How to use budgets on Google ads

How to use Budgets in Google Ads

The Importance of Budget Management in Google Ads

The ability to control advertising costs effectively lies at the heart of successful Google Ads campaigns. It’s a topic that’s sparked many a debate on Reddit, with concerns often raised about Google’s tendency to exceed set budgets. But what’s the real story here? 

Getting to Grips with Key Budget Concepts

Before we get into the nitty-gritty, it’s crucial to understand a few key budgeting concepts in Google Ads:

Average Daily Budget – This is the amount you set for each ad campaign on a daily basis. It indicates your comfort level of spending each day over a month.
Daily Spending Limit – This is the maximum amount billable for a campaign on any given day, which is typically twice the average daily budget.
Monthly Spending Limit – This is the maximum billable amount for a campaign over a month, calculated as the average daily budget multiplied by 30.4 (the average number of days in a month).

The key takeaway is that Google may exceed your average daily budget on high-traffic days, but it will ensure your monthly spending limit isn’t surpassed.

Unpacking Average Daily Budgets

The average daily budget is the amount you’re comfortable spending on each ad campaign per day. Google’s clever algorithm may decide to exceed this daily budget on days when it anticipates a high return on investment (ROI), but it will always ensure that your monthly limit isn’t surpassed.

When deciding on your average daily budget, consider tools like the Performance Planner, which can help you optimize your budgets across campaigns. Also, keep in mind your cost-per-click (CPC), which determines the maximum amount you’re willing to pay for a click.

For example, if you plan to spend $304 on advertising over a month, your average daily budget would be around $10 (calculated as $304/30.4).

Understanding Spending Limits

There are two spending limits to keep in mind: the daily spending limit and the monthly spending limit.

Daily Spending Limit – This is the maximum amount you’ll be billed for a campaign on any given day, typically twice your average daily budget.
Monthly Spending Limit – This is the maximum amount you’ll be billed for a campaign over a month, calculated as your average daily budget multiplied by 30.4.

In rare cases, the cost of all clicks or impressions (known as served costs) may exceed these spending limits, but your billed costs will never surpass these limits. Any excess costs are covered by Google.

Exploring Campaign Total Budgets

This option is exclusive to video campaigns with specific start and end dates. When creating your video campaign, you’ll have the option to select a “Campaign total budget.”

Google Ads will then spend this budget evenly over the duration of your campaign, optimizing for both high and low-traffic days.

The Power of Shared Budgets

A shared budget is a single average daily budget shared by multiple campaigns. The benefits of using shared budgets include:

Increased Operational Efficiency – It streamlines budget management across campaigns.
– Improved Budget Utilization – It allows for the free distribution of your overall marketing budget between campaigns.
Maximized Performance and ROI – Shared budgets can help optimize performance towards your set goals when combined with Portfolio Bid Strategies.

For example, if you have a daily budget of $100 split between two campaigns, Google Ads can reallocate any leftover budget from one campaign to another to maximize results.

Impact of Budget Changes

Changes to your average daily budget can immediately impact both the frequency of your ads and potential charges.

Your daily spending limit will be based on the highest set average daily budget on the day of a budget change. After a budget change, your monthly spending won’t exceed the new average daily budget multiplied by the remaining days in the month.

Remember that modifying the campaign end date or changing the Google Ads account time zone are also considered budget changes.

There you have it! A guide on how to manage your Google Ads budgets effectively. Remember, the key to success lies in understanding these concepts and using them strategically to optimize your campaigns. Happy advertising!

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