ADWORDS BUDGET CHANGE · 10-MINUTE READ · By Misty Faucheux on November 14 2017.
At the beginning of October, AdWords users received a notification that campaigns can now spend up to twice the average daily budget in order to meet campaign goals. According to Google, advertisers “won’t be charged more than the monthly charging limit: the average number of days in a month (30.4) multiplied by average daily budget.”
This change now affects all AdWords accounts, and it’s not optional. There have been mixed reactions to the news, but most advertisers still don’t fully understand how the change affects them. Here, we answer some questions that you might be asking yourself right now.
How Does It Work?
On the announcement from Google, the company explained the change like this:
Internet traffic is like an ocean. Some days, there will be small waves. Other days, there will be great big ones. So, if your ads don’t show up much because of low traffic, then we’ll make up for that by showing them more when traffic’s higher.
That’s why we allow up to 2 times the clicks in a day than your daily budget allows. This is called overdelivery. And it’s a good thing: if we end up showing your ad too much — to the point where you accrue more costs than your daily budget allows for over a billing cycle — then we’ll give you a credit for those extra costs.
Basically, the explanation means that if Google is seeing that you’re having a “good day”, i.e. getting plenty of clicks or conversions, AdWords will raise your budget upwards of twice the spend of your set daily limit. To help you understand the process even better, here’s an example from Google:
So, in theory, you’ll never be charged more than the sum of your total budget for the month. Yet, many advertisers fear loss of control, which leads to another question that we’ve seen popping up pretty regularly since the update.
Should You Be Concerned?
AdWords has always had rather free rein to raise and lower budgets. Your daily budget could be over-spent by as much as 20 percent in the past. Yet, in relation to the current potential spending, this was miniscule.
Now, you could spend nearly double your average daily budget – with no way of stopping it. To allay fears, Google will provide credits if they deliver over your budget within a calendar month (not the 30.4-day period). Known as “overdelivery” credits, the over-spend will be given back to you at the end of the month. You’ll be able to see the credits in your transaction history after they’ve been processed.
You can monitor the daily over delivery by going to Reports, Pre-defined reports, Basic and Overdelivery.
There is one kicker to all of this that could really hurt many marketing teams: If you make any changes to budgets or budget groups within the calendar month or if you have a campaign that doesn’t last upwards of 30 days, you are ineligible for the credit.
I’m going to let that sink in a moment. If you make any changes to your budget or if you have only a week or two campaign or short-term promotion, you don’t get the credit. This means that Google could overcharge you plenty, and you never see the return on that.
Here’s where this is really problematic. Most of us adjust our budgets fairly regularly, especially if we know that certain times of the month are better for conversions than others or if we are having something like an event or branding campaign happening. Now, if we change our budget to reflect our needs, we’re now ineligible for the credit.
Another issue is that AdWords may run through your budget way before the end of the month. For example, if the platform sees a huge spike in traffic at the beginning of the month, it might raise budgets for that week, which leaves little to nothing at the end of the month.
Not to mention that many of us marketers have been monitoring our campaigns for months or potentially years. We know that there is a point at which getting more clicks may not be the best for our campaigns. This could cause CPAs to rise and revenue to drop. We may prefer to keep our spend where it’s at to ensure that we’re meeting internal goals. Now, you can see why many advertisers are not happy with the change.
Why Are There Only Daily Budgets?
One of the reasons that many marketers are chafing at this change is that the only way that we can control our spend is via daily budgets. So, that begs the question as to how does AdWords know that they’re not exceeding your budget?
This problem has led many marketers to question why there aren’t monthly or campaign budgets. Advertisers want to get as many clicks and conversions as possible so that’s why we try to evenly break out the budget across the average 30.4-day period. Yet, we’re still working towards either a monthly or campaign budget. The daily budget is just our way of ensuring that we’re spending our budget in the most efficient way possible across the life of the campaign. It would be easier to do away with daily budgets and focus on monthly/campaign budgets.
What Can You Do to Adapt?
All of these issues show us that we can no longer simply sit back and let our campaigns run for several days or even a week, and then check them. We’re going to have to start stepping up our monitoring. For larger companies, over-spending for a day or two might not be a huge concern. For smaller companies, however, who are on strict budgets, this could be a potential headache.
Many businesses who are concerned about going over their budgets should consider lowering their daily budget spend – even before campaigns are launched. This is especially true if you’re planning on running a campaign that is less than 30 days. You might even want to lower the budget by 50 percent in case the budgets do increase dramatically.
Overall, you need to stay vigilant. Monitor your campaigns, and gather as much data as you possible can during the first few months of this change. See how it works, and use the insights to tweak your campaigns and budgets to counteract any negatives from the update.
About Misty Faucheux
Misty Faucheux is an Integrated Online Marketing Specialist at Faucheux Enterprises and a guest writer for Supermetrics. She is a digital marketer, specializing in SEO, SEM, content marketing/writing and social ads. Misty helps companies develop a cohesive online marketing strategy that directly addresses their overall business goals and objectives. You can find her on Twitter, LinkedIn, Instagram and Flickr.