Limited by Budget: The silent killer of PMax potential

The technology behind PMax: why Total Addressable Marketing is everything

At the heart of Performance Max (PMax) lies an advanced AI engine designed to optimise campaigns by leveraging data from every interaction, across every channel in Google’s surface ecosystem. It’s a future-proof solution for marketers, capable of dynamically responding to shifts in audience behaviour, market demand, and creative effectiveness, all in real time.

But for PMax to perform at its full potential, it must have access to the entire Total Addressable Market (TAM). Capturing TAM isn’t just about today’s results; it’s about future proofing your campaigns by feeding the AI with the richest possible data set.

Ultimately, it’s a simple equation: good data in, good data out. Conversely, if the AI is fed poor or incomplete data - due to constraints like 'Limited by budget' - the system’s performance won’t reach its full potential.

The ‘Limited by budget’ status in Google Ads is often overlooked, dismissed as a sign of acceptable campaign constraints. But this perspective ignores the broader implications of budget limitations. For campaigns powered by Google’s PMax, this flag represents more than just a spending cap - it signals a cascade of missed opportunities that gradually erode performance.

The closer your campaigns edge toward budget constraints, the more limiting the effects become, subtly but significantly impacting everything from audience reach to AI learning.

The expanding consequences of budget constraints

Think of your campaign’s budget like a boundary. The tighter the boundary, the more the system has to compromise on efficiency, data quality, and reach. Budget constraints aren’t just a minor operational limitation; they can fundamentally limit the potential of your PMax campaigns to scale and adapt.

Here’s how these constraints compound over time:

• Unutilised budget potential
  • A limited budget restricts PMax’s ability to capture all available demand, leaving value untapped. This doesn’t just affect immediate results but also prevents the campaign from exploring optimal opportunities.
• Eroding efficiency
  • Budget constraints force PMax into trade-offs that prioritise maintaining activity over maximising returns. This can lead to higher CPCs and diminished ROAS lost opportunity cost as the future opportunity, as the system operates within artificial limits and can’t see all the learnings.
• Narrowed product range
  • With limited reach, fewer products are promoted effectively, creating an imbalance in your retail inventory. This undermines the consistency and breadth of your market presence, share of demand and share of wallet
• Restricted creative testing
  • PMax thrives on dynamic creative testing to optimise performance. Budget limitations reduce the volume of testing, slowing the refinement of your assets and weakening their effectiveness.
• Missed audience opportunities
  • One of PMax’s greatest strengths is discovering and engaging new audience segments. When constrained, your campaign misses these growth opportunities, limiting the diversity of its reach. Why would you want to let this happen?
• Weakened AI learning
  • PMax’s AI relies on a constant stream of data to adapt and improve. Reduced exposure diminishes the quality and quantity of data fed into its algorithms, impairing its ability to optimise effectively.
• Diminished strategic flexibility
  • Budget constraints force the AI to focus on immediate returns at the expense of longer-term learning. This creates a ripple effect, where poor data today leads to less effective bidding and weaker results tomorrow.

Why all of this matters

Contrary to what I’ve heard over years in this space, the 'Limited by budget' status isn’t about spending more --  it’s about enabling your campaigns to operate at their full capacity. PMax is designed to leverage every interaction, audience insight, and market signal to refine its performance. By constraining its resources, you’re effectively clipping its wings.

How to address budget constraints

To maximise PMax’s potential, take a strategic approach to addressing budget limitations:

Evaluate budget simulations: use Google Ads’ budget simulator to understand how incremental increases could unlock additional value.

Adjust bid strategies: If budget increases aren’t feasible, consider refining target ROAS settings to maximise clicks within existing limits. Be careful to do this in the right manner and to not derail the AI and force a relearning. 

Plan for scalability: Align your campaign budgets with long-term objectives to ensure PMax has the runway to scale effectively.

The hidden cost of inaction

The closer your campaign operates to budget constraints, the more it hampers its ability to perform as intended. This isn’t just about efficiency; it’s about safeguarding the strategic advantages that PMax provides - broader reach, smarter learning, and seamless integration across Google’s surfaces ecosystem.

In the end, addressing the ‘Limited by budget’ status isn’t just a tactical adjustment; it’s a commitment to unlocking the full potential of your campaigns. By removing these constraints, you empower PMax to function as it was designed - to adapt dynamically, optimise intelligently, and drive scalable growth.

Your campaigns aren’t just limited by budget - they are limited by opportunity. The question is: how much are you willing to leave on the table? 

Speak to Upp.ai about our approach to this topic - we have a unique and groundbreaking approach to maximise PMax and Limited by budget