How does daily budget work?

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A-ADS default payment scheme is pay-per-day. It is quite unusual and works as follows.

Advertisers set their targeting parameters and specify a daily budget - the amount of money they want to spend every day.

We sum up all the money spent by advertisers on targeted traffic and give each campaign a share of impressions proportional to its spendings.

Traffic volume and price are not fixed and depend on supply and demand. Please see the examples below to understand it better.

Example 1. Monopsony

First, let’s assume that you are the only advertiser who targets ad units which give 10 000 unique impressions a day.

If you set your daily budget to $10 in bitcoins, then your actual CPM would be 1 000 * $10 / 10 000 impressions = $1 per mille, which seems reasonable.

But since you are the only advertiser for these ad units, the amount of traffic you receive doesn’t depend on your spending. You would probably set your daily budget to a much lower value in such a situation.

Example 2. Competition

Let’s assume that you target ad units which give 10 000 impressions a day, your daily budget is worth $10 and your CPM is $1 per mille (as in the previous example).

If new advertisers enter the market with the same targeting and pay $10 in total, then they get half of the traffic, and your actual CPM would be 1 000 * $10 / 5 000 = $2 per mille.

That’s how the market forms the price.

You can set the “Max CPM” to prevent the whole expenditure of your daily budget in case if the price goes too high.

There is always a trade-off between volume, price, pace, and quality of the traffic you receive.

Example 3. Narrow targeting risk

If your targeting is very narrow, there is a risk that your CPM might suddenly raise, because the volume of traffic fluctuates over time.

Say, if you set a daily budget to $10 and filter out most of the traffic sources, leaving only 2 ad units with 10 000 impressions a day, your CPM will be $1 (as in Example 1).

But if for some reason, one of these ad units goes offline and the other one produces only 1 000 impressions a day, then it would increase your CPM to $10.

Just don’t do like this unless you set the “Max CPM” limit!

Conclusions

Remember that A-ADS is not a pay-per-impression, neither pay-per-click advertising network.

Use broader targeting and lower daily budget to get a more predictable and satisfying CPM.

Always check campaign performance estimates on the campaign -> finances -> budget page after making any adjustments to your campaign settings.

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