What If My Agency Spends More Than I’ve Budgeted For?
This is linked to the question of what happens if something goes wrong.
It might seem obvious, but the first thing is to ensure from the start that if you have a budget cap your agency knows what that is. You’d be surprised how often that’s not actually communicated, it’s just assumed that everyone knows…
Therefore, make sure it’s confirmed what your budget is, and whether it varies from month to month. Some clients have fluctuating budgets and campaigns have to be adjusted month by month to meet those budgets.
Whoever’s managing your account should have processes in place to alert them if the budget is going to go over target. This is called budget pacing, where we look at the spend so far for the month and project forward to see where we’ll be at the end of the month if we continue to spend at that level.
Now, as I’ve said before, managers are human, and mistakes or miscalculations can be made. If that does happen communication is key here once more. If an agency realises that at the current level of spending they’re going to overshoot the budget, then I’d expect them to get in touch and let you know. This way you can make the decision of whether to pull back spending or continue at this pace – this will depend on how profitable the campaigns are and how your cashflow looks, among other things.
If, however, the first you’re aware of the problem is when your bill comes from Google for the ad spend and you realised it’s £1,000 more than you expected, then you have to talk to the agency. When this happens is can result in other problems – your payment may be declined if it’s higher than budgeted and that will mean your whole account will stop serving ads. You may incur bank charges if you ended up overdrawn or exceeding your limit when a payment goes through.
Again, communicate all this to your agency and find out what they are prepared to do in term of remedy. In a worst case scenario, you can ask if their insurance will cover you for potential/actual losses.
If you’re concerned about going over budget at some point, then ask your agency if they can keep you updated. Maybe on a weekly basis they could send you a summary of the spend so far with the projection of where it will pace to at the end of the month. This will give you peace of mind.
As always, though, communication is key to preventing this kind of problem in the future.