budget-recommendation-calculator

name	budget-recommendation-calculator
description	Calculates conservative budget recommendations for Google Ads accounts based on pacing variance, impression share analysis, and performance constraints. Auto-invoke when creating budget recommendations, investigating underspending, or determining optimal budget increases. Enforces 5-10% increase limits and performance safeguards.
allowed-tools	["Read"]

Budget Recommendation Calculator Skill

Purpose: Provides standardized methodology for calculating conservative, data-driven budget recommendations that balance pacing targets with performance goals.

Type: Domain knowledge skill (auto-invoked)

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Core Principles

Budget Philosophy

1. Primary Goal: Hit monthly spend targets (pacing within tolerance)
2. Secondary Goal: Maintain acceptable CPA/ROAS performance
3. Conservative Approach: 5-10% increases (not aggressive jumps)
4. Algorithm Safety: Avoid shocking smart bidding algorithms
5. Performance Guardrails: Never increase if performance is failing

Why Conservative Increases?

• Smart bidding needs time to adapt (3-7 day ramp-up period)
• Large budget jumps risk CPA spikes (algorithm overspends during adjustment)
• Multiple small increases > one large increase (safer, more controllable)
• Client trust: Predictable, controlled spend changes

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Budget Recommendation Decision Tree

Decision Point 1: Should We Increase Budget?

✅ YES - Increase Budget if ALL of the following are true:

1. Pacing Variance Check:

   • Standard tolerance portfolios: Underspending beyond ±8% monthly tolerance
   • Tight tolerance portfolios: Underspending beyond ±5% monthly tolerance
   • At least 5 days into the month (exclude early-month variance)

2. Performance Check:

   • CPA is acceptable (within goal or <20% over)
   • OR ROAS is acceptable (within goal or >80% of target)
   • No major quality issues flagged

3. Impression Share Check:

   • Budget Lost IS >10% (spend potential exists)
   • OR Rank Lost IS >50% + any Budget Lost IS (competitive pressure + budget constraint)

4. Recent Changes Check:

   • NO budget increase in last 7 days (avoid ramp-up period)
   • NO recent campaign launches in last 7 days
   • NO major targeting changes in last 7 days

❌ NO - Do NOT Increase Budget if ANY of the following are true:

1. Performance Failure:

   • CPA >20% over goal (need quality fixes first)
   • ROAS <80% of target (efficiency issues)
   • Cost per conversion increasing >20% week-over-week

2. Recent Changes:

   • Budget increased within last 7 days (still ramping)
   • New campaigns launched within last 7 days
   • Major targeting/bidding changes within last 7 days

3. Low Demand:

   • Search IS >80% AND Budget Lost IS <10% (capturing most demand)
   • No spend potential (already maximizing available impressions)

4. Month Timing:

   • Less than 5 days into month (early-month variance normal)
   • Less than 3 days left in month (too late for meaningful impact)

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Budget Increase Calculation Methods

Method 1: Pacing-Based Calculation (Primary Method)

When to use: Standard underspending investigation with clear pacing variance

Formula:

Target Monthly Budget = Current Monthly Budget × (1 + (Pacing Variance × Adjustment Factor))

Where:
- Pacing Variance = % Over/Under from monthly spend target
- Adjustment Factor = 0.5 to 1.0 (conservative to moderate)

Example 1: Moderate Underspending (+13%)

Current Monthly Budget: $1,000
Pacing Variance: +13.18% (underspending by 13.18%)
Adjustment Factor: 0.5 (conservative - only close half the gap)

Target Monthly Budget = $1,000 × (1 + (0.1318 × 0.5))
                      = $1,000 × 1.0659
                      = $1,065.90

Rounded: $1,065 (6.5% increase) ✅ WITHIN 5-10% RANGE

Example 2: Severe Underspending (+25%)

Current Monthly Budget: $1,000
Pacing Variance: +25% (underspending by 25%)
Adjustment Factor: 0.4 (very conservative - cap at 10% increase)

Target Monthly Budget = $1,000 × (1 + (0.25 × 0.4))
                      = $1,000 × 1.10
                      = $1,100

Result: $1,100 (10% increase) ✅ AT MAX 10% INCREASE
Note: "Will require additional increases after ramp-up period"

Adjustment Factor Guidelines:

• 0.3-0.4: Very conservative (use for >20% variance, performance concerns)
• 0.5: Standard conservative (use for 10-20% variance)
• 0.6-0.7: Moderate (use for 5-10% variance, strong performance)
• 0.8-1.0: Aggressive (use for <5% variance, excellent performance)

