Did you know Google AdWords just announced on October 4, 2017, advertisers’ AdWords budgets will be automatically enabled to exceed their daily allotment by two times?
Advertisers are going to have lots of questions like, is this a good change and how will it affect my Google AdWords strategies and budgets? These are all great questions and concerns, but we are a few weeks out from any significant conclusions.
What Does the New Adwords Daily Budget Update Really Mean for You?
Google has not made any major changes to AdWords in quite some time—until now. Google quietly announced their new daily budget policy. However, the way it was presented makes advertisers a little squirmish because they do not want to lose control over daily budgets and campaign pacing, which is pretty much what Google has done.
Here is how Google is explaining their AdWords Daily Budget change:
Does this sound like there is any real reason for concern?
At first glance, it seems as though this could be helpful for some. So why the concern?
Some of the concerns are as follows:
Some of these reasons seem unfounded based on Google's explanation of their new policy being that it is to help advertisers reach their advertising goals for clicks and/or conversions which would generally result in a better outcome for them. However, the result of this policy, which is yet to be seen, has advertisers concluding that setting a daily budget means nothing now.
How Google AdWords Budgets Previously Worked
Google has always had the ability to exceed the daily AdWords budget you have selected; however, they previously had it capped at 20 percent versus the 100 percent they are now using to manipulate their policy.
This process is called over-delivery. There are some days you might have 1,000 people searching for your product or service and on other days that number could drop to only 300.
Thus, over-delivery ensure your ads are presented to as many potential buyers as possible without leaving any unspent money on the table at the end of the month. Which means you will have a higher ad spend on high traffic days, but this number will be counteracted on the days when traffic is slower.
This does not mean you will be spending more than your budget. It merely ensures that you will always spend up to your target budget and nothing less. In other words, you will not be leaving any of your budgeted ad spend left unspent at month's end.
If your budget is $150 per day, Google now can spend up to $300 per day on high traffic day. With this said, more advertisers may start finishing the month short on budget.
Potential Issues (Good and Bad) as a Result of This New Update
There are several things that are going to change and perhaps be a little more challenging. For example:
In the end, we believe small and medium-sized businesses maybe be the losers as larger companies can strategically overspend on a daily basis to capture more market share. Furthermore, combine this change with the launch of Google’s automated click and conversions optimized bidding strategies a while back. Clicks could become more expensive because you now have twice the available daily budget to compete with.
Who Pays for Overages Beyond Your Monthly AdWords Budget?
The good news is that when Google goes over your monthly budgeted ad amount, they issue you an over-delivery credit for the overage. Therefore, advertisers’ worries about this whole process could be unfounded because they are never out any money that was not already budgeted. Moreover, advertisers get the added benefit of free advertising when Google does go over their designated ad spend.
However, just like anything else, there are exceptions to this rule that could trigger a limit reset depending on how you have set up your campaigns.
Campaign Data Analysis Comes Next
You and/or your SEM agency will need to sit back and monitor these new changes over the next few months to determine whether or not this new policy is a good one and what campaign changes are necessary. Then if needed, make the required adjustments to counter the results of any hurdles that come to light.
Need Google AdWords Help?
If you would like more information about the new AdWords daily budgeting update, or, if you are looking for a search marketing agency to help you get the most bang for your buck, please Contact Us today. We would love to show you how Google AdWords can help take your business to the next level.
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