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Is it a bad idea to make frequent changes to your PPC budgets?

Is it a bad idea to make frequent changes to your PPC budgets?

Spoiler alert - No. But like all things, you need to be strategic about what you change and when.

In answering this topic, it’s important to address two questions

  1. How do budget changes affect smart bidding strategies?
  2. Why can’t we just set the budget and leave it (I mean, why shouldn’t we just leave it up to the Google algorithm?)

All smart bid strategies cope well with small, regular budget changes. It didn’t used to be the case, but the algorithms are much more robust now. However, you definitely still want to avoid infrequent larger changes to budgets as the smart bidding algorithms can take more time to adjust. We often see this when managers only jump in a couple of times a month to ‘tweak’ budgets in an attempt to keep the spend or ROI on track. Or when managers only infrequently look at accounts and realise that a massive increase in budget is warranted by campaign performance.

Often these tweaks end up being larger (and more impactful on the algorithm) than they would have been if they were done more regularly and as a result of more frequent supervision. Additionally, larger and infrequent changes can play havoc with click costs if you’re using Max Conv (no target CPA) or Max ROAS (no target ROAS) as bids under these strategies are linked to budget, therefore an increase in budget means an increase in bids.

But Google pinky-swear they’ll spend the correct amount by the end of 30.4 days. That’s good enough, right?

Why do they even need to say that? Google can over-serve ads, incurring up to 200% of your set daily budget meaning some days you’re over, some days you’re under. Regardless of what Google says about the 30.4 day average, if you are consistently over/under you’ll need to make adjustments to average the allocated daily spend throughout the entire month.

And that’s the key issue. You want to spend over the entire month. Yes, if you leave it up to Google they won’t spend more than your budget over the 30.4 days, BUT to ensure they don’t overspend they can (and do) throttle your account from serving ads for days/weeks if they’ve let spend run away. And given they can spend up to 200% of your daily budget on any given day, I can assure you that this happens.

Your client isn’t going to be happy that their ads aren't serving through the back end of the month because you decided to trust in the machine that spent the majority of the month's budget in the first few weeks and then throttled the account to bring spend in line with budget.

And here’s the extra kicker - in some instances it’s possible to achieve lower CPAs at the back end of the month as competitors run out of monthly budget and the auction becomes cheaper. Unless specifically sought after, you’ll always want to be present in those later-in-the-month auctions. And this requires active budget supervision.

It’s also a little known fact that if you make a downward budget correction, Google won’t ACTUALLY start spending less until the next day. So if you’re making big corrections, it’s important to remember there’s also a lag in how they impact the account.

Here’s how Google explain it:

“For example, imagine that you have a campaign with an average daily budget of US$10. On the same day, you first increase your budget to $50 USD, then lower it to $5 USD. The daily spending limit for the day is going to be the highest of your average daily budgets multiplied by 2, therefore $50 USD * 2 = $100 USD.”

Using Maximize Conversions (no target CPA) or Maximize ROAS (no target ROAS)?

If you are underspending and are not limited by budget but ARE limited by rank, the answer is to increase budget as bids under these strategies are linked to budget, therefore an increase in budget means an increase in bids and (likely) more traffic. Just do it gently to avoid any sudden spikes in click costs!

Have you lost impression share due to budget?

If you lose impression share due to budget, you may also need to look at other areas to trim down your targeting (locations, audiences, time of day, poor performing keywords etc). Keep an eye on it though, as if you tighten the screws too much and your traffic starts to dry up, you will need to loosen those settings up a little.

Are budget changes just for pacing?

No. Active budget management also allows us to consider the effectiveness of the account strategy we have in place and if we’d be better serving the interests of our clients by, perhaps, moving budget from campaigns that aren’t performing as well, to those that are performing better but are limited by budget.

Additionally, active budget management can also be about observing that, for example, the ROAS or CPA on a particular campaign is above the desired KPI and using that knowledge to reach out to the client for extra budget if you have reason to believe the account is limited by budget. So budget changes can be about adding budget. If you’re on a percentage of spend model, this is mutually beneficial. And if you’re not, it can just be about delivering such great service and ROI to your client that it impacts a reduction in client churn and an improvement in client satisfaction. Happy clients are much easier to upsell on your other services, making them stickier and more likely to refer new business to you.

So no, budget management isn’t as simple as ensuring healthy pacing through regular budget updates. That’s a part of it, of course, but it’s also about reflecting on the account as a whole and how the money you are spending is delivering on the investment and goals of the client. It’s the central truth behind all we do (take money and use it to make money); HOW we do that is a many and varied and nuanced process, overlaid by different goals, networks, ad types, KPIs and automated and manually managed bid, campaign and account strategies. That’s where our magic comes in.

Just remember though, small, frequent budget changes are much better for the smart bidding algorithms than larger, less frequent changes. You can’t do this if you’ve left the budgets on set-and-mostly-forget.

Looking for expert help with budget management?

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