AdWords Budget Optimizer is a Great Way to Spend Money… And That’s It

Recently, we received a question from a reader in regards to Google AdWords’ Budget Optimizer. We have not discussed this option here on the blog so I thought I’d give a description of this tool while answering our reader’s question.

First, let’s get the basics out of the way and discuss what Budget Optimizer is, and where you can find this option within the AdWords interface.

What is Budget Optimizer? It’s an automated keyword bid management tool that adjusts your bids throughout your campaign. Set your 30-day target budget, and the tool will actively seek out the most clicks possible within that budget.

Within the ‘Campaign Settings’ screen, under the ‘Networks and bidding’ section you’ll see a link for ‘Change bidding strategy.’ This is where the Budget Optimizer is located:

Once you’ve clicked on on this link you will arrive at a screen with a few different bidding options. Toward the bottom of the page you will find the ‘Budget Optimizer’ option. This is where you can choose to utilize this bidding option:

From here, you can enter your monthly click budget and AdWords will automatically adjust your keywords bids to spend the entirety of  your budget.

Now that I’ve shown you where and how to set up Budget Optimizer, I will tell you why you should not use this option.

So, how does AdWords actually manage your automated bids? That is where our reader’s question comes in: “Does budget optimizer set your keyword bid according to CTR of the keyword in the ad group or it just keep the same bid for all keywords throughout the ad group as the days progress?”

To answer this question: the core metric that AdWords focuses on when optimizing your budget is your budget. The goal is to spend your entire budget for the month. In summary, you’re saying, “Hi Google. Here is my money. Please feel free to spend it however you see fit. ” If you ask me, that is a terrible strategy.

The AdWords literature says that this option generates as many clicks possible with your allotted monthly budget. But if you have a robust keyword list in your campaign, you have no control over which keyword bids are raised and/or lowered.

Also, the most important reason not use Budget Optimizer is that it’s not focused on conversions or ROI. The Budget Optimizer does not gauge success other than spending your money. As you know, ROI should be the guiding light in all of your PPC activities. So, to answer our reader’s question, it doesn’t really matter how Budget Optimizer adjusts your bids because you shouldn’t use this option anyway.

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This entry was posted on Wednesday, April 22nd, 2009 at 10:06 am and is filed under Google AdWords. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.