Understanding Google Ad Spend on a Day-to-Day Basis
The daily budget you set is what Google Ads assumes you’re going to spend over 30.4 days a month, meaning that while you set a specified daily budget the actual spend can fluctuate both up and down. The bit that can terrify users when they come face to face with this, is the overspend. Google allows up to 50% over or under your daily budget on any given day, so there’s a good chance that it’ll look like the spend is running away at some point. This is where some careful planning of what you’re prepared to spend over a given month comes in as Google will only spend on average, during that period, what you set the spend to.
The over-delivery is designed to maximize performance and opportunities, especially in early phases of campaigns where Google is learning where your prime audiences and target clients/customers might be based on the information you’ve supplied.
Example courtesy of Google
“Let’s say you set your budget at £5 a day and your billing cycle is 30 days. Over the course of the month, you notice that your charges vary. Some days you’re charged £2, on others you’re charged £10. At the end of the month, your charges won’t exceed £152 (that’s 30.4 multiplied by your £5 budget).
So even though your campaign costs tipped above and fell below your £5 budget from day to day, at the end of the month, you’re still charged no more than what you budgeted.”
Monitoring That Budget Over-Spend
It’s crucial to monitor budgets closely.While Google’s system ensures that overspend is balanced, sudden spikes in the spend could affect cash flow and your forward financial planning for the duration of your campaign. Setting clear budget limits and regularly reviewing spend reports can help manage these fluctuations more effectively based on the conversion factors you’ve put in place. Ensuring ads are well-optimised and targeting the right audience can also help to minimise unnecessary overspend. This is where a good This Google Ads manager can help you.
Performance Max Campaigns And Their Budget Quirks
Performance Max campaigns, at times brilliant and easy way of advertising across all of Google’s surfaces but sometimes horribly complex and lacking in reporting to see what’s really working. In relative terms Performance Max is a new addition to Google Ads, leveraging AI machine learning to optimise your ad performance, using imagery, text, interests, keywords, product feeds (if you have them) and video. These campaigns require careful budget management, particularly concerning the algorithm’s sensitivity to sudden budget changes. Big changes in content you put into Performance Max or big budget changes can take 2 weeks to take affect as the algorithm relearns. The secret is to make some small step changes, both forwards and backwards.
Go Carefully On Those Budget Increases
One critical aspect of managing Performance Max campaigns is adhering to the 15% to 20% rule. We suggest that advertisers should avoid increasing their budgets by more than 20% at the very maximum at a time. Google may flash up in a box next o your campaign what it thinks should be spent but remember its yours or our clients budget, and unless the performance is showing the desired returns, there’s some careful considerations to make.
Exceeding that 20% increase can disrupt the campaign’s learning phase, essentially causing the algorithm to feel like its restarting. It can lead to obvious changes in spend, dips in performance and some questions over what’s going on as the algorithm re-calibrates. To maintain consistent performance, gradual budget adjustments are our recommendation, allowing the algorithm to adapt without significant disruptions.
The Google Ads Spend Final Thoughts
Managing that spend and working out what the right strategy if its not doing what you need it to do is vital. The worst thing to do is keep on spending and not getting the results. The only winner then is Google. So plan the budget, don’t spend more than you can afford to but unfortunately with new campaigns there is always going to be a lot of learning and some spend is likely to go to waste. Get it right and be able to scale it, is the goal, getting the conversions you want and the desired return on your investment.
Contact us to discuss how we could assist with your business’s Google Ads Management needs or maybe you just need some consultancy on what you’re doing and the next steps. click here to fill in a contact form and we’ll get back to you as soon as possible or feel free to call 07710 181812.