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# How the Daily Budget Works

At AADS, the default payment model is **Cost Per Day (CPD)**. Unlike traditional advertising networks, you don't buy impressions or clicks directly. Instead, you set a **daily budget**, and AADS distributes your ads according to your share of the total advertiser spend for the traffic you've selected.

**Here's how it works.**

Advertisers choose their targeting settings and specify how much they want to spend each day. AADS pools the daily budgets of all advertisers competing for the same traffic and distributes impressions proportionally based on each advertiser's share of the total spend.

Because both traffic volume and advertiser demand change over time, the number of impressions you receive and your effective CPM may vary from day to day.

###### Example 1. No Competition

Suppose you're the only advertiser targeting ad units that generate **10,000 unique impressions per day**. If your daily budget is **$10**, your effective CPM is:

> 1,000 × $10 ÷ 10,000 = **$1 CPM**

Since no other advertisers are competing for this traffic, increasing your budget won't give you more impressions. In this situation, you may be able to achieve the same reach with a lower daily budget.

###### Example 2. Competition Increases

Now suppose another advertiser starts targeting the same traffic and also spends **$10 per day**. The available impressions are now shared equally, so you receive approximately **5,000 impressions** instead of 10,000.

Your effective CPM becomes:

> 1,000 × $10 ÷ 5,000 = **$2 CPM**

This illustrates how competition naturally increases the price of traffic. To protect your campaign from unexpectedly high costs, you can set a **Max CPM** limit. If the effective CPM exceeds this value, your campaign will stop purchasing impressions until prices fall below your limit.

###### Example 3. Narrow Targeting

Very narrow targeting can make your campaign more sensitive to changes in traffic volume. Imagine your campaign targets only two ad units that together generate **10,000 impressions per day**. With a **$10 daily budget**, your effective CPM is **$1**. If one of those ad units becomes unavailable and the remaining one generates only **1,000 impressions per day**, your effective CPM increases to:

> 1,000 × $10 ÷ 1,000 = **$10 CPM**

To avoid paying more than you're comfortable with, it's a good idea to configure a **Max CPM** limit, especially when using highly specific targeting.

###### Key Takeaways

> **AADS is neither a pay-per-click (PPC) nor a pay-per-impression (CPM) advertising network.** Your campaign receives a share of available impressions based on your daily budget relative to other advertisers targeting the same traffic.

For more predictable campaign performance:

* Use broader targeting whenever possible. 
* Start with a moderate daily budget.
* Set a **Max CPM** limit to protect against sudden price increases. 
* Review your campaign performance estimates after changing your targeting or budget.

If you have any questions about our platform, feel free to [__contact our support team__](https://help.aads.com/). We’re here to help 24/7.