How to Diagnose and Resolve Why Google Ads Isn't Using Your Daily Budget

You've finally approved your creatives and copy. Your campaign is launched and but after a while you notice that performance is not quite as you expected. When you come back, you realise that only a fraction of your budget has been spent.

A lot of businesses who advertise on Google encounter this issue. Much of the advice available online focuses on making technical adjustments to campaigns. These may be necessary, but the first step is to think things through from a business perspective before fiddling with campaign settings.

Why You Won’t Spend If Your Budget Is Too Low

It sounds counter-intuitive, but if your daily campaign budget is too low, you might end up not spending it at all. Surely a low budget would end up being spent entirely every day? Here’s why not: Imagine you have a daily budget of $2.50 for lunch, but every sandwich shop nearby charges at least $3.95. You can set out every day with your $2.50 but you’ll never get to spend it. You would go home hungry every day. It’s the same with ad spend, if you don’t ever bid enough to place the ad, your ads won’t run and your budget won’t be spent.

An obvious resolution to this would be to increase bids or campaign budget. However, it’s always better to make the most of what you have than just to throw money at a problem. That way, even if you do ultimately decide to increase budget, it will work that much harder for you.

Google Ads is a Competitive Marketplace

They key to diagnosing why your Google Ads campaigns aren’t using their full budget is understanding that it’s a competitive marketplace. Your campaigns compete with others by bidding against them to place their ads.

There are three reasons why your campaigns aren’t competing successfully:

1. You are being out-bid by your competition

2. Your ad quality is low

3. You may be competing against yourself.

Bluntly increasing budget will overcome these, but it’s better first to be smarter about how you optimise your campaigns.

Taking each of these potential problems in turn, let’s look at some approaches to optimisation.

1 - You Are Being Out-Bid by Your Competition

One of 1827 Marketing’s clients recently found that their campaigns weren’t spending their budget. This client advertises in different countries around the world. When we looked more closely at the campaigns that were under-spending they were all in the US. This made sense. The marketplace for our client’s product is most fiercely competitive in the USA with a larger number of established, well-financed rivals. We were heading into a time of year when customers tend to buy products like our client’s, so we knew competition would become more intense.

Simply looking at budget vs spend at the campaign level was enough to identify this issue. The report data aligned well with what we know about their business and market.

The final solution may eventually to be to increase budget for the campaigns in the US. Narrowing the list of campaigns whose budget will increase is already an improvement on increasing overall budget. so this simple analysis, blended with market insight, will help to focus investment.

There were two optimisations that we decided to implement before we altered budgets:

1. Implementing Data-Driven Attribution. Google’s Data-Driven Attribution is a brilliant evolution of conventional advertising attribution models. People typically have to see ads a few times before they click and go on to make a purchase. Conventional attribution models might assume that the first ad had the most impact, or the last one, or that each of the ads made some kind of contribution. Data-Drive Attribution understand the sequence of ad that a customer sees and interacts with as a customer journey. It builds models of which ad sequences deliver the best results. Campaigns have to have been running for some time before this option becomes available, but it’s worth considering once your campaigns have enough data to become eligible.

2. Implementing Target CPA (Cost Per Action) Bidding. Target CPA bidding is a Smart Bidding strategy that sets bids for you to get as many conversions (customer actions) as possible. When you create the Target CPA (target cost per action) bid strategy, you set an average cost that you'd like to pay for each conversion. This was ideal for our situation, since it focuses ad spend on delivering the optimal number of conversions for the available budget. Google’s own campaign recommendations will suggest a Target CPA to start with, or you can work out the current CPA with a simple report that allows you divide the number of conversions by the ad spend. Our client only sells one product. If they had a larger inventory of products with different profit margins we might have considered Target ROAS (Return on Ad Spend) Bidding instead.

These approaches work when your campaigns are set to use conversions as their measure of success. It’s best practice to set conversions for your campaigns so that the algorithms train themselves to encourage customer actions that are most valuable to your business. For this client, we had a free-trial sign-up as the conversion, and we had indicated in the campaign settings what value this has to the business. That way, the campaigns are focused on delivering rigorously define commercial objectives.

Once you have made the switch to CPA bidding, you can begin to optimise this strategy by taking further steps to reduce your Cost Per Action.

Making these changes have the potential to mitigate the need for budget increase. Even if budget increase is still necessary, we will get better return on investment as a result of these optimisations.

2 - How Low Ad Quality Affects Ad Spend

The bidding process that Google uses to decide which campaigns get to show their ads does not just depend on how much each campaign bids. Ad quality matters too. As part of delivering an overall high quality internet browsing experience, Google Ads actually lets high quality ads with lower budgets win out over poor quality ads with higher budgets. Within limits, of course.

That means that improving ad quality can be a smarter way to get your ads to appear without having to increase budget. The Google Ads platform provides lots of guidance and recommendations for how to improve Ad Quality in the recommendations report and when you inspect each individual campaign.