HARD CAP: Never exceed 10% increase in single change

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Method 2: Impression Share-Based Calculation (Alternative)

When to use: When Budget Lost IS is very high (>30%) and you want to estimate full spend potential

Formula:

Estimated Full Spend Potential = Current Spend ÷ (1 - Budget Lost IS)

Example:

Current MTD Spend: $500
Budget Lost IS: 40% (0.40)

Estimated Full Spend Potential = $500 ÷ (1 - 0.40)
                                = $500 ÷ 0.60
                                = $833 (for current MTD period)

If we're 50% through month:
Projected Monthly Spend Potential = $833 × 2 = $1,666

Current Monthly Budget: $1,000
Spend Potential: $1,666

Gap: $666 (66% increase needed)

APPLY 10% CAP:
Recommended: $1,100 (10% increase)
Note: "Significant untapped spend potential - will require multiple increases"

Use Case: This method is good for understanding total opportunity, but ALWAYS apply 5-10% cap to actual recommendation.

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Method 3: Daily Budget Calculation (Tactical)

When to use: When you need to translate monthly budget to daily budget for Google Ads implementation

Formula:

Daily Budget = Monthly Budget ÷ Days in Month

Example: October (31 days)

Recommended Monthly Budget: $1,100
Days in October: 31

Daily Budget = $1,100 ÷ 31 = $35.48/day

Rounded: $35.50/day (Google Ads allows 2 decimal places)

Example: February (28 days)

Recommended Monthly Budget: $1,400
Days in February: 28

Daily Budget = $1,400 ÷ 28 = $50.00/day

IMPORTANT: Google Ads can spend up to 2x daily budget on any single day, but will not exceed monthly total (daily budget × days in month).

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Budget Recommendation Output Format

Standard Recommendation Template

================================================================================
BUDGET RECOMMENDATION
================================================================================

CURRENT STATE:
- Current Monthly Budget: $X,XXX
- Current Daily Budget: $XX.XX/day
- MTD Spend (through Day XX): $X,XXX
- Pacing Variance: +X.X% (UNDERSPENDING by X.X%)
- % Through Month: XX.X%
- % Spent: XX.X%

PERFORMANCE CHECK:
- Cost per Conversion: $XX.XX (Goal: $XX.XX) ✅ WITHIN GOAL
- [or ROAS: X.Xx (Goal: X.Xx) ✅ WITHIN GOAL]
- Performance allows for budget increase

IMPRESSION SHARE ANALYSIS:
- Search Impression Share: XX%
- Budget Lost IS: XX% (spend potential exists)
- Rank Lost IS: XX% (competitive pressure)
- Diagnosis: Budget constraint is primary limiter

RECOMMENDATION:
✅ Increase Monthly Budget: $X,XXX → $X,XXX (+X.X%)
✅ New Daily Budget: $XX.XX/day

Rationale:
- Pacing variance (+X.X%) exceeds ±8% tolerance
- Budget Lost IS (XX%) indicates spend potential
- CPA performance acceptable (within goal)
- Conservative X.X% increase to move toward pacing target

Expected Outcome:
- Reduce pacing variance from +X.X% to ~+X.X% (closer to ±8% range)
- Maintain acceptable CPA performance
- Algorithm will ramp up over 3-5 days

Next Steps:
1. Implement budget increase in Google Ads
2. Monitor daily for 5-7 days during ramp-up period
3. Re-evaluate pacing after ramp-up period
4. Consider additional increase if still underspending after 7 days

Confidence Level: High
================================================================================

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Alternative: Do NOT Increase Budget Template

================================================================================
BUDGET RECOMMENDATION
================================================================================

CURRENT STATE:
- Current Monthly Budget: $X,XXX
- MTD Spend (through Day XX): $X,XXX
- Pacing Variance: +X.X% (UNDERSPENDING by X.X%)

PERFORMANCE CHECK:
- Cost per Conversion: $XX.XX (Goal: $XX.XX) ❌ OVER GOAL (+XX%)
- [or ROAS: X.Xx (Goal: X.Xx) ❌ BELOW GOAL]
- Performance does NOT allow for budget increase

RECOMMENDATION:
❌ Do NOT Increase Budget

Rationale:
- CPA is XX% over goal (quality issues present)
- Increasing budget would worsen CPA (more spend on inefficient traffic)
- Need quality improvements first (ad relevance, landing page, keywords)

Alternative Actions:
1. Improve ad relevance (align ad copy with keywords)
2. Optimize landing pages (speed, mobile experience, relevance)
3. Refine keyword quality (pause low-performing keywords)
4. Re-evaluate budget after quality improvements stabilize

