Solved: Google Ads tROAS Plummet After Budget Increase

Hi there,

Thanks for reaching out about the performance drop in your Google Ads account. The situation you're in is a classic, and frankly frustrating, scaling problem. You've done well to get to £100k a month from a £20k spend—that's a solid 5x ROAS. But hitting a wall like this when you try to push further is incredibly common, especially with Performance Max at the helm. It feels like the machine is working against you, and in a way, it is.

You're right to be concerned. A performance drop this severe isn't something you can just wait out, hoping it'll fix itself. It's a clear signal that your current strategy has hit its ceiling. The good news is, this isn't a dead end. It's just the point where you have to evolve from simply feeding the machine more money to strategically guiding it. I'm happy to give you some of my initial thoughts and a bit of guidance on how I'd approach this. The core issue isn't just the budget increase; it's the structure of your account and your reliance on an automated system that has different priorities than you do.

We'll need to look at what's really happening inside the PMax "black box"...

First, let's break down why a 50% budget jump, from £20k to £30k, can cause such a catastrophic failure, even if it says "Eligible" and not "Learning". While the status might not officially say "learning," an increase of that magnitude absolutely forces the algorithm into a frantic re-calibration phase. Think of it this way: for months, Google's system has become incredibly efficient at finding you customers for around £20k. It knows the most profitable pockets of the internet for your business at that specific spend level—the best search terms, the most effective shopping placements, the highest-converting YouTube audiences.

When you suddenly hand it an extra £10,000, it can't just find 50% more of those same perfect customers. That pool of low-hanging fruit has already been picked. Instead, the algorithm is forced to explore new, untested territory to spend that extra cash. This is where PMax's nature becomes a liability. Because it's a "black box" campaign type that bundles Search, Shopping, Display, YouTube, and Discover, it has free rein to spend that new budget wherever it sees fit. And nine times out of ten, it'll start pumping money into broader, lower-intent channels like the Google Display Network or YouTube placements. These channels are great for volume but notorious for having much lower conversion rates and ROAS compared to high-intent channels like Search and Shopping.

So, your blended performance collapses. Your previously stable 5x ROAS, driven by efficient Search and Shopping, is now being dragged down by a huge chunk of new, inefficient Display spend. The overall conversion rate plummets from, say, 5% to the 0.2% you're seeing, because you're suddenly showing ads to millions of people who aren't actively looking for your product. It's like having a brilliant salesperson who is great at closing leads that come to them, and then telling them they now have to spend half their day cold-calling random numbers from the phone book. Their overall success rate is going to nosedive.

This isn't just a theory; it's a pattern we see time and again, particularly with software and eCommerce clients who hit this exact spending plateau. I remember one SaaS client who was in an almost identical situation. They were getting a steady CPA of around £100 and tried to scale their PMax budget by 40%. Their CPA shot up to over £300 overnight. When we dug in (as much as PMax allows), the data pointed to a massive increase in spend on YouTube and Display placements with almost zero conversions to show for it. The system was simply trying to spend the money, not spend it wisely. Your experience isn't an anomaly; it's the predictable outcome of pushing an automated system beyond its efficient frontier without changing the underlying strategy.

I'd say you need to ignore Google's "Limited by Budget" siren song...

This leads directly to the next critical point: you need to treat the "Limited by Budget" status with extreme suspicion. Google's UI is designed to encourage you to spend more money. That notification is, for all intents and purposes, a sales tool. It's Google telling you, "Hey, there are more auctions out there where your ads *could* show. Give us more money and we'll show them for you."

What it absolutely does *not* tell you is the quality of those additional auctions. It doesn't say, "There are more high-intent buyers searching for your exact product, and you're missing them." It just says there's more inventory available. That inventory could be low-quality mobile game apps, irrelevant blogs, or broad YouTube channels that have a passing thematic connection to your business. The notification creates a sense of FOMO (fear of missing out), making you think you're leaving money on the table. In reality, by increasing the budget so drastically based on this prompt, you've started paying a premium for scraps.

A much better way to think about it is that you've found the 'Maximum Efficient Budget' for your current account structure. At £20k, you're capturing the vast majority of profitable traffic available to your PMax campaign. The extra "headroom" Google is flagging is almost certainly unprofitable headroom. The challenge isn't to spend more money within the same structure; the challenge is to *change the structure* so you can create new, profitable headroom.

This requires a mental shift from being a passive 'budget allocator' to an active 'account architect'. You can't just trust the algorithm to scale for you. The algorithm's goal is to hit your tROAS target *on average* across the entire budget. When you give it more money, it has more room to experiment with unprofitable pockets of traffic, hoping that your core high-performers will balance out the bad spend and keep the average ROAS somewhere near your target. As you've seen, that balancing act often fails spectacularly, especially during the initial re-calibration period.

You probably should break up with your PMax-only strategy...

So, what's the solution? You need to take back control from the machine. An account spending £30,000 a month should not be running on a single, catch-all PMax campaign. That strategy is fantastic for getting started and for smaller budgets where the algorithm can easily find efficiencies, but it's a liability when you're trying to scale seriously.

The path forward is a hybrid model. You need to deconstruct your PMax monolith and build a more granular account structure where you have direct control over your budget allocation. This means moving away from putting all your eggs in one opaque basket and instead creating dedicated campaigns for different channels and intents. This is how we consistently scale accounts past the £20k-£30k/month barrier.

Here’s what that structure typically looks like:

1. Standard Shopping Campaign (Your New Bedrock): This should become the core of your account. Unlike PMax, a Standard Shopping campaign gives you crucial levers of control. You can see exactly which search terms are triggering your product ads and add negative keywords to cut out wasted spend on irrelevant queries (e.g., "reviews," "free," "jobs"). Most importantly, you can use campaign priorities and budget segmentation based on product performance. You can create one campaign for your best-selling products with an aggressive budget and a lower tROAS target, and another for lower-margin or slower-moving products with a tighter, more conservative target. This imediately gives you control over profitability at a product level, something that's impossible with PMax.


