What Google’s New Overcharging Policy Means for Your AdWords Account

Published: October 16, 2017  by 

person typing at laptop computer

On October 4, 2017, Google AdWords notified advertisers in their AdWords accounts and on Twitter that a change had been implemented in the daily handing of ad budgets. This after-the-fact announcement has resulted in some challenges to advertisers and their marketing partners.

Google has always utilized a “daily overage” strategy to help advertisers “get that extra click” when budget allowed and search trends seemed favorable. That overage has been up to 20% more than your daily budget on any given day. This daily overage budget strategy would typically only be used a few times a month, with your ad spend on other days adjusted accordingly so that your total monthly spending would remain “average.” (This average is determined by multiplying your stated daily budget by 30.4 – the average number of days in the month.)

In the event that the daily overage strategy caused you to go over your monthly average spend, Google would refund the difference. Luckily, this safeguard remains in place.

So, what has changed?

Google AdWords has increased the daily overage percentage from 20% to 100%. This means on any given day you could spend double your usual daily budget.

BigWing’s paid search team reached out to Google via several channels and received some clarification on this sudden change in policy.

As before, the daily overage strategy is designed to allow you to reach those extra customers when the opportunity presents itself.  Then, toward the end of the month, you may see your daily ad spend reduced to make up for this extra spending. BigWing traditionally manages pacing of clients’ budgets very closely to avoid dramatic ups and downs, and will continue to do so.

calculator and budget sheet on desk

Google’s reasoning for the increase in daily overage is that there are many clients who have a restricted budget five days of the week and don’t spend their budget on the other two days. This automated boost strives to help them better reach their goals by allowing their ads to show when they are more likely to get clicks. The upside? More effective ads and better return on your overall investment. The downside? Unforeseen large hits to your ad account, day-to-day. We’d like to reiterate that while your daily spend can fluctuate by relatively large amounts, your overall monthly budget will still not be exceeded. If for some reason it is, Google will refund you – and your agency will be watching to ensure they do.

The ideal scenario:

Let’s imagine that your monthly click-budget is $600, or approximately $20/day.  On the 15th of the month, a Google algorithm determines that the conditions are right for a ‘boost day” of $15 over your usual daily budget. Therefore, you spend $35 for that day. Google adjusts your daily spend for the rest of the month to be around $19/day, so you don’t spend more than your monthly average. If this automation causes you to spend more than your monthly average, Google will refund the money to your account.

As always, BigWing continuously strives to be good stewards of our clients’ budgets.  If you have any questions please feel free to call your Account Strategy Manager or Account Strategist.

Want to know more? Google’s Policy Page provides more detailed coverage of the change.