16/05/2023

How come my Google Ads budget is not optimally spent?

Most of the time, “budget” and “spent” are used antagonistically. But in the search ad campaigns world, you want those two to walk hand in hand.

As surprising as it may sound, it is pretty common for SEM Managers to see that the Google Ads budget allocated to certain campaigns is not being entirely spent. Isn’t it something good though, spending less money than the amount initially forecasted? Well, in most situations yes, but in this case not really…

Don’t get us wrong here! We’re not saying you need to spend your money at all costs, and start throwing dollar bills in the air just for the sake of “liquidating” your campaign budget. It’s more about setting the best context for your ads to reach success. Not spending the entirety of your Google Ads budget might actually be a red flag you’d want to tackle. We’re helping you do it by going over 3 main possible reasons why your daily Google Ads budget is not being entirely spent and some campaign budget optimization guidelines.

3 reasons why you’re not spending all your Google Ads budget

1. You’re using manual bidding with a too limited budget

When setting up a Google Ads account or preparing to launch a new campaign, one of the key steps you have to go through is defining your bidding strategy. If you opt for a manual CPC bidding strategy, you will have total control on your budget allocation, choosing the amount you are willing to pay for each keyword. But you will also have to dedicate more time to budget management, monitoring results and adapting actions accordingly, all by yourself. When looking into how to determine your Google Ads budget, the decision to go for an automated or manual bidding strategy is yours and depends on lots of factors that we are not going to detail here.

The fact is that if you’re using a manual bidding system, a too limited budget might be the source of your issue. The optimum bid level doesn’t depend solely on your willingness to pay a certain amount for a keyword. It depends on other external factors such as the worth of that keyword on the market, and thus, the level of competition it implies. Let’s say you want to create an ad to see how you would do promoting your new line of bikinis, and you choose to target the keyword “trendy original bikinis”. Given the fact that it’s a first try, you might want to avoid spending too much money on this ad and decide to set your budget to a maximum of 0,50$/click. And then bam, nothing happens… Your perfect campaign, with relevant copies, landing page and well-curated visuals and CTAs isn’t generating any conversions. And besides, the budget you carefully set aside specially for it isn’t even being spent.

If we take a closer look at this example, we notice the importance of taking external factors into account. Your 0,50$/click threshold might be way below the minimum value necessary to trigger that keyword. If the term “trendy original bikinis” is highly requested and used in your industry, and has a cost of 3,50$/click, your ad will never pass the bid auction. You are trapped in a vicious spiral: your budget is not being spent because your ads don’t show for the appointed keywords, and your ads don’t show for those keywords because you’re not paying enough…

What can you do? Make sure you check the minimum CPC for each keyword you’d like to target and define your campaign budget around that information. Also, bear in mind that the online advertising sector is highly dynamic! Since you’re going for a manual bidding strategy, you want to monitor changes very closely and periodically to make the relevant modifications in time and avoid misusing your money.

2. You’re using an inaccurate automated bidding strategy

As we said earlier, when defining your bidding strategy you have two options and automated bidding strategies is one of them. If you don’t want to go through the trouble of managing your campaigns budget manually or if you simply don’t have the time to do it, relying on automation and machine learning to take up the burden of search ad campaign management is a good option, especially when it comes to campaign budget optimization.

Using an automated bidding strategy requires you to clearly define your campaign goals, as Google Ads classifies strategies according to different objectives. Let’s say you’re setting up a brand new campaign for those bikinis and you really want to see those conversions spike. You thus decide to go for a Target ROAS strategy. According to Google, this automated strategy is defined as followed: “Target ROAS automatically sets bids to help get as much conversion value as possible at the target return on ad spend (ROAS) you set.” It seems like the perfect way to get those conversions right away. You see it coming right? There’s a trick here…

This strategy actually requires a minimum of conversions to begin with. Which, in our example, means that Target ROAS would not be the best fit for your campaign, preventing the smart bidding algorithms to optimally use your budget. In the end, this can lead to useless campaigns that, as perfectly set-up as they could be, will be incapable of delivering the expected results.

What can you do? Make sure your campaigns goals are clearly and correctly defined. Once you’ve established the purpose of your ad campaign, identify the automated strategies that are aligned with this objective. Then, within this set of options, go over the specificities of each one of them to ensure there’s not a single condition prone to hinder its running.

3. Your segmentation type is too restricted

To provide your campaign with even more details and help it reach success, you can use different types of segmentation to organize them. This will help you launch ads that precisely match certain needs and characteristics, increasing their relevance and thus their success rate. However, these segmentation options can also be at the source of Google Ads budget issues.

Let’s take the audiences as an example. If you’re launching a re-marketing campaign, you want your ad to show to a certain limited group that you consider relevant to target in a particular context. In some cases, working with a smaller niche group like this will turn out to be very useful. As a matter of fact, it allows you to concentrate your ads on people highly interested in what you have to offer, thus increasing your chances of conversions. In a less positive scenario, you might have pushed your partition to such a level that the final audience could turn out to be uninterested in what you’re offering. Your ads may then show to them, but not get clicked on, resulting in a stalling daily Google Ads budget.

Something similar can actually happen with keywords. You already know we have a special diligence regarding keyword management for online ad campaigns. And as much as we believe in their crucial importance for the success of Google Ads campaigns, we also believe that sometimes less is more… What do we mean by that? Some of the most common mistakes when conducting online ad campaigns is to stockpile major amounts of keywords to reassure oneself and try and cover all possible aspects the service or product offered could encompass. This is a problematic move, as it might lead you to participate in auctions targeting keywords with very low search volumes. In other terms, useless keywords. This could be one of the reasons why, despite having set up a really good campaign, you could observe your budget stagnating at its initial level and ads generating no conversions whatsoever.

What can you do? if you observe such facts as previously described, take a step back to reassess your segmentation and identify if you could’ve gone too far. You could regroup certain audiences together and see if the new larger group presents more relevance, or decide to better adapt your ad to this new niche group. Regarding keywords, make sure you optimize your keyword selection, cleaning your current list from irrelevant terms. If you need help with the latter, don’t hesitate to contact us, we have a tool specially dedicated to all keyword management matters!

As you can see, campaign budget optimization can get ruined very quickly by very small things… So stay vigilant and check those 3 possible causes. If you have that budget at your disposal anyway, it would be a waste not to use it properly to get those conversions don’t you think?