Introduction to budgeting process
The daily budget is the maximum amount of resources we are willing to spend on a single day for a specific campaign in order to collect traffic through Google AdWords system.
Account managers are able to set budgets at any amount with the only restriction that the daily budget of a specific campaign must be higher than the maximum CPC set for keywords in the same campaign.
Why is budgeting important?
Since resources allocated to marketing investments are scarce and millions of search queries are run every day, it is of vital importance to keep track of the amount that is spent on a daily basis for search engine marketing. A misallocation of budget resources could result in an unfavorable balance sheet or in an ineffective marketing investment.
Executing a proper clustering is important, due to the fact that the budget is allocated on a campaign level. Then it is possible to allocate the right amount of resources to different groups of ads effectively. Moreover, each campaign should receive an amount of resources corresponding to its potential traffic.
How does budgeting work in Google Adwords?
As mentioned above, the budget in Google Adwords is set at a campaign level and not at an AdGroup level. This means that several AdGroups share and compete on a common pool of daily resources.
During the course of the day, as the budget for a specific campaign depletes, the ads will appear in the Ad Rank slots with a lower frequency. However, Google AdWords enables your campaigns to deliver up to 20% more (or less) daily clicks than your daily budget would allow. This feature makes it possible to redistribute part of the resources from low-traffic days to significantly higher traffic days. Nonetheless, the total amount of resources spent for a specific period of time cannot exceed the total budget available for this time period.
There are two factors determining the speed of budget depletion. Firstly, the higher the CPC the quicker will be the speed of budget consumption. Secondly, the choice of delivery setting influences budget consumption. In AdWords, there are two settings to choose from:
Standard delivery settings
Ads are delivered evenly throughout the day.
Pros – ads will appear in all parts of the day.
Cons – some impressions might be lost during profitable parts of the day.
Accelerated delivery settings
Ads are shown whenever it is possible until the budget limit is reached.
Pros – if the budget limit is not reached, the ad will be shown whenever it is possible
Cons – if the budget limit is reached before the end of the day the ad will lose impressions
In Google AdWords, the account manager is able to modify the daily budget for a specific campaign up to ten times per day. However, increasing the budget assigned to a specific campaign does not necessarily increase the traffic to the linked website. In fact, a depleted budget restricts the ad to be clicked. Nonetheless, increasing the budget only gives ads the possibility to be clicked, but does not automatically mean that this will happen eventually.
Impressions limited by budget depletion
Insufficient resources or poor restriction in traffic selection might lead to a depletion of the daily budget during the day. Consequently, our campaigns might lose relevant traffic in the remaining hours. In AdWords, this case is labeled as “impressions limited by budget”.
AdWords offers the chance to customize the user interface in order to control for the following important indicators: