Inside Google Ads podcast: Episode 93 - Budget Issues

Your Google Ads budget may seem like one of the most straightforward things in Google Ads. Here's how much money I want to spend. Go spend it. Right?

Unfortunately, that is not at all how budgeting works in Google Ads. So in this episode, we're going to dive into three common budget issues and how you can solve them.

I'm your host, Jyll Saskin Gales. I spent six years working for big brands at Google, and now I work for you.

This is Inside Google Ads: Episode 93, Budget Issues.

Our first question came up on a Google Ads coaching call with my client who we'll call Chris.

Chris is a lawyer, we've been meeting regularly for some time. And when we opened the account, I saw that his campaigns were limited by budget. And for this context, I said, “We've got some campaigns limited by budget. Hopefully that's good news!”

Now, Chris looked at me a little funny when I said that because he knows, like you know, that being limited by budget is not actually a good thing. 

So why is it not a good thing? And why did I see it as good news on this call?

By the way, I shared this story on my free Google Ads newsletter, The Insider, which goes out every other Tuesday with a real Google ads coaching client challenge and how we solved it. So if you have not yet signed up. I'll put the link to sign up for The Insider in the episode description.

First, why is being limited by budget in Google Ads normally a bad thing?

Because when your campaign is limited by budget, it can't perform to its full potential. Your Google Ads campaign starts off each day with the assumption that it will have enough budget to finish the day. On some days, it might spend more than your budget. On some days, it may spend less than your budget. But it will never surpass your daily spending limit and your monthly spending limit.

Your daily spending limit is two times your average daily budget, and your monthly spending limit is 30.4 times your average daily budget.

So let's say things have been going really well. You've been spending your budget. You've been hitting your spending limits. You're getting great conversions. Things are going great. And it's like… you suck the oxygen out of the room. The campaign's limited by budget. It just can't do it anymore. You're missing out on results. Versus a fully funded campaign when it's going and going and getting good results, it can keep spending, keep getting you those conversions, that ROAS, those business benefits that you're looking for from your investment. That's why being limited by budget is bad. 

Why did I tell Chris that his limited budget was good?

Well, Google will only tell you that you're limited by budget when you're at or near your target bidding goals and you've lost Impression Share due to budget.

(Remember, a campaign on Max Conversions or Max Conversion Value or Max Clicks can't actually be limited by budget. So if you see a yellow limited by budget warning, that's actually a budget recommendation in fancier clothes. What I'm talking about here is a red limited by budget warning, which you will only see if you're using Target CPA or Target ROAS or manual CPC.)

And it's a true performance issue because there is more opportunity out there to be had just by increasing your budget. We know that that's not always the case. If you're already capturing a certain portion of available searches, if your Search Impression Share is high, then you could increase your budget all you want. You could set it to a million dollars a day. And Google won't spend it because there are only so many searches for you to advertise on.

So the fact that we were on Target CPA and seeing the red limited by budget warning means there was more opportunity to be had for Chris. All he had to do was increase his budget and he would likely get more leads.

For Chris, this was great news. He increased the budget. His campaigns are doing great.

The moral of the story is first, you don't want your campaigns to be limited by budget. If they are, you should either increase your budget or decrease your targeting. Fewer keywords, fewer locations, fewer ad groups, tighter match types. Don't try to do too much with too little.

Second, please keep in mind the difference between red warnings and yellow warnings. When a warning like limited by budget or something else is in red, that means there's a critical issue. Whereas when a warning is in yellow or blue, like upgrade to broad match or limited by budget, it is just a recommendation disguised to make you pay attention.

You can feel free to ignore blue or yellow warnings, but don't ignore red ones.

Our second question today is about budget issues with ad scheduling. And again, this is something that came up on one of my Google Ads coaching calls. And I thought, I've never talked about that publicly before. I bet there's a lot of people who don't know this.

Remember that your average daily budget is actually just used to set a monthly spending limit. So let's say that you set a daily budget of $10 in your Google Ads campaign. Behind the scenes, Google is going to go $10 times 30.4 equals $304. So over the course of a calendar month, your campaign won't spend more than $304.

Keeping that in mind, that means if you're using an ad schedule, then your campaign could spend a lot more than your average daily budget.

Here's an example. Let's say that your ad campaigns are only live on weekends, Saturday and Sunday, and they're not running Monday to Friday. And you do this via an ad schedule. Let's say in this month there are eight weekend days, four Saturdays and four Sundays. Even if you have set a $10 a day budget, that doesn't mean that Google is going to spend $10 on each of those days. 

No, you have a monthly spending limit of $304. Your ads are only eligible to serve on 8 days. So that means that in practice, you're going to have a $38 average daily budget. That's a $304 monthly spending limit divided by the 8 days your ads are eligible to serve. So even though you set that $10 a day budget, you've actually given your campaigns a $38 a day budget since your campaigns are only going to be serving on a maximum of 8 days out of the month, not the full average of 30.4 days out of the month.

