Different businesses will define overspending differently, but if your ads are generating profitable new business, you'd eventually want to increase your spend, not reduce it.
The challenge here is to make your ad spend more productive, not necessarily just capping costs.
Come at this from two directions:
- tighter targeting
- better ads
Clickthrough rates: A big thing to understand - if your ads get a better CTR than the other guy, you'll be more competitive in the ad auctions even without raising your bids. Tighter targeting and more effective ads will both help with this.
In general, look for ways to be more selective about who sees your ads. Weed out wasted impressions! You don't need to reach the whole world, you need your ads to reach the people most likely to be interested in your product or service.
Geotargeting: Make sure your ads are only showing in areas that your business could actually serve. A landscaping company would want to advertise primarily in their own city, especially in the more affluent areas, while a specialty widget seller might want to reach widget hobbyists in every country they ship to. A high-end restaurant might want to reach users within an hour's drive, and bid more aggressively to reach users in a closer radius. There's room for nuance here.
Time of day: you can also target by time of day. Run your ads during the hours when your phone lines are open, for instance.
Negative keywords: Improve your targeting by building your negative keyword lists. It would be profitable to spend some time with a keyword suggestion tool to identify searches where your ads should <not> run. Also keep an eye on your query reports. Example: if your product was wedding tuxedo rentals, there would be little value in showing your ads to searches about tuxedo cats, Tuxedo real estate, or even tuxedo black paint. You don't need your negatives to list every possible dud search; it's usually sufficient to list select individual words. Block words like cat, cats, kitten, kittens, paint and so on, and you'd block searches that contained those words. TIP: watch for song lyrics, recipes and game searches that could trigger off-target ads.
Demographics: demographic targeting is harder in these days of privacy concerns, but do what you can. Adjust your bids for different genders, age groups, income groups and so on. I advise setting your maximum bid then bid down for different demographics, rather than starting with a bid and bidding up. Fewer surprises that way!
Better ads: this is a never-ending quest. The quality of your ads involves more than just what the ads say, it's also a matter of how well they match the queries they appear for. Don't just write one ad to run across your whole account; set up different campaigns and ad groups to run different ads against different queries. If the user searched for blue widgets, they'd usually respond better to the ad that actually mentioned blue widgets than to one that just mentioned household appliances. Test different wording and keep the ads that perform best. Repeat from time to time.
Bid levels: It's counterintuitive but if you have a set budget, you might get more clicks by reducing your bids. Your ads would rank lower in the ad auction, but they'd show for longer. Bonus: Running at a lower rank can improve the quality of the clicks you get, by avoiding reflex clicks from users who just click the first thing they see. If you have a fixed budget and are using it up, reduce your bids and see what happens.
Tracking: set up all available tracking so you know which ads helped to produce sales. That will help with every decision you make.
