Why does increasing Google Ads budget raise cost per conversion?

[Irena]

Hello,

Google recommends to increase the Budget, however shows that after increasing it the Cost per conversion will also increase a lot 🤔

Does anyone know how those two are related and why after increasing the Budget, Cost per conversion goes up? Should I even believe those Google's estimates?

Thanks for any advice!

[Brendan-Optily · Accepted solution]

Hey @Irena, I'd use that recommendation from Google in conjunction with other data points at your disposal.

The first question is whether this campaign is achieving your cost and/or ROAS objectives. If not, then spending more on this campaign is not likely to deliver better results for you.

In the instance you highlight, Google is suggesting that you spend an additional €154 /week and for that you can expect an additional 3.36 conversions. That's a cost per conversion of €45.83 for those additional conversions. Are you happy with that number?

This type of recommendation from Google works on the basis that you're more than happy with your existing results from this campaign and are ready to scale. If you're not happy with your existing results, then adding more money is not the solution, clearly.

If you are happy with your results then begin by making small incremental changes to your budget. Google gives you three choices here - it's the usual tactic that all marketers deploy. Give the customer three choices and there's a good chance that they'll choose the middle one, which is the one you want them to choose. Look at the difference between the top two options and the bottom two - the way they've structured the choices means that you'd never choose the top one.

Remember that Google wants you to spend more money, but sometimes that's not the best thing for your business. IF you are happy with this campaign, then I'd suggest you start with a 5-15% increment today and monitor it daily for the next week to see how it progresses.

I hope that helps. All the best. B

[Irena]

Thank you for your reply! 😊