Fellow member of the list, Marcus Halberstram (fake name for privacy), asked:
“I made the mistake of doubling our budget. […] The campaign ROAS was around 500%; it’s now below 300%. CPC exploded.
How do you handle budget increases when campaigns are limited by budget?”
Ouch! That’s a BIG drop in ROAS there.
The reason CPCs exploded was caused by the campaign “overperforming” its ROAS target, combined with the drastic budget increase by Marcus.
Remember: Google will try to spend as much as it can as long as you let it!
If Google’s smart bidding is meeting its ROAS targets and you are suddenly giving it waaaay more budget to spend, it will spend it!
However, the algorithms often get thrown off, spending a lot of money on clicks that do not convert.
To prevent this, I have 3 things in place:
1) Part of my SOP: instead of making massive changes to campaign budgets, I rarely increase budgets by more than 20% per week
2) I am a big fan of portfolio bid strategies with a CPC bid limit. This prevents exploding CPCs
3) Google Ads Script: campaign spend alerts. This script warns me when any campaign shows a significant (*) change in yesterday’s spend compared to the same day for the last 8 weeks.
(*): a change is considered “significant” when the delta is over 1.5 times the standard deviation
– Nils
PS: If you don’t know Marcus Halberstram, then don’t worry, neither do most of his colleagues 😉
PPS: I’m trying to help some more PPC friends by answering questions via an ‘Ask Me Anything’ each Wednesday. If you’ve got a question to which my answer would benefit a larger part of the community, send it my way, and I’ll try to answer it 🙂