Every digital marketing agency I have worked at, and every digital marketing agency my colleagues have worked at, and the advertising agency I now run with my business partner — ALL of these places have one Google Ads practice in common: They all work with monthly advertising budgets for their clients.
For example, ABC Company has a monthly Google Ads budget of $10,000. It’s our job (the marketing agency) to spend that money in 28 – 31 days depending on the month.
So what happens if all $10,000 gets spent before the end of the month?
Of course, we all do our best to pace budgets so this scenario doesn’t happen, but it inevitably does. Until the last few years, a standard practice was to reduce the daily budgets within the account to $0.01 per day until the next month. This did two things:
- It stopped spending.
- it didn’t stop ads.
The second point is a technicality. Many clients hate the thought of their ads not running. So even though you’re likely to only get a few impressions with a daily budget of $0.01, the ads are technically still live, and it’s easier say that to the crazy clients whose minds melt when their ads are paused than to explain there is very little difference between the two in practice.
Is it dumb? Absolutely. But there were no downsides to doing so, and still aren’t depending on what bidding strategy you’re using. That’s the main point I want to talk about: Bidding strategies.
Automated bidding strategies, like maximize clicks, maximize conversions, target CPA, and so on consider all impactful variables when optimizing a campaign towards their respective goal. When you make a significant change to a campaign, it sends the bidding strategy back into learning mode. This includes budgets.
Imagine telling a robot to dig a hole. You give it a shovel, some general guidance on the size and kind of hole you want, then let it get to work. Now, take its shovel away and give it a teaspoon instead. It’s not literally impossible to dig a comparably-sized hole with a teaspoon as you would expect with a shovel, but it is an unreasonable request. If you did that to a human instead of a robot and they actually attempted to do it, they might go insane, and that would make sense.
This is what happens when you reduce daily budgets to $0.01 per day for campaigns using automated bidding strategies. The AI goes into learning mode trying to achieve your goals with a penny. It’s unrealistic, but the AI doesn’t know that because they’re a robot. It’s just working with the information you gave to it.
I’m sure Google will try to fix this in the future, but my experience so far is the $0.01 daily budget tactic breaks the automated bidding strategy AI so badly that it can’t recover when you give it a shovel again (i.e. raise the daily budget back up to a reasonable amount). By “break”, I mean the campaign stops delivering ads — no impressions, no spend. I’ve had to temporarily switch campaigns over to manual CPC bidding for a few days just to get ads back up and delivering. It ends up being a big waste of time.
In contrast, pausing campaigns doesn’t affect the learning period of automated bidding strategies. It just freezes time until you enable them again. For that reason, it’s a better idea to pause campaigns instead of reduce daily budgets to $0.01, at least for automated bidding strategies. As for manual bidding strategies, it doesn’t matter either way.