Setting a Google AdWords budget
When you edit a campaign, you have to set a daily budget. If you set your budget lower than Google’s recommended budget your ads will only show occasionally. It is probably better to have a set of keyphrases that show ads continuously than occasionally.
The common sense reason behind this is people often shop around. If someone clicks on your ad, looks around, goes to another site, and then tries to find your site again using the same keyphrases, your listing may not come up. If using a budget greater than the recommended budget does not work for your site, you could try using a budget lower than the recommended budget because there are various (less probable) scenarios where this might be better.
Unless there are fluctuations in the times when an ad is profitable during the day, you should always make sure your ads are showing all day. If ads give positive returns, the longer they show, the more money they will make you. Some companies balk at this logic because it might mean spending thousands of dollars a month in search engine advertising.
Even if there are time fluctuations in the profitability of an ad, using a budget lower than the recommended budget won’t help because Google controls when the ads show. It would be extremely lucky if your ads ended up showing only when they were generating positive returns.
Up the budget
Almost always, it is best to use a budget that is greater than AdWords’ recommended budget. They predict click-throughs by looking at keyphrase history; it is not clear exactly what they do, but their estimates are too low. That is, if you choose their recommended budget, your ads always go over that budget and Google will limit their appearance the next day to make up for the over-shot.
The budget optimizer
After getting an idea of how much to spend, you have the choice of using the budget optimizer. The budget optimizer generates the most clicks possible for a certain budget.
It is for people who don’t want to spend time managing campaigns, only want to generate the maximum amount of traffic, or who get the same profit on average from ads for all their keyphrases. All of these scenarios are rare. Usually, users want to track how much an ad makes for a certain keyphrase and adjust bids accordingly.