Expected Timeline:
- Quality improvements: 2-3 weeks to stabilize
- Re-evaluate budget after CPA returns to goal range
- Budget increase only if CPA acceptable AND still underspending

Confidence Level: High
================================================================================

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Special Cases & Edge Cases

Case 1: Ramp-Up Period (Recent Budget Increase)

Pattern:

• Budget increased within last 7 days
• Currently underspending vs. new budget
• Impression share metrics not stabilized

Recommendation:

❌ Do NOT Increase Budget (ramp-up period)

Rationale:
- Budget increased X days ago (recent change)
- Smart bidding algorithm needs 3-7 days to adjust
- Current underspending is expected during ramp-up

Action: Monitor for 3-5 more days
Timeline: Re-evaluate on [Date] (7 days after increase)

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Case 2: Low Demand (High Search IS, Low Budget Lost IS)

Pattern:

• Search IS >80%
• Budget Lost IS <10%
• Still underspending vs. budget

Recommendation:

❌ Do NOT Increase Budget (low demand, not constraint)

Rationale:
- Already capturing XX% of available impressions
- Budget Lost IS only X% (minimal spend potential)
- Underspending is due to low search volume, not budget limit

Alternative Options:
1. Accept as normal (low demand market)
2. Consider REDUCING budget to match actual demand
3. Expand targeting (new keywords, broader match, new geos)

Note: Increasing budget will NOT increase spend in this scenario

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Case 3: Shared Budget Dynamics

Pattern:

• Multiple campaigns share one budget
• One campaign dominating spend (>80% of shared budget)
• Other campaigns starved (<20% of shared budget)

Recommendation:

⚠️ Shared Budget Reallocation (not just increase)

Current Shared Budget: $X,XXX/month
Campaign A: $X,XXX (XX%) - dominating
Campaign B: $XXX (XX%) - starved

Options:
1. Increase shared budget (+5-10%) → benefits Campaign A primarily
2. Split into individual budgets → granular control
3. Adjust campaign priorities (Google Ads beta feature)

Recommended: Split into individual budgets
- Campaign A Individual Budget: $X,XXX
- Campaign B Individual Budget: $XXX
- Allows precise pacing control per campaign

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Case 4: End-of-Month Catch-Up

Pattern:

• Less than 7 days left in month
• Significant underspending (>15%)
• Need to catch up quickly

Recommendation:

⚠️ End-of-Month Catch-Up (aggressive but necessary)

Current Pacing: +XX% underspending
Days Remaining: X days

Option 1: Conservative Approach
- Increase budget +5-10% (standard)
- Accept that we won't fully catch up this month
- Focus on preventing next month's underspending

Option 2: Aggressive Catch-Up (if performance allows)
- Calculate daily deficit: $(Monthly Budget - MTD Spend) ÷ Days Remaining
- Temporary daily budget increase
- Return to normal after month-end

Recommended: Option 1 (conservative)
- Avoid algorithm shock from large temporary increase
- Better to start next month correctly than force current month

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Integration with Other Skills

Prerequisite Skills:

1. impression-share-diagnostics — Determines if budget is the constraint
2. A pacing data source — Google Sheet, spreadsheet, or direct API query for MTD spend vs. target

Workflow:

1. impression-share-diagnostics → Diagnoses root cause (budget constraint?)
2. Check pacing variance against your portfolio's tolerance
3. THIS SKILL → Calculates budget recommendation (how much to increase?)
4. Verify current budget data before writing changes

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Quality Checks Before Recommending

Pre-Flight Checklist:

✅ Pacing variance exceeds your portfolio's tolerance (typically ±5% to ±10%) ✅ At least 5 days into month (not early-month variance) ✅ CPA within goal or <20% over (performance acceptable) ✅ Budget Lost IS >10% OR Rank Lost IS >50% (constraint exists) ✅ No budget increase in last 7 days (not in ramp-up) ✅ Increase is 5-10% (conservative range) ✅ Daily budget calculation is correct (monthly ÷ days in month)

If ANY check fails:

• Do NOT recommend budget increase
• Explain which check failed and why
• Provide alternative recommendation

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Related Skills in This Repo

• impression-share-diagnostics — Root cause diagnosis before recommendation
• mutation-safety — Two-step approval protocol for writing budget changes to live accounts
• gaql-query-patterns — GAQL templates for pulling budget and spend data

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Built by Kurt Henninger. More free skills: github.com/fourteenwm/ppc-ai-skills