This is post N° 3 in my series of posts about Google Ads step-by-step daily optimization routines (see the introduction here, and the general Google Ads optimization routine overview here).
Alright, so as I was saying on my previous article (make sure you read it first HERE), with my weekly Google Ads optimization routine, Monday is one of the hardest days, when you have to do more work if your account is underperforming.
Step 1: Check your “budget pacing” (current and projected ad spend)
The first thing you need to do on Monday is check your current ad spend for the month, vs. how much you are supposed to spend by the end of the month.
In an ideal world, if an account is performing well, the budget should be infinite.
Why limit yourself if you have a machine that spits out $5 for every $1 you put in?
However, in many cases there are cashflow limitations, stock/scale limitations, credit card limits, etc. For those reasons, we usually deal with limited budgets.
The idea is to have an even spend on a daily basis, as much as possible, so you get a steady flow of leads and sales, you give steady data to Google Ads’ algorithm (which helps with optimization), and you don’t get any surprises by the end of the month, such as overspending or underspending your monthly budget.
You don’t want your daily ad spend to look like a rollercoaster, but more like a flat horizontal line.
This is what is called “budget pacing”.
This is not a sexy topic, in fact it’s quite boring, but it’s really important.
Let’s say today is Monday, August 15th , 2022.
August has 31 days, and by this date, assuming you do this on the morning, 14 days have passed, so you should have spent 14/31 = 45.16% of your monthly budget.
Now, let’s say your budget is $10,000/month, and you have already spent $6,000.
That’s 60% of your budget. This is higher than the correct pacing of 45.16% of the budget by August 15th.
This is problem N° 1: You’re overspending.
Since August has 31 days, your daily ad spend should be an average of $10,000/31 = $322.58
But you’re spending a lot more than that.
Since you have spent $6,000, and 14 days have gone by, you have spent an average of $6,000/14 = $428.57.
Let’s say also that you have spent $4,000 over the last 7 days. That means you have spent an average of $4,000/7 = $571.42 per day.
Now, this wouldn’t be a problem if over the last 7 days your daily ad spend has been what it should have, given how much days in the month you have left.
So let’s calculate that first.
By August 15th, you have 17 days left (including the 15th), and since you have spent $6,000 already, you have $4,000 left to spend.
Your daily ad spend from now until the end of the month should be $4,000/17 = $235.29, in order to precisely hit $10,000 in ad spend by the end of the month.
Your actual average daily ad spend (over the last 7 days) should be equal or slightly less than this amount, so you don’t end up overspending or underspending.
But $571.42 (your daily average ad spend over the last 7 days) is a lot more than $235.29
Oh-oh.
This is problem N° 2:
You’re not only overspending (when considering the whole month), but you’re spending at a faster daily rate than you should, and if this continues, by the end of the month you will have spent a lot more than you were supposed to (about $15,700, instead of $10,000).
Alright, so how do we fix this, so you don’t get your head chopped off by the end of the month?
Simple, you just need to bring your average daily ad spend to what it’s supposed to be, i.e. $235.29, instead of the current $571.42.
So, you have to decrease your average daily ad spend by about $300 (exactly $571.42 – $235.29 = $336.13).
The easiest way to do this is to change your total daily budget across all campaigns by a fixed percentage.
In this case, the percentage you need to adjust is:
Ideal daily average ad spend/Actual daily average ad spend/ = 235.29/571.42= 41.18%
So, you need to decrease your daily ad spend by about 41.18%.
Notice I said “daily average ad spend”, because there is a difference between how much you give as a budget in the platform to a campaign, and what it actually spends.
If, on the other hand, the situation was that you’re UNDER-spending, you would need to increase your daily ad spend accordingly. The process is the same, namely:
- Figure out what’s the right daily ad spend, depending on how much budget and days in the month you have left
- Figure out what’s the actual average ad spend over the last 7 days
- Increase the daily average ad spend as per the formula above
Important: Like many things in SEM/PPC, this is not an exact science, and you might find that even if you increase/decrease your daily budget by the right amount, what is actually spent is not the same.
This is normal and to be expected. Traffic patterns fluctuate all the time – that’s why I recommend a weekly budget check. Actually, once you’re getting close to the end of the month, it’s better to do these checks more often, just in case.
