AdWords update to daily budgets – is this really a bad thing?

Google AdWords very quietly announced a big update to AdWords daily budgets last month. This means that, as of 4 October 2017, campaigns will be able to spend up to two times the average daily budget (deep breath).

What does this mean?

Firstly, this could mean you will never be able to come in under your monthly advertising budget again.

But secondly, this could also mean that, on occasion, Google will overdeliver your ads, causing your account to overspend up to twice your set daily budget. Seems a little unjust, right?

But the concept behind the change actually makes a lot of sense

Google has put in place parameters to ensure that your account doesn’t go over the monthly charging limit. This limit is averaged by the number of days in a month, which equates to 30.4 days. Google then multiplies your daily budget by this number so that you always know what your budget will be over the course of a month.

So, what does this mean for the accounts you manage?

In the long run, not very much. For campaigns that run continuously throughout the month with no daily budget changes, you will be spending the same amount on a month-on-month basis. Your daily spend will fluctuate, but with this new system in place, it will automatically adjust the amount of spend based on the traffic for that day.

On days with spikes in traffic, your account will automatically spend more to pull in potential new conversions, with this overspend making up for any slower days when there is less traffic and the daily spend has not been used up.

Overall, the update will help balance your total budget throughout the month, leading to fewer manual budget changes and allowing you to hit your end of month budget with greater accuracy.

For campaigns that do not run for an entire month, advertisers will be responsible for paying for any overdelivery charges, for up to two times the daily budget. This is because the monthly budget limit does not apply in this case, but according to Google this is very unlikely to happen.

The good news

If for some reason the system is not accurate and spends more than your overall monthly budget, you will be credited the difference.

But what’s in it for Google?

For Google, this is a major opportunity for them to increase their ad revenue. If every advertiser gets to even 1% closer to hitting their monthly budget, that will soon add up, resulting in increased revenue for everyone.

What’s the downside?

This is by no means a perfect update, as it means having to closely monitor any overspend and overdelivery to ensure that your account is credited for overspend. This is especially true for those working to strict budgets.

Advertisers can see the overdelivery by day, from the reporting section in AdWords.

 To calculate overdelivery, you need to subtract ‘billed cost’ from ‘served cost’. If there is overdelivery and the report is not showing if you have been credited, we advise that you contact AdWords support or your Google rep to report the issue.

As detailed in an article on Search Engine Land, ‘Google says it is not possible to spend an entire monthly budget in the first half of the month: Overdelivery provides flexibility during traffic fluctuations and isn’t intended to spend your budget quickly. Before the change, it was unlikely that you experienced 20% overdelivery every day and spent your entire budget for the month by day 25. Our algorithm continues to make sure your ads are delivered throughout the month by taking into account your past spending within the billing cycle.’  

It is important to remember that there is no way to opt out, and that it’s here to stay, so love it or loathe it, marketers will need to adapt.

If you would like more information around this topic, get in touch  – we’d love to hear from you.

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