Have you ever looked at your Google Ads campaign, saw a glaring red "Limited by budget" warning, and felt completely confused because your campaign was spending less than your daily budget?
How can a campaign be limited by budget it isn't even spending its budget?
I've come across this a few times recently, so let's get to the bottom of this once and for all. I'm going to share the example from my Google Ads coaching call with Charlotte and her team. We meet regularly to go through their "Jyll list" of questions, and this one had a simple answer... if you knew where to look.
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In order to understand what was happening in Charlotte's account, let's have a quick refresher about how budgets work in Google Ads.
When you set a daily budget, Google can spend up to twice that amount on any given day. This can happen if there are spikes in demand, or your conversion rate increases, or something else that makes it seem worthwhile for the algorithm to spend more money. That means that your daily spending limit is 2 x your daily budget; if your campaign spends more than that on a given day, it's called overdelivery, and you won't be billed for the overages.
Additionally, your monthly spending limit is 30.4 times your daily budget. It is very rare for a campaign to exceed your monthly spending limit - but I have seen it happen, and can confirm that you won't be billed for monthly overdelivery either.
Anyway, back to Charlotte. If your campaign has been aggressively spending and hitting its daily spending limit (twice your daily budget) for many days in a row, it will be forced to pump the brakes later in the month to ensure it stays under your monthly spending limit. This is what happened to Charlotte's campaign, and why it was limited by budget even though it was now underspending the daily budget.
I showed Charlotte how to segment the campaign data by day to see exactly what had happened. Let's say the daily budget was $50/day; the campaign had spent at or near $100/day for more than a week, and was now spending only $10-20/day. Not surprisingly, impression share had dropped - because market demand was still there! - but the campaign needed to scale back to stay within the monthly spending limit and thus, was now limited by budget, even though it wasn't even close to spending the daily budget.
What should you do if your campaign is limited by budget, but not spending its daily budget?
- Segment your data by day: Click the "Segment" button, then choose "Time" > "Day." Note that you can only look at up to 14 days at a time like this, so ensure you've picked a date range of 14 days or less.
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Check your key metrics: Look at your Cost and Search impression share columns by day. If you're using Target CPA or Target ROAS bidding, you can also look at Search lost IS (budget) to understand if you are actually limited by budget. If Search lost IS (budget) is at least 10%, then your campaign is truly limited by budget. Conversely, if your total Search impression share decreases proportional to your Cost decreases, it's safe to assume you are probably limited by budget.
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Adjust your targeting: If your budget is fixed and you cannot increase it, then you should tighten your targeting. Try narrowing your geographic radius, focusing on tighter keywords, or decreasing your CPA target/increasing your ROAS target to ensure you're not chronically limited by budget.
Want to diagnose your campaign bottlenecks together? Book a call with me and we'll get your Google Ads working the way you want.
P.S. If you missed Inside Google Ads Live in Toronto, it's not too late! For a limited time only, I'm offering the talk recordings and decks for sale. Plus, all proceeds will be donated to the Fort York Food Bank. Learn more and get access now
