Google Ads Budget: When Should I Increase or Decrease?

Recently, Dynamic Creative has been getting many questions from clients regarding when they should be increasing or decreasing Google Ads budgets.

Our answer to these questions always comes back to:

  1. Your goals or KPIs (Key Performance Indicators); and
  2. The current market opportunities

This blog goes through reasons why you should increase or decrease your Google Ads budget, what campaigns to increase or decrease spends on and our recommended approach when it comes to budget management.

Reasons for Increasing Your Google Ads Budget

When your Google Ads Campaigns are achieving your KPIs

Understanding what your goal is imperative to making Google Ads budget changes. Whether your goal is revenue, sales, traffic or brand awareness, set a goal for a reasonable time period to allow Machine Learning to gather enough data to work (read more about setting your digital advertising goal). The idea is, if your advertising campaigns are hitting your goals, this is a good first sign that you should increase your budget.

Working Example: Jen owns an online florist shop. Her goal is to achieve a return on advertising spend (ROAS) of 6:1 (for every $1 she spends on Google advertising, he gets $6 back) to be profitable. Currently, her Google Ads campaigns deliver an overall ROAS of 7:1 . She has set a daily Google Ads budget of $100 and the campaigns have consistently spent the $100 per day for the last week. As she can afford for the ROAS to be 6:1 and the campaigns are limited by budget, she increases her daily spend to drive more conversions.

Maximising on market opportunity

Understanding the market conditions in your industry is also an important factor to deciding whether to increase your budget. For example, ask yourself, is there naturally going to be more people searching for your products online because it’s Black Friday?

Also look to see whether your Google Ads campaigns say “limited by budget”. This is Google advising that your daily Google Ads budget is being exhausted each day. Therefore, the campaigns can spend more as there is more market opportunity out there.

Working Example: Ben owns an online fashion store. His goal is to achieve a return on advertising spend (ROAS) of 4:1 (for every $1 he spends on Google advertising, he gets $4 back) to be profitable. His Google Ads account is achieving its target, however not limited by budget. However, tomorrow he is going to run a sale on his website and therefore based on historical data, he knows there will naturally be more people in the market. To capitalise on this increase of searches, Ben can leave the budget as is, or increase it even more.

Reasons for decreasing Your Google Ads budget

When your Google Ads Campaigns are not achieving your KPIs

On the other spectrum, if your Google Ads campaigns are not achieving the desired results, look at decreasing your Google Ads budgets in order to achieve your KPIs. However, remember not just to rely on this to fix everything. Make sure you are consistently doing hygiene checks on your accounts such as negatives, product title optimisation and keyword analysis to help improve performance.

You can read more about account hygiene and optimisations in our other blogs:

How To Set Up Google Search Campaigns here
How to Set Up Google Shopping Ads
Google Smart Shopping, What’s Next?

What campaigns should I increase or decrease Google Ads budgets on first?

Google Ads Campaigns that are not hitting your KPIs

Most likely, you are going to have some campaigns that are hitting goals, and some that are not. We recommend that if you are looking to increase your Google Ads budgets, start on campaigns that are limited by budget and also hitting your goal. That way, you are capitalising on campaigns you know are working well for your business.

High Profit Margin Campaigns or Products

Look at also increasing budgets on certain campaigns, product categories or products that drive your business the highest value (high profit margins).

Furthermore, look at moving your Google Ads budgets across different campaigns depending on how they are performing i.e move  budget away from campaigns not hitting goal, to those campaigns hitting goal.

Working Example: Taylor runs an online music store. She runs shopping and search campaigns. Her shopping campaigns are hitting above her goal of 8:1 and limited by budget but her search campaigns are not. However, as an aggregate, the account is achieving a 9:1. Taylor can look at increasing her daily budget on shopping campaigns.

Our Recommendation

Dynamic Creative’s approach to Google Ads budget is that it should be flexible and open, basing decisions to increase or decrease your budget on your goal. Monitor your campaigns regularly and check their effectiveness. Doing these checks regularly allows you to be more reactive. E.g. If your campaigns are achieving targets in the last 7 days and are limited by budget, look to increase your Google Ads budget then. If your campaigns are not achieving targets in the last 7 days, look to decrease your budget.

Google Ads budgets are a never ending game. However, understanding what you want to achieve from your budget will help you grow your business.

 

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Martin Fleming
Martin Fleming
10. December, 2020.
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7. December, 2020.
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