What Happens When you Change Your PPC Budgets?

By Brad

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General

One of the most common questions people ask is how changing their budget will affect their data. There are a few ways to look at this question to get an answer.

The first place to examine is your Impression Share Lost Due to Budget. This is also known is Lost IS (budget). If your impression share loss due to budget is 0%, then changing your budget won’t get you any more traffic.

If you see the ‘Limited by budget’ in your Google Ads account, then you can get some details from the search engine:

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Click on the graph icon, and you’ll be presented with a chart that shows you the changes to CPC and cost. Unfortunately, even when you are bidding by target CPA, you often won’t get a good idea of the conversion changes.

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Working with Lost IS Budget Projections

What the budget projections will give you is a change to clicks, cost, and average CPC as you change your budget. You can’t easily see changes to conversions and other data using the interface data.

Using your Lost Impression (budget) data, you can create your projections in 1 of 2 ways:

  1. Download the campaign data into a spreadsheet program. Use the Lost IS budget as the percentage of additional available budget you can spend. Then take that number and use it as a multiplier to create your own spend, conversions, and click projections.
  2. If you are using a recommendation engine, such as Adalysis, then you can use the budget projection tool to see a built-in graph for all your budgets (campaign or shared budgets) that will show you the projections based upon this math, so you don’t have to work it out for yourself.

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Using this type of data projection, you can tell your boss or client what will happen if you change your budget (assuming that a seasonality change won’t dramatically change your search volume).

Use Budget and Spend Trends to Avoid Budget Loss

The other thing that happens is that as you improve your Quality Scores, get higher CTRs on broad match, test ads, and improve your marketing is that you naturally spend more each month as you gather more clicks (and hopefully conversion). Trending your actual spend to your daily budget can help you see when you are capable of getting more clicks than you have budget and can anticipate the need to either increase budget or pause some of your worst performing keywords to push your budget towards your most effective keywords.

For example, in this account, they started in November and didn’t spend their budget. They made some improvements in December and almost spent their budget for the month. In January they increased their budget and due to their improvements, actually exceeded their budget (which Google won’t charge you for) in the month.

Just by watching this trend, they had an idea of when they needed to increase their budgets to capture the additional demand.

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Wrap Up

“What will happen if we increase our budget to $x” or “What will happen if we raise our budget by 15%” is a common question that can be easily solved by using Lost Impression Share Budget.

If you can’t raise your budget, you might be better served to either pause your worst performing keywords or move budget into campaigns that are limited by budget but have much lower CPAs or higher ROAs, so you make more profit by just manipulating where you spend your budget.

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If you can raise your budget, then do a little bit of math for each campaign to ensure you are increasing your budget where you will get the most additional conversions and revenue. It’s a good question, what happens if we change our budget, make sure you give the proper answer by ensuring your budgets are allocated correctly now and that you can project exactly what will happen as you manipulate your budgets to increase profits.

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