In light of recent antitrust lawsuits and scrutiny over its ad business practices, advertisers are becoming more concerned that Google may be wasting their ad budgets in subtle ways. While Google provides a powerful platform for targeting customers, savvy advertisers need to be vigilant to ensure they are getting true value from their ad spend.
With Google controlling the auction dynamics and having full access to advertisers’ account data, it has the means and potential incentive to make advertisers spend more than required.
Advertisers should be aware of areas where Google Ads may subtly lead to inflated spending and take steps to optimize their accounts accordingly. Here are seven causes of inflated ad spend and ways to address the issue.
How Google May Lead Advertisers to Overspend
There are several ways Google encourages advertisers to spend more than intended or extract higher revenues from accounts, such as:
1. Using Broad Match Without Negative Keywords
One of the most powerful targeting capabilities of Google Ads is the ability to use Broad Match keywords. This allows your ad to show up for a wide range of searches related to your keywords, even if the query doesn’t contain the exact keyword.
However, some of these searches could be for more competitive terms that result in much higher cost-per-click (CPC) than expected. Other search terms may be less relevant and while costing less per click, may return poor ROAS due to lower conversion rates.
The solution is to set up a robust list of negative keywords to exclude any searches that are not highly relevant or fail to convert at justified CPCs. Otherwise, a Broad Match keyword that normally costs $1 per click could trigger ads for $5 clicks, quickly inflating your costs.
Optmyzr’s Keyword Lasso, Negative Keyword Finder, and its many prebuilt strategies for Rule Engine can all help advertisers more effectively manage keyword targeting.
Recommended Reading: Our recent study of 2637 Google Ads accounts to determine the impact of keyword match types and Smart Bidding strategies. It’s Broad Match vs. Exact Match and Target CPA vs. Target ROAS.
2. Using Broad Match Without Smart Bidding
When employing a Broad Match approach, it’s best practice to enable Smart Bidding strategies like Target CPA or Target ROAS. With Broad Match, an ad can appear for a wide range of searches with different expected conversion rates. Smart Bidding leverages Google’s machine learning to determine the optimal bid for each variation based on your targets.
For example, it may bid $5 for a commercial query that’s more likely to convert, versus $0.50 for a low-intent query seeking only information. This automatically adjusts bids based on the search to help control CPCs to keep CPA and ROAS within your targets.
By pairing Broad Match and Smart Bidding, advertisers can capitalize on Google’s reach while controlling spending. The combination provides expanded exposure at optimized CPCs tailored to each search query.
3. Changing Budgets Too Frequently
Google will cap your total monthly ad spend based on the daily budgets you set multiplied by the average number of days in a month. If you frequently change your daily budgets, the system will add up all those temporary budget levels over the month.
Google may also overdeliver on any day because it expects traffic on other days to be lower.
There are good reasons why advertisers may change budgets frequently — for example, in response to short-term offers, or changes in inventory and the accompanying changes in spend prioritization.
This means your actual monthly spend could far exceed the level you intended. And knowing how much you may be on the hook for can get very confusing when you change budgets throughout the month.
It is recommended that advertisers use automated tools like Optmyzr’s budget management features to ensure that Google doesn’t exceed your true budget. For example, by optimizing budgets throughout the month, while resting assured that campaigns will be paused for the remainder of a budget period when your ad budget has been exhausted.
Tools like Optmyzr even allow you to deploy flighted budgets that are not bound to the first and last days of a calendar month.
4. Ignoring Quality Score
Your ad’s Quality Score is a major factor that Google uses in determining your cost-per-click in the auction. Quality Score is influenced by expected click-through rate, ad relevance, landing page experience, and other factors. The higher your Quality Score, the lower your CPC for the same ad position.
Optimizing factors like landing page speed, ad copy, keywords, and extensions can improve Quality Score. But if you ignore it, CPCs will be higher than necessary to maintain your position, needlessly inflating your costs.
Optmyzr’s Quality Score tool helps you monitor for changes and identify opportunities for improvement by breaking out low-Quality Score keywords into new ad groups, where you can add a more relevant ad and landing page.
5. Turning On Auto-Applied Recommendations
Google Ads offers optimizations called auto-apply recommendations that it can apply automatically to your account (with your consent). These are based on its analysis of potential “headroom” to increase conversions. However, Google’s algorithm may not have a full understanding of your true conversion value.
