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What’s Up With The Recent Google AdWords Daily Budget Update?

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:

  • “Starting October 4, 2017, campaigns will be able to spend up to twice the average daily budget to help you reach your advertising goals, like clicks and conversions.
  • On days with lots of high-quality traffic, your costs could be up to 2 times your daily budget. This spending is balanced by days when your spend is below your daily budget.
  • Keep in mind, you won’t be charged more than your monthly charging limit: the average number of days in a month (30.4) multiplied by your average daily budget.”

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:

  • It is not an optional policy.
  • Loss of daily budgeting control.
  • Something new to factor into campaign management.
  • The added burden of your marketing team or search marketing agency to manage impression share and set proper expectations.
    Running out of budget earlier in the month.
  • Increase in Cost Per Click (CPC)

Some of these reasons seem unfounded based on Google’s explanation of their new policy is 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 ads to spend left unspent at month’s end.

For example:
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:

You will probably never come in under your monthly advertising budget again. That could be good or bad depending on how you look at it.

This change will help you maximize your monthly ad spend by showing your ads to more people and that is great. Isn’t that what you want? Of course, you do. However, it’s also an opportunity for Google to increase their ad revenue because this will have every advertiser coming a little closer to spending all of their monthly budgets. So it appears to be a win-win for everyone.

Your daily tracking reports will show more sporadic numbers. On some days your ads will be overserved and other days they will fall short, but the daily fluctuations will go both ways, which means your campaign spend should level out by month’s end.

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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