In our case, we had already been routinely considering and selectively implementing Google’s keyword recommendations for our campaigns. This is a good habit to get into, but we recommend never implementing a keyword change without making sure it fits with what you’re really selling. Sometimes the recommendations can be too vague or irrelevant.

One recommendation that the Google Ads platform made was to make sure that the headlines in our ads used more of the keywords that we had selected. We had done this when we first set up the campaigns. For Google this is a measure of relevance so it will affect your quality and optimisation scores. It’s also good practice simply because people need to see what they’re looking for reflected in how you describe your offer.

Having adjusted our keywords over time, we now had the opportunity to look again at the headlines to make sure that they reflected the search terms that were driving results. This would raise our quality score, reduce the amount our campaigns would have to bid, allow the campaigns to win bids more often and therefore spend their budget and reach customers online.

Search Asset Report

Editing or replacing ad headlines with ones that include better keywords may be a good idea, but it creates a problem: which of your current headlines do you change or replace? Obviously you would prefer to get rid of the poor-performing headlines so that the whole set is gradually improved and optimised.

Google Ads offers a helpful report that tells you how well each headline in search ads is performing. It’s called the Search Asset Report and it ranks each headline as ‘Best’, ‘Good’, ‘Low’, ‘Learning’ and ‘Unrated’. You can use this report to identify the ‘Low’ performing ones. These are the ones that should be chosen first to be edited or replaced.

Headlines only get a ranking once they have been shown to potential customers enough times. In fact the Search Asset Report is based on how well headlines performed when they appeared in Ads that were displayed above the search results in a Google Search Engine Results Page (SERP). This is a highly competitive space in which ads can appear, so you might have to wait until other optimisations have had time to work before the Search Asset Report can provide the guidance you need for headline optimisation.

3. Why Your Campaigns May be Competing Against Each Other

If you are running several campaigns it’s possible that they may overlap to some extent. This can result in your campaigns competing against each other.

There are two potential solutions to this. One is to reduce the amount of overlap. If different campaigns use similar keywords, targeting, headlines and other assets they may end up competing with each other.

You will see some advice that tells you to never let overlap happen. It certainly worth revisiting how your campaigns are set up and reducing the extent of overlap if that makes sense, but it’s not true to say that zero overlap is always best practice.

There can be good business reasons to have campaigns that share some commonalities. You will almost certainly include your own brand name and headlines that describe your core benefits in all of your campaigns. That already guarantees a little overlap.

If you are running campaigns directed at different attitudinal segments you might have even more overlap. For example, you might promote a financial services product on the basis that one consumer segment finds the idea of ‘control of your finances’ interesting but another finds ‘creating future opportunities’ more relevant. A lot of the keywords for your brand and the product itself will be similar, even if the campaign messaging and imagery are different. It’s not usually possible to target ads based on attitudinal segments. You are essentially testing one campaign against the other to find out which delivers better business results.

The challenge in these sorts of situations is to decide on a campaign structure that follows the logic of your business objectives. If you have campaigns that overlap in their targeting but address different customer attitudes, you want the Google Ads algorithm to work with you in gradually de-emphasising the campaigns that deliver the poorest business results in favour of the campaigns that deliver more conversions and more revenue.

If your campaigns are set up separately with their own budgets, the Google Ads platform is not able to dynamically reallocate budget from one campaign to another based on results. It would be much better if these different campaigns shared a single budget and a single commercial objective of delivering high-value conversions. That way the algorithm can show ads from one campaign more often than ads from another when it makes business sense to do so.

Google offers two possible approaches to this. One is for you to create campaigns with different ad sets or asset sets in them. The other, newer approach, is to use a Portfolio Bidding Strategy.

Portfolio Bidding Strategy

The Portfolio Bidding Strategy's main effectiveness lies in its ability to organize campaigns within a common objective and a single budget. This ensures that the overall budget gives the algorithm a chance to experiment further, letting Google decide the budget allocation between campaigns depending on individual contributions to overall performance. The ‘portfolio’ part of the term means you can group campaigns together. You can still utilise CPA as the ‘Bidding Strategy’ part, so this approach works well with keeping your campaigns able to compete with other businesses in your market.

The potential drawback to this strategy is Google might accidentally kill off certain campaigns. We say ‘potential’ because in many ways killing off underperforming campaigns is exactly what you want to happen. However, you might decide to run campaigns separately for a while during a research phase to understand and then bring them under the umbrella of a portfolio. One advantage of the Portfolio Bidding Strategy approach is that it’s easy to move campaigns in and out of a portfolio as your own campaign strategy evolves.

Further Considerations

When implementing any of the solutions within the three categories, budget optimisation can be considered a "chicken and egg" dilemma because of the various factors present. This is why you need to implement solutions methodically. Take it step by step, depending on your workflow, never adjust too many things at a time, and allow time between each change for the algorithm to adapt.

Take the Guesswork Out of Your Strategy

1827 Marketing prides itself on taking a business results-driven approach to providing the value you need to properly construct your campaign strategy. Book a free demo today to see the 1827 difference in your strategic planning, content creation, marketing automation, and social amplification.