For example, if you run a B2B lead gen campaign but only track form submissions as conversions, the system does not know the downstream value of a lead. Google may ramp up spend while chasing unqualified leads.
Advertisers should connect Google to their CRM data and review recommendations from Google manually to focus on true conversion value.
Optmyzr’s Rule Engine can connect your PPC campaigns to your business data and a variety of different conversion goals, so that you’re always in charge of determining what should be automatically changed and when.
The majority of Optmyzr’s optimization suggestions are calculated using our own algorithms that prioritize advertiser results over Google profits. But we also use a handful of Google’s optimization suggestions as the basis for further analysis.
For example, where Google recommends raising a budget to capture more conversions, Optmyzr applies an additional layer of logic to predict the incremental cost of those new conversions. Only if that cost is reasonable do our tools recommend increasing the budget.
6. Not Tracking High-Value Conversions
Similarly, if you do not properly track high-value conversions beyond simple form submissions, Google will optimize purely for form submissions. The system bases spend on whichever conversion you specify, so you need to make sure it reflects your actual desired outcome.
For a B2B company, that may require tracking CRM data on closed sales attached to converted leads. For ecommerce, connect your back-end order data.
This focuses Google’s algorithms on your real goals versus whatever limited conversion you happened to initially set up tracking for in your account.
When you use an independent third-party PPC tool like Optmyzr, you can connect your business data without that data flowing to Google. Use Optmyzr to create rules and logic with your business data, and then send only the resulting Target ROAS and Target CPA to guide Google in how it treats your ads in its auctions.
7. Using the Display Network, Performance Max, and YouTube Without Excluding Placements
A major mistake advertisers make is not proactively excluding unwanted placements in the Google Display Network, which has long faced quality control concerns from more advanced practitioners.
By default, your Display ads can run across millions of websites, videos, and apps that Google partners with for its Display network. However, many of these sites may be irrelevant to your offer or have very poor conversion rates.
Savvy advertisers will use placement exclusions to restrict Display ads only to highly relevant sites that have been proven to generate conversions. Otherwise, your budget gets wasted as Google serves your ads across its vast Display network to meet your daily budget.
How to Optimize Spending With Google Ads
Given Google’s incentives and control, PPC advertisers must take smart steps to ensure their budgets drive true value and performance. Some of these solutions include:
1. Use Independent Optimization Tools
Google Ads and the Google Ads Editor let you do a lot to optimize your ads, but they still have a number of issues related to convenience, sharing of data, and managing large numbers of accounts in little time.
Consider PPC management software like Optmyzr that can connect to your Google Ads accounts, but also integrate broader business data. This allows you to optimize bid strategies based on profitability metrics and other data, without fully exposing it to Google.
Advertisers get the benefit of Google’s targeting power but use independent tools to set optimal bids and targets based on their confidential business data. Google sees the optimal bids and targets — not your proprietary data driving it.
Third-party tools (particularly Optmyzr) also provide a high degree of support that advertisers typically crave then they regularly deal with long waits for Google’s support tickets and pushy reps.
2. Refine Tracking for True Conversions
As discussed above, advertisers need to look beyond basic form submissions and make sure they’re tracking true conversion KPIs in their accounts. This may require linking CRM data on lead quality or closed deals back to clicks and conversions.
Ecommerce advertisers can adjust conversion values to exclude returns or account for bundles/subscriptions to offer Google a more complete picture of the value they get from ads.
3. Actively Manage Quality Score
Don’t just set it and forget it when it comes to Quality Score. Actively monitor scores for keywords, ads, and landing pages. Test changes to copy, headlines, ad extensions, site speed, etc. to maintain optimal scores that minimize CPCs.
Quality Scores can suffer without ongoing optimization, so you end up paying more for the same results. So think of Quality Score management as a constant optimization loop.
In today’s complex digital advertising ecosystem, maximizing return on ad spend ultimately comes down to the advertiser’s savvy. While Google provides incredibly powerful targeting capabilities, its incentives may not fully align with advertisers’ need to get the highest value from their budgets.
By understanding areas where Google may cause advertisers to overspend, focusing optimization on true conversion metrics, using independent tools like Optmyzr, and constantly honing quality, advertisers can fulfill the promise of pay-per-click advertising.
With the right optimization approach, Google Ads can deliver phenomenal ROI. But it requires an expert human touch to ensure subtle factors don’t lead to wasted spend.