How to Set Up Your AdWords Campaign Budget

By | September 14, 2013

Let one thing be clear from the very beginning: this article is on the daily budget for a Google AdWords campaign. Not the monthly budget, not the quarterly budget, not the annual budget… the daily budget. Nothing unusual so far: you already set the maximum amount you wish to invest in AdWords, divide it among the active campaigns in your account and just expect to receive clicks. Quite easy, right? Well, yes. But this is only a part of the issue at hand and merely the beginning.

On the other hand, what do you do if the daily budget you set is not the “right” one? And, more importantly, how can you know if this is the case? No worries! Google knows! And it’s willing to share, by means of displaying a so-called “recommended budget”. More precisely, this is a sort of notification the system provides at the campaign level (marked “Limited by budget”) in the online interface.

Even more precisely: what Google AdWords does is analyze your daily budget and then suggests you adjust it. Needless to say, this only happens when the recommendation is to increase the budget, as the Lost Impression Share rate is growing. Quite useful, if you think about it. And yes, this is the same budget you carefully set before activating your campaigns and which seemed perfect at the time. Here is what it’s all about actually: after a thorough analysis and evaluation of the quality of your keywords, your ads, your website, as well as of your direct competitors, search trends and many other such factors, Google may suggest you increase your daily spend in order to receive more impressions and, implicitly, potentially more clicks. Which, in turn, might mean more leads or conversions.

BUT: Very few advertisers know that increasing the daily budget according to the this recommendation or by your own will does not guarantee a better performance for your campaign (although it does not exclude either) . Sometimes it may even be the contrary. For instance, if you choose not to invest in a high-quality website, or if your ads are not carefully written, or you list of keywords is not relevant or lacks precise structuring, not even the most significant daily budget increase can bring spectacular results. Why? It’s actually quite simple: Google focuses on and rewards relevance and quality before anything else.

Something else to keep in mind: your daily campaign budget directly influences the Impression Share of your ads. This explains why, when your campaign is Limited by Budget, your Lost Impression Share is higher than 0. In other words, a limited budget also limits the potential of an ongoing campaign and usually results in fewer impressions and reduced visibility of your ads. One thing you could do if you’re dealing with a similar situation is “play” with the budget simulation available in yoru account. Obviously, Google would like you to set the highest possible budget recommended in the online “diagnosis tool”. However, your budget is yours and you can spend it whichever way you see fit. Either way, make sure you check periodically for budget status and recommendations, as they are not displayed with a default frequency, but might appear in your account either in the next 2 minutes, in three-weeks time from the start date or not at all.

And one last hint: the Google AdWords ad serving system works with the so-called “overdelivery” function. This means that, on certain days when the competition is higher or the search volume grows (or both), your campaign might not only meet the daily spend limit, but also pass it by 20%. So don’t be surprised if, for example, the daily spent budget for 1 out of 7 days is 12 USD instead of 10 USD. You might ask yourself, then, what is the point in setting a maximum if it might be disregarded. Well, as you might expect, Google has an answer for this too. Even if this is possible on a daily level, within any given 30 days, your campaign will never consume more then 30*daily set budget. So no need to worry. Give it a try! Make your budget work for you and bring you the best possible results.

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