11 Most Common Causes of Wasted Ad Spend

July 25th, 2023

Ad spend can be wasted in lots of different ways. So it can be hard to pinpoint exactly why your campaigns aren’t getting the results you expected. But eliminating inefficiencies is much easier when you know how and where they’re likely to crop up.

In this article, we’ve compiled 11 common causes of wasted ad spend that occur within performance marketing campaigns. The list comes from from our previous Performance Marketing Efficiency Playbook.

You can download the 115-page playbook for free – no form fill required. Expect to learn: 

  • How to calculate your Marketing Efficiency Ratio (MER)  
  • How to obey the 10 ad copy commandments 
  • The 1-1-3-1 rule for landing pages 
  • Ideal B2B & B2C PMax campaign structures 
  • “Outside the box” targeting strategies for paid social 
  • And lots more

Get Lunio’s Performance Marketing Efficiency Playbook

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Wasted Ad Spend: 11 Common Campaign Inefficiencies

Run through the list below and consider how your own campaigns stack up in comparison.

1. Not Using Historical Performance Data

This is a potential gold mine of valuable information and insights. You should know exactly where your budget has previously delivered and where it has fallen short. Going ahead without a clear grasp on this is like swimming in the dark. 

2. Lack of Robust Conversion Tracking

As PPC becomes more automated, having a bullet-proof conversion tracking system in place is more important than ever. The principle of ‘garbage in, garbage out’ always stands. So you need to pay closer attention to the quality of input data (i.e. conversions) you’re feeding into campaign algorithms.

3. Setting Up Automated Campaigns Incorrectly

Performance Max and other automated campaign types have a lot of potential. But they can also lead to significant overspending if they’re not set up effectively, or left to their own devices. This is especially true for B2B businesses where CPCs are generally higher.

4. Fake Ad Engagements & Invalid Traffic

Based on data we’ve collected at Lunio, we typically observe that 10 – 20% of ad spend is wasted on clicks from bots and fake user profiles. These bad clicks also distort your analytics, making it harder to make data-driven campaign optimsations. 

You might go into Google Analytics and review your click and conversion data there. Then you log into your CRM and see completely different metrics. Different click volumes. Different conversion volumes. Different values per lead. And this is in part due to the distorting influence of fake and invalid traffic on your ad campaigns.

Leo Pizarro

Head of Demand Generation, Lunio

5. Poor Landing Page Design

Excessive copy, poor value proposition placement, and high levels of friction can kill your conversion rates. It doesn’t matter how well-optimised your campaigns are – if your landing pages aren’t up to scratch you’ll simply be spinning your wheels (and wasting lots of money in the process).

6. Poorly Crafted Ad Copy

Your ads might reach the right audiences, but if your messaging doesn’t resonate, your click-through rates will suffer. If you adopt very similar messaging to your competitors you risk being drowned out in the noise. And if your ad copy isn’t highly relevant to the keywords you’re targeting, your Google Ads Quality Scores will dip leading to an increase in campaign costs. 

Note: Check our previous guide to crafting captivating ad copy that converts.

7. Using the Wrong Bidding Strategy

Your bidding strategy signals which KPI you want Google to prioritise. So using the wrong one can create a disconnect between your goals and the results you’re getting. Failing to set appropriate budget limits on automated bidding strategies can be very costly if left unchecked for even just a day or two. 

wasted ad spend

8. Not Refining Your Audiences Enough

If you’re not using exclusion audiences in all your campaigns, your ads will be displayed to a less targeted range of people who are ultimately less likely to convert. Exclusion targeting becomes even more important when using automated campaign types, where audience targeting is in the hands of machine learning algorithms.

We saw a significant increase in efficiency on LinkedIn campaigns by excluding inactive users. Imagine you are setting up a LinkedIn campaign – you put in a job title, you put in the target company, and you end up with 10,000 people in the target audience. If you simply press go at this point without any further refinement, you’re going to waste money.

Ideally you want to separate active from inactive users. You can do this by adding extra campaign parameters to exclude any users with incomplete profiles, those who haven’t posted within the last 90 days, or those who aren’t actively engaged in any groups. This may cut your initial list of 10,000 users down to 5,000 or less.

Leo Pizarro

Head of Demand Generation, Lunio

9. Not Updating Ad Creatives

Don’t continue spending heavily on stale ads with mediocre conversion rates. Constant innovation and experimentation is essential for creating ads that resonate with your audience. If you continue to do what you’ve always done, you’ll never drive further ad spend efficiency.

10. Not Investing Enough in Retargeting

If you aren’t further capitalising on traffic you’ve already paid for through extensive retargeting, you’re limiting your overall spend efficiency. You should aim to concentrate a significant portion of your overall ad spend on you know have some sort of interest in your business. Retargeting also significantly increases branded search queries, which have much higher conversion rates. 

wasted ad spend

11. Focusing on Leads Over Revenue

Measuring on MQLs alone incentivises marketing teams to get the most volume of MQLs for the lowest cost, which is entirely misaligned with sales productivity and sales goals. B2B brands tend to spend the vast majority of their paid media budget on driving short-term outcomes with lead generation activity driving little revenue. 

Doing More With Less?

Given the current economic climate, many of us are having to adapt to less budget, reduced headcount, and fewer shiny new tools. But revenue targets remain as ambitious as ever. 

So in this context, performance marketing efficiency is the key to success. Gone are the days of simply throwing more money at ad networks until goals are met. 

If you’re one of the lucky ones that hasn’t been affected by budget cuts, efficiency still matters. You can become more efficient while increasing marketing spend by ensuring your campaigns are seeing higher profitability ratios over time. And one of the easiest ways to start is by eliminating wasted spend on invalid traffic and fake ad engagements.

Advertise to Active Buyers, Not Fake Users

Ads are for humans, not bots. Get a demo and save up to 25% of your advertising budget by automatically eliminating fake ad engagements across all paid channels.

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