2. Brand Search Campaign (Your Defensive Wall): You absolutely must have a separate campaign that bids only on your own brand name and variations. This is non-negotiable. It captures the highest-intent traffic possible (people actively searching for you) at a very low cost. It also prevents competitors from bidding on your brand name and stealing customers right at the point of conversion. Letting PMax handle your brand traffic is a mistake; it often overbids and muddies the data, making it impossible to see the true performance of your brand vs. non-brand efforts.


3. Non-Brand Search Campaigns (Your Targeted Hunters): These campaigns will target the specific keywords your customers are using when they are looking for a solution but don't know your brand name yet. You'd structure these into thematic ad groups (e.g., one for "problem-aware" keywords, another for "solution-aware" keywords). This gives you precise control over your messaging and landing pages for each stage of the buyer's journey.


4. Performance Max (Your Prospecting Engine, Reimagined): PMax still has a place, but its role changes dramatically. It should no longer be your entire strategy. Instead, it becomes a powerful tool for prospecting and finding new customers. You would run it *alongside* your other campaigns, making sure to feed it strong audience signals (like customer lists, high-value converter lists, and website visitor data) to guide its targeting. You would also exclude your brand keywords from it to ensure it's not just cannibalising your Brand Search campaign. In this model, PMax's job is to explore and find new pockets of growth, while your Search and Shopping campaigns handle the core, reliable performance.

This hybrid structure solves the core problem. When you want to increase your budget, you're no longer making a blind 50% jump on a single campaign. Instead, you can make an intelligent, strategic decision. You can add 10% more budget to your proven, best-selling Standard Shopping campaign. You can increase spend on your top-performing non-brand search keywords. You can launch a new PMax campaign with a small test budget aimed at a new audience. You have levers to pull. You're back in the driver's seat.

You'll need to focus on LTV, not just ROAS, to truly scale...

There's another piece to this puzzle that gets missed when you're solely focused on optimising for a target ROAS. ROAS is a great metric for measuring immediate efficiency, but it doesn't tell you the whole story about profitability, especially for a business with repeat customers. To make truly smart scaling decisions, you need to understand your Customer Lifetime Value (LTV).

LTV tells you the total profit you can expect to make from an average customer over the entire duration of their relationship with your business. Why is this so important? Because if you know that a new customer is worth, say, £500 in profit to you over their lifetime, it completely changes how you think about your acquisition costs. A campaign that's only hitting a 3x ROAS on an initial £50 purchase might look like a failure on the surface. But if that £50 customer goes on to spend another £450 over the next two years, that initial acquisition was incredibly profitable. You could have afforded to pay much more to acquire them.

Knowing your LTV frees you from the tyranny of short-term ROAS. It gives you the confidence to invest in channels and campaigns that might have a higher upfront cost but acquire a more valuable type of customer. This is the maths that underpins aggressive, intelligent growth.

Here's a simplified way to calculate it:

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)?

2. Gross Margin %: What's your profit margin on that revenue after accounting for the cost of goods sold?

3. Monthly Churn Rate: What percentage of customers do you lose each month?

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

Let's run a quick example. Say your average customer spends £100 per month, your gross margin is 70%, and you lose 5% of your customers each month.

LTV = (£100 * 0.70) / 0.05

LTV = £70 / 0.05 = £1,400

In this scenario, each new customer is worth £1,400 in gross margin to your business. A common, healthy benchmark for SaaS and eCommerce is a 3:1 LTV to Customer Acquisition Cost (CAC) ratio. This means for a customer worth £1,400, you can afford to spend up to £466 to acquire them and still have a very healthy business. Suddenly, that campaign with a high cost-per-sale doesn't seem so bad if it's bringing in these high-value customers.

This is the kind of strategic financial modelling that separates businesses that successfully scale to £100k/month in spend from those that remain stuck at the £20k plateau.

This is the main advice I have for you:

To pull this all together, the situation you're facing is serious but fixable. It requires a decisive shift in strategy away from what has worked in the past. Trying to wait it out is likely going to lead to another month of poor performance and wasted ad spend. You need to be proactive. I've detailed my main recommendations for you below in a table to give you a clear, actionable plan.

Implementing a structure like this is undoubtedly more complex than managing a single PMax campaign. It requires more hands-on management, a deeper understanding of the auction dynamics, and consistent monitoring and optimisation. It's a significant peice of work, and it's not a quick fix. However, it's the necessary evolution for any business that wants to scale its ad spend beyond the initial stages profitably and sustainably.

This is precisely the kind of inflection point where bringing in expert help can make a massive difference. An experienced paid ads consultant or agency has navigated this exact scaling challenge dozens of times. We know how to build these complex structures efficiently, how to diagnose performance issues quickly, and how to interpret the data to make smart, strategic decisions rather than reactive ones. We've helped numerous clients, from eCommerce stores to complex B2B SaaS platforms, break through these plateaus. I remember one campaign we worked on for a medical job matching software, where we managed to reduce their Cost Per Acquisition from a painful £100 down to just £7 by moving away from an inefficient automated setup to a more granular, controlled structure.

If you'd like to have a more detailed chat about your specific situation, I'd be happy to offer you a free, no-obligation 20-minute strategy session. We could go through your account together, and I can give you some more tailored advice on how to implement this kind of strategy for your business. It might give you the clarity and confidence you need to get your growth back on track.

Regards,

Team @ Lukas Holschuh