Now, let's take our weekend example even further. Remember that campaigns also have a daily spending limit. So if you have a $10 a day budget, that will have a $20 maximum daily spending limit. But then we said, according to our monthly spending limit, you'd actually have $38 per day. Your campaigns couldn't spend that because your daily budget is $10, and you can only run on Saturday or Sunday. Let's say it's the third Sunday, that campaign can only spend up to $20 on that day. So you're not going to hit your monthly spending limit. You're not going to spend your budget in full. 

While this is an extreme example, it illustrates how ad scheduling can really mess with your budgeting.

The moral of the story is that if you're using ad scheduling in Google Ads, you're going to want to keep those dynamics of monthly spending limits and daily spending limits in mind when setting your average daily budget. Because the thing you type into Google Ads as your average daily budget may not actually be the amount you want the campaign to spend per day.

If your budget's just not behaving the way you want it to, or you're really confused about something going on in your Google Ads account, you can book a Google Ads coaching call with me so that we can demystify your account together and get your campaigns working the way you want them to. You can learn more and book a call with me at jyll.ca, that's J-Y-L-L dot C-A, or follow the link in the episode description.

Our final topic today is daily budgets versus campaign total budgets, because this is actually something Google just announced recently that's changing.

With most Google Ads campaigns, you set an average daily budget, and that determines your daily spending limit and monthly spending limit. And understandingly, that can get really confusing. Now, there's something else in Google Ads called a campaign total budget. As of right now, this is only available in certain Demand Gen and Video campaigns. However, Google announced recently that they're rolling campaign total budgets out to Search, Shopping, and PMax campaigns as well.

So here's what you need to know. If you use a campaign total budget, then that tells Google Ads, “Here is the total amount I want you to spend on this campaign.” And then Google can decide day by day how much of that budget to spend.

This can be helpful if you're advertising something for a shorter period of time or across two months, so the regular monthly spending limit dynamics just don't make sense for you.

Again, in the vast majority of use cases, you're going to want to stick with the regular daily budgets, but maybe a campaign total budget makes sense if you have a limited time offer that you want to advertise or for a sales event like Black Friday or Cyber Monday. Or if you just want to test something out for a short period of time.

I'm not going to go too into the weeds now on the features, partly because there's a great article on Search Engine Land from my friend Anu Adegbola that lays it out. So I'll link that in the episode description. And also because these features are likely to change very frequently and I don't want this episode to become outdated before it's even published!

The key takeaway for you is that in most Google Ads campaigns, you are going to want to use our good old friend, or frenemy, the average daily budget. But now, across most campaign types and most scenarios, you may be able to use a campaign total budget, which can be useful in certain scenarios where you want a fixed amount to spend over a fixed time period.

I hope this answered some of your most burning questions about Google Ads budgets. And remember, if you have a question you'd like me to answer in an upcoming episode, you can drop a comment wherever you're watching or listening to this right now or on any of my social media posts.

Today's Insider Challenge is this. Let's say that you want to run a Demand Gen campaign from the middle of November to the middle of January. Would you choose an average daily budget or a campaign total budget? How would you make that decision? 

The beauty of the insider challenge is there's no right or wrong answer, just an opportunity to stretch your brain on real life Google Ads problem solving.

Our Last Insider Challenge was in Episode 90, and it was this. For an e-commerce business, brand new to advertising, but not a new business, do you prefer starting with Performance Max or starting with Standard Shopping? What's your rationale? And if it depends, what does it depend on?

As I shared in Episode 90, my preference is generally to start with Standard Shopping. The reason for that is because the most important thing or things that determine whether or not your campaigns will be successful in e-commerce is your merchant center feed and, of course, your conversion tracking. 

I like to start with Standard Shopping because it just gives you more control and visibility into what's going on with those things. A Standard Shopping campaign is the bread and butter of how your feed will present itself to the world. So if there are issues with your feed, if your imagery or your pricing or your text or your query matching or anything is not going well, we're gonna be able to see that in Standard Shopping. 

In Performance Max, while we do have much more visibility than we used to with product level reporting, with search term reporting, it just could do a whole bunch of other stuff that would conflate the results. Like in Performance Max, you could have regular non-brand Search, you could have Display, and you could have Video going on. So if Performance Max doesn't go well, it's a lot harder to figure out why it didn't go well because there are so many more factors. Whereas if a Standard Shopping campaign doesn't perform well, there are far fewer levers we need to pull to try to fix things.

Then if we get Standard Shopping working well, it could make sense to expand into Performance Max. But I've also had situations, which I've spoken about on this podcast before, where Standard Shopping just wasn't performing well. So we tried Performance Max and it actually was able to get good results! It just took time.

If you're curious, I unpack that case study in a recent issue of The Insider, my free biweekly Google ads newsletter. I'll link that specific issue in this episode description. And of course, if you want to get that in your inbox every other week, I'll drop the link to subscribe to The Insider.

What about you? Do you prefer to start with Standard Shopping or go right into PMax?

What does it depend on for you? 

I'm Jyll Saskin Gales and I'll see you next time Inside Google Ads.