We’ve seen companies deciding campaign budgets on a daily basis, constantly changing it. Every day they open Google Ads, see the previous day’s performance and adjust the budget “for today”. This may be a tempting opportunity for hands-on business owners that like to keep everything under control. But we firmly advise against such a practice, which will make your monthly spending difficult to predict and will also ruin your campaigns’ results.
Yes, we know that when setting up a campaign in Google Ads you are prompt to set your budget as “an average you want to spend EACH DAY”. So, what you might think is “I want to spend € 20 per day” and set the campaign budget accordingly. Two days later you decide to go slow with the ads and change it to € 5 per day. And you are calculating your spending as the number of days with the first budget times € 20, plus the number of days with the second budget times € 5, right? You keep adjusting your budget like this almost every day, confident that you have everything under control, but then you see your actual monthly spend and it catches you by surprise – it is not what you’ve calculated. Why is that?
When Google Ads asks you for an “average you want to spend each day”, you need to keep in mind that the operative word here is “average”. Whilst you are asked to setup a daily spend for your campaigns, Google actually calculates the budget on a monthly basis, so that your actual daily spend may be lower or higher than the value you’ve entered, as long as your monthly budget is within your planned value. Why? Well, because Google Ads tries to drive you as many conversions (or other goals you might have) as possible, and if the system sees that on a given day there is a nice opportunity to get more value for your money, it will invest more that day than your average daily budget, making up for it on another day by investing less.
So, how do you know your monthly budget then? You take your daily budget and multiply it by 30.4 (the average number of days in a month). This way you get a value that you are sure Google will not exceed that month.
But what happens if you change your budget in the middle of the month?
There is no crime whatsoever in changing your budget midway through the month – your strategy might change; your promotion period might end; you can have a very valid reason for it. But if Google Ads calculates the budget on a monthly basis, how will it be calculated when you change it half-way through? It’s easier to explain with an example – let’s say that, at the beginning of April you had a daily budget of € 5 per day. On the 16th April, you change your budget to € 10 per day. In this case, to calculate your monthly spend limit, you need to take what you’ve spent up to the date of the change (which was calculated within the € 5 x 30 days’ limit, so might be more or less than simply € 5 x 15 days, as we’ve explained before) + what you’ve spend during the 16th of April up until the exact moment you changed it + up to the 15 remaining days x € 10.
Now, imagine that you are changing your budget several times per month or, even worse, every day. It will be very tricky to calculate your monthly spending limit and, as such, your actual spend that month may surprise you.
Another reason for why it is not advisable to constantly change your budget is that every time you make a change, your Google Ads enters a “learning” phase. The system needs to analyse the data and to “learn” the way to accommodate your new budget in the most efficient way. Therefore, if you keep changing this setting, the system never gets a chance to actually finish the learning and show you its full potential to drive better results.
In short, the main conclusion is a simple one – only change your budget if it’s really necessary and if said change is supposed to last for quite a long time.
If you just want to optimise the spending a bit, try changing the bids instead. If you are using an automated bid strategy and you cannot change the bids, try organising your Google Ads by dividing your products or services throughout different campaigns, so that you can change the budget only where it is absolutely necessary, leaving the rest of the account untouched.
And if you are positive you need a budget change, do it, but calculate your monthly spending limit correctly, so that there are no surprises at the end of the month. Oh, and wait for the system to finish its learning process and bring you the results after each adjustment, before rushing to changing it again.
For more information, bespoke strategies and efficient digital marketing solutions, just contact the Clarity’s girls through info@yourdigitalclarity.com or visit our website at www.yourdigitalclarity.com.
