3 Ways Google Ads Is Wasting Your Money Without You Knowing

google ads wasting money


Key Takeaways:

  • Auto Bidding Strategies: Without a Max CPC cap, Google’s auto bidding strategies can lead to escalating CPCs over time, often without a corresponding increase in conversion rates.
  • Remarketing Audience Expansion: Google’s “optimized targeting” can dilute the effectiveness of your remarketing campaigns by expanding the audience to include brand-naive individuals.
  • Phrase Match Targeting: The expansive nature of phrase match can result in your ads being displayed for thousands of never-ending competitor search queries, necessitating vigilant monitoring and refining of your keyword strategy.

While Google Ads can be a powerful tool for businesses, certain overlooked features and settings can silently drain your budget. In this blog, we explore three ways Google Ads might be wasting your money without you even realizing it.

1. Auto Bidding Strategies Raising CPCs Over Time

Google Ads’ auto bidding strategies can be enticing, promising efficiency and optimization. However, they can also be a silent drain on your budget if not managed with precision. One of the most overlooked aspects of these strategies is the absence of a Max CPC cap. Without this protective measure, we’ve observed Google subtly and steadily increasing average CPCs. In our audits of numerous accounts, we’ve seen CPCs for the same keyword themes skyrocket by as much as 3x over a three-year period. What’s even more concerning is that this isn’t just limited to non-branded terms; even branded terms aren’t immune.

Now, you might think, “Why not just set a CPC cap?” Here’s the catch: Google allows Max CPC caps only for specific auto bidding strategies like Target ROAS, Target CPA, Target Impression Share, and Max Clicks. Popular strategies like Max Conversions or Max Conversion Value don’t offer this option. Moreover, the option to set a CPC cap is hidden under portfolio bidding strategies, making it inaccessible on a campaign-by-campaign basis.

This increase in CPCs without a corresponding rise in conversion rates is a recipe for reduced profitability. To offset a 3x increase in CPC, either the conversion rate or the average order value needs to triple, which is often not feasible. Furthermore, a recent revelation from a former Google executive admitted to increasing rates by 5-10% without notifying advertisers. This lack of transparency further underscores the importance of vigilance and expertise in managing your Google Ads campaigns.

2. Remarketing Audience Expansion

Remarketing is a powerful tool in the digital marketer’s arsenal. By targeting previous visitors with display ads, businesses can remain at the forefront of potential customers’ minds, maximizing the value of their initial search click investment. Especially when considering that search clicks can be significantly more expensive than display clicks, a well-executed remarketing strategy can offer a high return on investment. This is particularly true when businesses invest in strong, in-house developed creative rather than solely relying on Google’s dynamic creative.

However, there’s a hidden pitfall that many advertisers are unaware of: Google’s “optimized targeting.” On the surface, it might sound like a feature designed to enhance your campaigns. In reality, it’s an audience expansion tool that can dilute the effectiveness of your remarketing strategy. Instead of focusing on previous visitors, “optimized targeting” broadens the audience to include brand-naive individuals. This not only deviates from the core principle of remarketing but can also lead to wasted ad spend on less qualified leads.

What’s more concerning is how Google has made this feature the default setting, burying the option to disable it deep within the platform. It’s a subtle move, but one that can have significant implications for advertisers aiming for precise targeting. At Fractional PPC, we’ve highlighted the importance of being vigilant and understanding these nuances. To truly harness the power of remarketing, it’s essential to ensure that your campaigns are genuinely targeting the intended audience and not being inadvertently expanded by hidden platform settings.

FYI: to turn off audience expansion, navigate to the Ad Group level settings of your remarketing campaign, click on “Edit Ad Group targeting”, and disable “Optimized Targeting”. This will need to be done for all remarketing Ad Groups.

3. Phrase Match Targeting Competitor Search Terms

The landscape of keyword matching in Google Ads has evolved significantly over the years. What was once the domain of broad match a few years ago, phrase match has now taken over, especially in its expansive nature. For industries that are highly fragmented, with a plethora of competitors, this can pose a unique challenge. Advertisers might find that their ads, intended for non-branded and non-competitor keywords, are being displayed for competitor search queries. This not only dilutes the targeting precision but can also lead to wasted ad spend on less relevant clicks.

The remedy? A rigorous and consistent examination of the Search Terms report. By actively monitoring and adding negative keywords, advertisers can gradually refine their targeting. However, even the most diligent Google Ads expert might find that it takes months to achieve a “clean” Search Terms report, free from unintended competitor terms.

To further isolate true non-branded from shaky non-branded turned competitive targeting, we recommend an “old school” strategic approach for high-value keywords. By segregating Exact match and Phrase match versions of these keywords into separate campaigns, advertisers can achieve better control over their budget allocation. This method, while reminiscent of older Google Ads strategies, has proven to be effective. It ensures that the budget is channeled towards genuine high-value non-brand search queries, minimizing the risk of inadvertently targeting lower-value competitor search terms.

Final Thoughts

Navigating Google Ads requires a blend of expertise, vigilance, and strategic thinking. By being aware of these potential pitfalls and implementing proactive measures, advertisers can ensure that their campaigns are both cost-effective and high-performing. In the world of Google Ads, knowledge is your best defense against unnecessary costs.

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