07 Apr Budget Management
Managing budgets is a little bit more complicated than most people think.
We always try to act in the best interests of our clients and stick to the budgets agreed but that is not always possible for a few reasons:
- Google can spend up to 2 times the daily budget we set on a given day (https://support.google.com/google-ads/answer/2375423?hl=en-AU)
- We may be managing multiple campaigns starting and ending on different days during a month
- We may have higher budgets for new campaigns to increase clicks and impressions so that they are up and running faster
- We may have budgets set higher for some campaigns than we expect to spend and see a spike in demand
- We may have shifted budget from another campaign or a previous month where we have underspent into the current month
In many cases it may actually be in the best interests of our clients to spend more than the agreed amount in a given month. Some examples include:
- Maximising periods of high performance
- Increasing testing and development of new campaigns
- Allowing high value campaigns higher budgets
- Using the example of a plumber this may be like having one campaign for ‘emergency plumbing’ searches. This may only be searched 10 times per day, but each job is worth 3-4x more than the typical plumbing job. By giving this campaign a more than enough budget for we can ensure that we show an ad whenever someone searches for ‘emergency plumbing’ without the risk that budget has run out earlier in the day. Some days we will spend well below the set budget, but on the days that there are many of these types of searches we maximise the clients chances of claiming these high value jobs.
Sticking to set budgets
Of course we can manage budgets strictly and ensure that we never go over the set budget by:
- Pausing campaigns as soon as we hit budget
- Minimising testing of new campaigns
- Keep lower daily budgets
Pros:
- Lower risk of going over budget
Cons:
- Less consistency in account performance
- Strong possibility of either significant over spend or under spend when campaigns resume
- Less assistance from Google algorithms
- Resetting previous optimisations – particularly those related to Google’s machine learning technologies
- Prolonged periods of underperformance if learning periods are reset
Google’s algorithm thrives on consistency and spending and rewards advertisers that. If we need to pause or significantly lower budgets during months we run the risk of resetting the learning phase for campaigns and it can take weeks or even months for the performance to reach the same level again.
How we typically manage budgets
We prefer not to go down this route as it can cause lasting impact on the account performance.
Our preference is to operate with a bit of flexibility from month to month and capitalise on periods of strong demand and performance.
In practice this means:
- We may have higher daily budgets on some high conversion campaigns than what we expect to spend to capitalise on periods of higher demand and performance
- Have the flexibility of going up to 15% over in a given month
- If we go more than that over then smooth it out over the following months
- If we spend under the monthly budget we shift unused budget into following months
Pros:
- Maximise opportunities
- Improve faster
- Better leverage Google algorithms to support account performance
Cons:
- Higher risk of spending over allocation in a given month
Typically our clients would be happy for us to go a bit over if it means better performance overall.
However if you want your budgets managed in a different manner please let us know.