Also, some campaigns might be hitting the limit in terms of how many impressions are available, so even if you give them more budget, they won’t spend it. However, if a campaign is spending its current daily budget most of the time, it should be able to accommodate a higher budget and actually spend it.
If your account is currently performing well (i.e. it hasn’t met my 2-fold criteria for underperformance), this is all you have to do on Monday.
However, if your account is underperforming, you will need to perform and additional budget adjustment.
Step 2: Rebalance your budgets
This is what I call the “budget rebalance” method. It’s very similar to balancing a stock portfolio.
The logic here is, just like in the stock market, some campaigns will perform better than others over time. And this is constantly changing.
So, in order to get a good performance consistently over time, you need to re-allocate budgets between campaigns every so often (I recommend once a week or more), so that the best performing campaigns are always getting a corresponding percentage of the total budget.
This helps ensure that you hit your KPIs by the end of the month.
If a campaign is working well, put more budget into it. And if a campaign is not working well, take budget away from it (and give it to the best performers).
Simple.
It’s just like rebalancing a stock portfolio.
There’s no exact recipe for this, but I like the following method:
- Sort your campaigns in descending order by cost per conversion (cost per sale or cost per lead)
- Reduce the budget from the worst campaign by 20%, and give that budget (the amount, not the percentage) to your best campaign (should be at the bottom or near the bottom of the list)
- Go to the second worst campaign and repeat the process, but with a slightly lower percentage (e.g. 15%), and give that budget to your second best performer
- And so on
This way, you are making the biggest changes to your worst and best performing campaigns, basically inverting their budgets, and doing the same but in a smaller (proportional) scale with the rest of the campaigns.
Step 3: Adjust your bids
Another thing you should do on Mondays is adjust your bids (both automated and manual).
But you can probably guess what I’m going to say now – do NOT touch your bids if your account is performing just fine!
So if indeed your bids need adjustments, do this:
Set your date range to the last 7 days.
For anything that’s working well, you can either leave it alone (if you have a limited budget), or give it a higher bid (so you get more traffic & conversions from that element, assuming you have the budget).
Anything that’s underperforming, should get its bid reduced, so it gets less traffic.
If you want to do this the quick & dirty way, just change your bids at the campaign level (if you are using Maximize Clicks with a Max CPC, this is actually the only way).
You don’t need to change bids at the ad group or keyword level, unless you want a finer degree of control, but this will take you a lot longer, especially if your account is complex.
Regardless, the general procedure for changing bids is making small changes, depending on how far off you are from your goal KPI. Especially with automated bidding, you don’t want to change your bids by more than, say, 20%, because that could throw the bidding algorithm out of whack.
For example, if your target cost per conversion is $30, but a campaign/ad group/keyword is giving you $50, you need to drop the bid on that element by 20%. And depending on how things go, you might have to do this again in a few days (next Thursday or Monday).
You can also choose to pause those elements if your account is REALLY out of KPIs.
This is kind of an extreme measure, as it’s never good to pause elements (especially campaigns or ad groups), because you reset the optimization algorithm. But it will stop the bleeding, and you can try unpausing those elements again later, once your account is performing within your KPIs.
If your target cost per conversion is $30 and you have elements giving you $10, you can increase the bid on those elements by 20%, so you get more traffic from them. Or you can just leave them alone if you don’t have more budget.
If an element is close to your target cost per conversion of $30 (for example, $25 or $35), the bid adjustment should be more gradual, such as 10% or 5% in either direction (positive or negative).
There is another “secret” technique for bid optimization that I learned more than a decade ago from a PPC course, and I haven’t seen it taught anywhere else. However, I only teach this secret technique to my coaching clients (and apply it myself to my full-service client’s accounts). If you’re interested in that, click here to book a no-obligation consultation with me.
Conclusion
Well, I hope all that mumbo-jumbo made sense to you!
I wasn’t kidding when I told you Mondays are complicated…
The good news is, if you did this process correctly, the rest of the week should be more relaxed, and as your budget and bid adjustments kick in, your account should get closer to your KPIs as the days go by.
P.S.: If you need help with your Google Ads, go here to book a free consultation with me.
