvement in non-brand traffic and an 89% uplift in sales conversion. Within GOA, Luke is responsible for evolving, revolutionising and overseeing the customer journey from onboarding to ongoing care, to ensure all clients receive the best possible experience (CX) from both the platform and team.