What to Do When Your Paid Search Account is Spending Too Much or Too Little
One of the essential aspects of bid bud management is knowing at any given time, how is your campaign or account pacing. Pacing is the relationship between the spend of an account or campaign and the time frame. You will always need to know if the account is spending too little (running behind) or spending too much (running hot).
If you have one of these situations is the case, you’ll need to make adjustments according to the list of “need to knows.” It may be the case that running hot or behind is necessary at the current time. You’ll need to analyze your current situation before taking the next steps below.
If your Account is Running Behind
Review Account Goals — You’ll need to make sure you don’t deviate too much from your original numerical goals and client goals before increasing spend. Overspending isn’t an urgent issue in some instances. However, overspending is a cardinal crime in other cases. This will vary from account to account. Make sure you understand how the client prioritizes their goals, objectives, and KPI’s. For example, the client may first and foremost want conversions, but second-tier goals.
High Performing — Whenever increasing spend, you will almost always want to increase spending on areas that are high performing. Performance is defined by your KPI’s in order of their priority.
Identify Areas of Opportunity — Once you identify high-performing campaigns, you’ll want to increase spend for these campaigns first. There are two main areas of opportunity.
- The campaign is not spending allocated the budget.
- The campaign is spending allocated budget, but according to the Search Lost Impression Share due to budget metrics, there is room to expand.
One quick and dirty way to increase budgets is to check the Campaign Bid Simulator in Adwords, which simultaneously increases bids and budgets and shows you what to expect from the changes. Using the Campaign bid simulator makes bid adjustments in tandem with budget adjustments.
Not Spending Allocated Daily Budget — You want to look for the difference in the set budgets and the actual daily spend. If there is a significant difference, there may be an opportunity to increase bids or add keywords to make sure your campaign is maximizing its daily allocated spend. Pay attention to how much you increase bids. If bids are raised too much, you may end up limiting the number of ads are shown for that campaign.
For example, if your daily budget is $50 and you have 20 keywords within that campaign, set to a max CPC of $2, at the absolute most, you would spend $40 a day to obtain one click per keyword a day. Your conversion rates would have to be astronomical to produce anything of value. Make sure you have enough budget to support your max CPC/bid changes.
Search Impression Share Lost due to Budget — The Search IS Lost due to budget metric is the estimated percent of times that your ad was eligible to show on the Search Network but didn’t because your budget was too low. Taking the Search IS Lost to budget number, we can use the below formula to figure what we can spend. Keep in mind that this number was derived in an isolated scenario in which all other factors are not taken into account, such as goals, conversions.
Proposed Spend = Spend x ((1 + Search Lost IS%) / (1 — Search Lost IS%))
If you would like more information on Impression Share, try THIS article.
Search Impression Lost due to Budget is an excellent metric to use when you want to know if there’s an opportunity to expand the budget. When this need arises, we use a second method that takes into account seasonality and other variances.
If Your Account is Running Hot
Review Account Goals — Before decreasing spend, you’ll want to know what campaigns can stand to have their budgets cut back without affecting performance on a large scale. To do this, you’ll need to make sure you fully understand the client’s goals and expectations. For example, there may be keywords that have never converted, but the client would ALWAYS like to have those keywords active and serving ads no matter how they perform.
High Performing — Whenever decreasing spend, you will always want to decrease spend for areas that are low performing first. This includes areas in the account that have little bearing on the client’s numerical or strategic goals. Remember your priorities.
Identify Areas of Opportunity — Once you identify low-performing campaigns, you’ll want to decrease spend for these campaigns first. There are two main areas of opportunity.
When decreasing budgets, make sure you reduce bids and budgets in tandem. You don’t want a campaign budget of $5 with keywords that have a bid of $5. In this scenario, you have rendered the campaign inactive since only one keyword can serve one click, thereby using up the budget.
