AdWords
2.3K members online now
2.3K members online now
Improve your AdWords performance and boost your ROI, CTR, and Quality Score
Guide Me
star_border
Reply

What happens if I decrease my daily budget?

[ Edited ]
Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hi,

 

I have been working on optimizing my company's account and I've been able to decrease our CPA, however, my manager wants me to decrease the daily budget per campaign. What effects might this action have on the account performance and on CPA?

 

Also, how can I know the optimal budget for a campaign that would yield the lowest CPA? 

Marked as Best Answer.
Solution
Accepted by topic author Rana g
September 2015

Re: What happens if I decrease my daily budget?

Participant ✭ ☆ ☆
# 2
Participant ✭ ☆ ☆
Hi Rana G

I will go first with my thoughts on your questions.

Depending on the size of the campaigns in terms of clicks (assuming a statistically sound sample is within your campaign), and clicks needed per conversion, the most significant metric affected may be your actual number of acquisitions. I don't believe it will affect the campaign cpa, based only on reducing campaign budget.

For example in its crudest sense, if you acquired target x at $5 with a $200 budget (40 targets / customers / goals), it is my belief you would achieve the same $5 cpa with a $100 budget, but with just 20 targets / customers / goals acquired, ceteris paribus, all other things equal.

That is the simple theoretical answer. However, there may be several scenarios where this may not be true, and all other areas are not equal. For example, if your ads were showing at all times, whos to say it wasn't the morning times burning up your budget where the afternoon performed well? In this scenario, cutting budget and not paying attention to conversion times may allow for your budget to be burned in the morning thus dramatically affecting cpa. One tip here is to check and optimise performance times and ad scheduling.

Could it also be possible by cutting budget, opportunities are missed? If literally you are down to a low number of clicks within a campaign, this may become quite risky given you really dont know the motivations of a searcher and at what point they are in their buying decision process. Should you have a 'bad day' this may subsequently lead to an uninformed decision in campaign actions. Consider carefully clicks needed per conversion and any GA data patterns.

One other factor which is a grey area, may be your bidding strategy. For example, if you restrict a budget too much and you were on a flex strategy such as target cpa, this may take longer for the bidding strategy algorithms to learn and adapt, thus possible restricting performance somewhat.

One suggestion could be to investigate the use of shared budgets within your account? Or, the use of automated rules. For example, increase budget should conditions be met such as spend = x and cost per conversions = y. I believe you can use automated rules for this, or if your requirements are a little more complex, perhaps create a script that runs to your preferred frequency.

In understanding the optimal cpa, this will take time and testing the sweet spot. But be careful, search isn't always an area where future actions are mirrored by retrospective data, things are constantly changing. My advice is to be mindful not to chasing the 'holy grail equilibrium' to such an extent it hinders growth. Discovery via upper funnel search terms is as important as 'cutting' in my experience so long as your are providing positive ROI, of course Smiley Happy

I hope my thoughts help a little.

I wish you good luck

James Edward

Re: What happens if I decrease my daily budget?

Visitor ✭ ✭ ✭
# 3
Visitor ✭ ✭ ✭
Thank you very much Smiley Happy