While Google offers highly effective ad formats for getting in front of relevant users, several Google ad campaign settings and policies tend to work in opposition to advertiser goals. A common theme is Google’s policy of automatically opting advertisers into broader targeting settings of specious value from a ROAS standpoint.
The list below—while certainly not exhaustive—includes the settings and policies we view as the most egregious overspenders. Savvy advertisers will want to review their accounts to ensure these settings haven’t been applied inadvertently; doing so could mean thousand of dollars in cost savings in the remainder of 2020 alone.
1. Targeting Expansion in Display Campaigns
Expectation: Reach additional users similar to the ones you’re already targeting via audiences.
Reality: ‘Similar to’ is vague language, and Google isn’t clear about the criteria by which users are judged to be sufficiently similar. In our experience, Google has been very permissive in categorizing such users; in one particular instance, we saw ad spend spike in a demographic that was highly unlikely to be interested in the product on offer.
While targeting expansion may be effective in some cases, it can also contravene an advertiser’s stated goals. If you intend to run a remarketing campaign based on specific audience lists, be aware that Google automatically opts all display ad groups into a ‘conservative’ version of targeting expansion during the process of campaign setup. This means you won’t be running a true remarketing campaign unless you deliberately adjust your ad group settings. As noted above, even ‘conservative’ targeting expansion may not be all that conservative, driving a significant amount of non-converting traffic that weighs down ROAS.
2. Google Grants Itself Permission to Spend 2x Your Stated Daily Budget
Up to 2 times your campaign’s average daily budget can be used to show your ads on certain days of the week or certain times of the month based on fluctuations in traffic — but not more than you spend on your campaigns each month. For campaigns where you pay for conversions, your daily costs may exceed 2 times your average daily budget.
Expectation: Google is allowed to overspend your average daily budget by 2x, but this is only to help you better maximize ROAS by offering flexibility on higher traffic days. As long as your budget is consistent, Google will never spend more than your average daily budget multiplied by 30.4 (avg. number of days in a month.)
Reality: Depending on the size of your campaign budget, 2x may or may not be material. Google uses an example of a $10/day campaign spending $20. We agree, that’s not much to lose sleep over. But what about a $10K/day campaign? That could be a problem, especially if it happens several days in a row at a ROAS below target.
The bigger issue with this Google policy, however, is the caveat regarding ‘consistent’ average daily budgets. Only when budgets remain consistent will Google comply with the 30.4-day spend limitation; as soon as you adjust budgets, the clock resets and Google no longer needs to abide by the previous spend restriction.
Why is this such a problem? Well, budgets are rarely consistent—even over short time periods—given seasonality and promotional changes, inventory depletion, and cash flow management. Google knows this. In practice, this seemingly innocuous ‘flexibility’ allows Google to consistently overspend your average daily budget.
3. Display Network Opt-In for Text Ads
Expectation: Expand reach to additional relevant audiences; text ads will be shown only on the display network when they’re ‘predicted to be effective.’
Reality: Text and display are distinct ad formats with different targeting criteria. Text ads are keyword-based and will show only when a user enters a search query targeted by the advertiser. Assuming the keyword list is adequately thoughtful, this translates to a user interaction with high purchase intent. For that, an advertiser will often be willing to bid quite aggressively.
Alternatively, display ads are either audience or placement based, and even highly relevant audiences and placements will tend to have lower intent than a user actively searching for an advertiser’s products. For example, I may be interested in purchasing a kayak, but my intent when I’m served a display ad on the sidebar of a news article is much lower than when I search for ‘Perception Access 9.5 Kayak.’ In addition to the intrinsically lower intent of display ads, what makes this particular opt-in worse is that advertisers can’t even choose their own audiences; that’s left entirely up to Google.
In running display and text together, Google de-emphasizes the significant differences between these two formats. Google has no shortage of ‘black box’ solutions, but advertisers should be willing to give up transparency and control only as a tradeoff for better performance. The automatic opt-in to the display network certainly lacks transparency and control, but unfortunately the performance isn’t there, either.
4. Search Network (Google Search Partners) Opt-In for Text Ads
Expectation: Increase reach while achieving similar efficiency by expanding text ads to the Google search partners network.
Reality: While the automatic nature of this opt-in is frustrating, it’s probably the least offensive of the group. Because of much lower conversion volume, it’s unsurprising that search partner efficiency will deviate from that seen on Google proper, but at least it’s still serving ads based on user queries, as opposed to an entirely different (and opaque) targeting criteria of (3). But there’s still a strong possibility your ads are consistently generating lower ROAS on search partner sites; and even with the lower associated click volume, there’s potentially thousands of dollars in cost savings when considered over longer time frames.
In some cases, however, search partner efficiency may be acceptable, so if you’re currently using this setting you’ll want to engage in some analysis before opting out completely. Unfortunately, the decision is binary: You’re either in or out. Google does not allow advertisers to choose to show on search partners with better performance and exclude others consistently below target. Additionally, there are no separate bid modifiers, so while there’s a bit more transparency than in (1) and (3), control is still lacking.
* * *
There will be certain cases in which the settings above are appropriate to an advertiser’s goals, but the exceptions prove the rule. In general, these settings and policies tend to encourage increased ad spend at an efficiency below both the advertiser’s target and the account average. Advertisers should be aware of Google’s policy of automatically opting campaigns into these settings so as to take corrective action before a campaign is launched. Advertisers should also request an audit of these settings on any currently enabled campaigns to ensure they’re being deployed only where effective. In many cases, there will be substantial cost savings at stake.
Eight Oh Two Marketing is a boutique, search-marketing agency for enterprise. As the VP of Digital Advertising, Dan Pietrucha is an industry veteran. With degrees in commerce, finance and philosophy, Dan takes an analytical approach to any challenge, and you’ll often find him knee-deep in projection models and pivot tables. Click here to learn more about Eight Oh Two, our methodology and our team.
The Surprisingly Common Mistakes That Drain Money From Text Ad Campaigns Setting up paid search text ads seems quite straightforward.…
While Auction Insights reports are a critical tool for monitoring changes in competitor impression share, it’s also important to understand…
We love to talk shop!
And we’d love an opportunity to show you what we are made of with a complimentary audit. If you let us take a look under the hood, we’ll come back with a thorough audit of your campaigns, recommendations to optimize and opportunities to explore.
CALL US AT (802) 681-4329