Solved: Google Ads PMax Performance Tanked After Budget Increase

Hi there,

Thanks for reaching out! I've had a look at the situation with your Google Ads account, and what you're describing is unfortunately quite a common, and brutal, experience with Performance Max. It's a bit of a black box, and when you poke it the wrong way, it can definitley bite back hard. Happy to give you some of my initial thoughts and guidance on why this happened and what you can do about it. It's not just about waiting it out; you've likely triggered an algorithmic panic, and we need to coax it back to health.

We'll need to look at why PMax just imploded...

Alright, let's get straight to it. You've made a perfectly logical move. Google said you were "limited by budget," you saw headroom, so you gave it more money. In the old world of manual search campaigns, that would often work just fine. But Performance Max is a completely different beast. When you increased that budget by 50% overnight, you didn't just give it more fuel; you effectively reset the entire engine while it was running at full speed.

The label "Eligible" can be misleading. While it's not technically in the "Learning" phase, a shock to the system like a huge budget increase forces it into an un-declared, and often chaotic, re-learning period. The algorithm's job is to spend your £30,000 while hitting your tROAS. When it was spending £20,000, it had found a comfortable, predictable pocket of customers that delivered your £100,000 revenue. It knew who to target, where, and when.

By demanding it spend 50% more, you've forced it to immediately look outside that proven pocket of customers. Its first instinct isn't to meticulously find another high-quality audience segment. Its first instinct is panic: "I need to spend another £10,000, *now*!". Where does it find the cheapest volume to spend that money quickly? On the Google Display Network and YouTube. It starts blasting your ads across low-quality app placements and irrelevant videos just to hit the daily spend. This is why your conversion rate plummeted to 0.2%. You're suddenly paying for thousands of impressions and clicks from people who have zero interest in your product. You're not reaching more buyers; you're reaching more of... well, everyone else.

I've seen this happen with many eCommerce accounts. I remember one client in a similar position who was seeing fantastic returns, got excited, and dramatically increased their budget overnight. Their ROAS fell off a cliff within a couple of days. It took careful, methodical work to recover from what is a classic PMax scaling trap.

Here's a visual breakdown of what likely happened inside the algorithm:

So, is it normal for it to take over a week to come back? Yes, absolutely. And at this rate, you're right to be concerned that it might only get back to where it was, not exceed it. The algorithm is now trying to recalibrate from a very messy dataset full of low-quality clicks. It's confused, and you're paying for that confusion.

I'd say you need to switch from CPR to Triage...

Right now, your priority isn't growth; it's stabilisation. You can't build on a foundation that's crumbling. You need to stop the bleeding before you can think about healing. A month or two of lacklustre performance is a long time in paid advertising and can do lasting damage to your account's health.

Here's what I'd be looking at immediately:

1. Pull Back the Budget (Temporarily): This is going to feel counterintuitive, but the first step is often to reduce the budget back to, or close to, its original £20,000 level. You need to take the pressure off the algorithm. Forcing it to perform under these chaotic conditions will only prolong the pain. Bring it back to a level where it was previously stable and let it find its footing again for a few days. You need to re-establish that profitable baseline.

2. Check Your Asset Groups: Dive into your asset groups. Has the performance distribution changed dramatically? PMax might have latched onto one particular asset (like a specific headline or image) and is now showing it to a completely new, wrong audience. Look for any assets that have seen a huge spike in impressions but a terrible conversion rate. You may need to pause them to guide the algorithm back towards what was working.

3. Scrutinise Your Signals: Performance Max relies heavily on the audience signals you provide. Have you given it high-quality data? This is your chance to refine them. Instead of just broad interests, are you feeding it a customer list of your best buyers? Are you using website visitor data from people who have actually purchased? If your signals are too broad, you've essentially given the algorithm a blurry map, and when you told it to drive faster, it got completely lost.

4. Analyse Search Term Insights: This is one of the few windows you have into the PMax black box. Go to the "Insights" tab and look at the search term categories. Have they shifted since you increased the budget? You're probably seeing a lot more generic, top-of-funnel search terms that are less likely to convert. This is evidence that the campaign has broadened its reach too far into discovery mode, away from the high-intent buyers you were previously capturing.

Doing this isn't about fixing the problem overnight. It's about gathering clues. You're trying to understand *where* the algorithm went wrong so you can put guardrails in place to prevent it from happening again. Waiting and hoping is not a strategy. You need to be proactive and guide the machine back to sanity.

You probably should scale like a dimmer switch, not a light switch...

Once you've stabilised the campaign, you can think about scaling again. But this time, you have to do it differently. The key is to make changes that the algorithm can adapt to without panicing. Think of it like a dimmer switch, not a regular on/off light switch. You want to increase the brightness slowly and smoothly.

