Recently, Google announced an immediate change to average daily budget caps in AdWords and it has many advertisers wondering about the potential impact.
In a tweet, Google Adwords announced, “To help you hit your advertising goals, your campaigns can now spend up to twice your average daily budget.”
How this change will impact campaigns depends on a number of factors, but it’s important to note that Google also states “over a month-long billing cycle, you won’t be charged more than your daily budget would’ve allowed for over 30.4 days”.
This is a key point that bears repeating: any overages above the expected monthly budget that come from this change will not be charged back to the advertiser.
While Google has always had the ability to exceed a campaign’s daily budget, this change gives them more flexibility on how to maximize its impact. On days when search traffic is particularly high, your daily spend can double to reach as many customers as possible. The assumption being that this overage will be counteracted on days with slower traffic where spend will come in below the daily budget.
How Will This Change Affect My Campaign Budgets?
Monthly Campaigns With No Daily Budget Changes: These campaigns will not be charged over the “monthly budget limit” (your daily budget x 30.4 days). If the campaign does exceed the “monthly budget limit”, overdelivery charges will be credited back at the end of the month.
Monthly Campaigns With Budget Changes: These campaigns will continue as they have in the past, with the “monthly budget limit” being reset for the remaining days.
Short Term Campaigns: For campaigns that do not last a month, or are paused mid-month, advertisers will be responsible for over delivery charges at up to 2x the daily budget because the “monthly daily budget” does not apply. Although Google states that this is unlikely to happen, it is possible, so advertisers should take it into consideration when setting the budget.
Takeaways About The AdWords Budget Change:
- This new budget structure changes Google’s overspend threshold from 20% above the daily budget to twice the daily budget, or 100%.
- The change went into effect immediately on October 4, 2017, with no way to opt out.
- This change is an attempt to account for daily fluctuations in traffic, allowing campaigns to be better equipped to handle peaks and lulls. According to Google, “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.”
- Advertisers will not be charged overages above the expected monthly budget. “You might see that your advertising costs each day are a little higher or lower than what you set for your daily budget. If you do, don’t worry — over a month-long billing cycle, you won’t be charged more than your daily budget would’ve allowed for over 30.4 days,” explains Google.
- When setting up short-term campaigns that do not fall within the “monthly budget limit”, advertisers should be aware that they could potentially pay up to 2x their daily budget for the length of the campaign, although Google says this scenario is highly unlikely.
This is a significant change to Google AdWords budgeting, but shouldn’t be cause for panic. Just keep in mind when checking in on current and upcoming campaigns that your daily ad spend will be fluctuating more than ever, but should even out by month’s end.
