Ad spend tracking: What is it, and how do you do it?

In today’s fast-paced digital marketing landscape, knowing where your marketing budget is going and how effectively it’s driving results is key to getting the most out of your investment – and that’s exactly why tracking your ad spend is so important.

Ad spend tracking, or ad spend monitoring, is all about ensuring your campaigns are cost effective and align with your marketing goals.

In this article, we’ll cover what ad spend tracking is, why you should monitor your ad spend and 5 tips for tracking your ad spend effectively.

What is ad spend tracking?

Ad spend tracking is the process of monitoring, analysing and optimising the budget a company allocates to its advertising campaigns.

Ad spend tracking allows businesses to understand how their budget is being spent and ensure it delivers the return on investment (ROI) they’re looking for.

This makes monitoring ad spend a crucial part of any marketing and advertising strategy. Knowing how much money you’ve spent on marketing campaigns helps you stay on top of your marketing budget and avoid spending too much on activities and channels that aren’t paying off – and that allows you to invest more in the ones that are.

You might also be interested in: ‘6 steps: How to manage a marketing budget’

The benefits: Why you should monitor your ad spend

There are plenty of reasons why you should be tracking your ad spend. Ad spend monitoring has a direct impact on the effectiveness, efficiency and profitability of your marketing and advertising campaigns.

Here are some of the key areas where tracking ad spend makes a vital difference:

• Maximising ROI: By tracking your ad spend and adjusting your strategy, you can allocate your budget better and avoid wasting money on underperforming campaigns – and that’ll improve your overall profitability.
  
  
• Budget control and allocation: Monitoring allows your marketers to stay within budget while optimising for performance. They can allocate funds better and ensure your high-performing campaigns get the most support while adjusting or pausing the ones that aren’t doing as well.
  
  
• Better campaign performance: The insights you get from monitoring ad spend can help you optimise future campaigns and refine your targeting, creative elements and bidding strategies – and that leads to more effective advertising and higher conversion rates.
  
  
• Data-driven decision making: With data from ad spend tracking, your marketing team won’t have to rely on guesswork or intuition – they can base their decisions on concrete information, leading to better outcomes and minimised risk.
  
  
• Transparency and accountability: Monitoring ad spend creates transparency in how marketing funds are spent. This fosters accountability by clearly showing which parts of the strategy are working and which aren’t, allowing for better reporting and justification of budget requests.
  
  
• Flexibility and agility: Tracking ad spend allows you to make dynamic adjustments to campaigns based on real-time performance. Being able to pivot quickly makes your advertising strategy more agile, and that’s great for capitalising on opportunities when they present themselves.
  
  
• Competitive advantage: By constantly monitoring your ad spend and adjusting your strategy as you go, you can stay ahead of your competitors and outmanoeuvre them by investing in high-performing areas before they can catch on.

You might also be interested in: ‘Marketing spend management 101’

5 tips for tracking your ad spend effectively

Now that we’ve covered why you should monitor your ad spend, let’s take a look at how to do it right. Here are five tips for tracking your ad spend:

1. Set clear goals and KPIs

Before you start tracking, you need to establish what success looks like for your campaigns. Your goals could include things like:

• Increasing website traffic
• Boosting conversions
• Improving brand awareness

To guide your tracking effort define key performance indicators (KPIs) that are relevant to your business – e.g. cost per click (CPC), cost per acquisition (CPA) or return on ad spend (ROAS). Align these KPIs with your broader business goals – this helps ensure you’re focusing on the metrics that matter most.

2. Monitor ad spend daily

Regularly monitoring ad spend ensures you catch any spikes, budget miscalculations or underperformance early. This allows you to make adjustments in real time and helps you avoid wasting your budget.

Set up automated reports and alerts. Many platforms allow you to receive daily or weekly e-mail summaries of your ad spend and performance – and that helps you stay on top of things without having to manually check up on your ad spend every day.

3. Leverage conversion tracking

Knowing how much you’re spending is only half the battle: if you want to know exactly how effective your ad spend is, you have to track conversions, too.

Platforms like Google Ads or Facebook Ads Manager include conversion tracking tools. You can set these up to track user actions like buying a product, submitting a form of signing up to your newsletter after interaction with your ads. This’ll give you a much better idea of where your money is best spent.

4. Track LTV vs CPA

Cost per acquisition (CPA) is a critical metric for determining how effective your campaigns are right now. However, if you want to get an accurate picture of the long-term benefits of your ad spend, it’s just as important to consider the lifetime value (LTV) of your customers.

Track how much you spend to acquire a customer and compare to their projected LTV – this helps you understand whether your spending is sustainable in the long term.

5. Review and adjust as you go

Campaign performance can change quickly. That makes it important to keep an eye on your campaigns and adjust your budget based on current performance.

Set thresholds for when to increase or decrease your budget based on performance metrics. For example, if a campaign’s ROAS exceeds a certain level, you might allocate more budget to it while pausing or adjusting underperforming campaigns.

Wrapping up

Monitoring ad spend is crucial for any successful marketing strategy. Keeping a close eye on your advertising budget ensures your campaigns are cost efficient and data driven and deliver the best possible results for your investment.

By applying the tracking tips above, you can effectively monitor and optimise your ad spend and make sure your budget is used to its full potential while improving the outcome of your campaigns.