The rule of thumb we use for our clients is the 15-20% rule. Never increase a campaign's budget by more than 15-20% at a time. After you make the increase, you must leave it alone for at least 4-5 days to allow the system to adjust, stabilise, and optimise for the new budget level. This gives it enough time to explore new pockets of inventory carefully, without abandoning the core audience that's already working.

Let's map out what this looks like in practice compared to what you did:

So, to get from £20,000 to £30,000, your plan should look more like this:

• Day 1: Increase budget from £20,000 to £24,000 (a 20% increase).
• Day 5: Monitor performance. If stable, increase from £24,000 to £28,800 (another 20% increase).
• Day 10: Monitor again. If still stable, you can make the final small adjustment to get to your £30,000 target.

Yes, it's slower. It takes patience. But it's sustainable. This approach avoids the 'scaling shock' and allows you to grow your revenue without sacrificing your ROAS along the way. Your tROAS target is a crucial part of this. If you increase the budget, you're telling Google "find me more conversions, but at the same efficiency". If you do it too quickly, the only way it can try to obey is by finding cheaper, lower-quality traffic, which paradoxically makes it *miss* the ROAS target. It's a self-defeating loop. By scaling slowly, you allow the system to find more *good* conversions that actually help it meet the target.

This is where many businesses fail. They lack the patience and discipline for methodical scaling and instead chase quick wins that end up costing them dearly. It's not about how fast you can increase the spend; it's about how profitably you can sustain it.

You'll need to know the one number that truly matters...

This whole situation brings up a bigger, more strategic question. You're running on a tROAS (Target Return On Ad Spend) strategy, which means you're focused on the immediate return from each sale. While that's good for maintaining day-to-day profitability, it can become a straitjacket when you're trying to scale aggressively.

The real question isn't "what ROAS do I need today?", but "how much can I actually afford to pay to acquire a customer and still be very profitable in the long run?". The answer to that is your Customer Lifetime Value (LTV).

If you only focus on a 5x ROAS, you might be leaving a huge amount of money on the table. What if a customer who costs you a 3x ROAS to acquire today ends up buying from you five more times over the next two years? That initial "less profitable" acquisition suddenly becomes your most valuable asset. Understanding your LTV is the key that unlocks intelligent, aggressive scaling.

Let's break down how to calculate it. You need three numbers:

1. Average Revenue Per Account (ARPA): What's the average amount a customer spends with you in a given period (e.g., per month or per year)? Let's use a per-year basis for this.
2. Gross Margin %: What's your profit margin on that revenue? Not the revenue itself, but the profit.
3. Customer Churn Rate %: What percentage of customers do you lose each period?

The calculation is: LTV = (ARPA * Gross Margin %) / Customer Churn Rate %

Once you know your LTV, you can determine your maximum allowable Customer Acquisition Cost (CAC). A healthy ratio for a growing business is typically an LTV:CAC of 3:1. This means you can afford to spend up to one-third of your customer's lifetime value to acquire them.

Suddenly, the conversation changes. You're no longer just chasing a 5x ROAS. You're making a strategic investment. Maybe you can afford a lower ROAS on the first purchase if it means acquiring a customer worth thousands of pounds over their lifetime. This allows you to lower your tROAS target in Google Ads, giving the algorithm more flexibility to bid more competitively for higher-quality customers, which ultimately helps you scale your total profit, not just your ROAS percentage.

To make this tangible, I've built a simple calculator for you. Play around with your own numbers to see what your LTV and target CAC might be.

This is the main advice I have for you:

Trying to manage and scale a high-spend PMax campaign can feel like trying to tame a wild animal. It's powerful, but unpredictable if you don't understand its behavior. The steps below are designed to get you back in control and build a foundation for sustainable growth, not just volatile spikes. It requires a shift in mindset from short-term reactions to long-term strategy.

Scaling a campaign from £20k to £30k a month and beyond is absolutely possible, but it marks the point where casual adjustments stop working and a more disciplined, strategic approach is required. The brute force method of just upping the budget clearly doesn't work with Google's modern AI-driven campaigns. The machine needs to be guided, not commanded.

Honestly, navigating these challenges is where having an expert eye can make a huge difference. We've seen these patterns across dozens of eCommerce accounts and have developed the processes to manage them. We can spot the warning signs before a crash happens and implement a scaling strategy that grows your revenue without the heart-stopping drops in performance.

If you'd like to have a more in-depth chat, we offer a free initial consultation where we can go through your account together on a call. We could properly diagnose what's happening and lay out a more concrete, step-by-step recovery and growth plan for you. It's a chance to get a second opinion and see how a specialist approach might differ.

Regards,

Team @ Lukas Holschuh