Google Doubles Daily Budget Spend: Should You Be Concerned?
In October, Google AdWords campaigns became eligible to spend up to twice the average daily budget to help advertisers reach their goals, whether that be clicks or conversions.
Although Google hasn’t published any formal announcement on their blog, they did recently share an update here.
Since the official rollout in mid-October, there’s been a whirlwind of feedback, both positive and negative from advertisers.
In the following article, we not only cover the announcement but we sit down with our very own experts at CPC Strategy to find out if Google’s latest update is helping or harming the well-being of our advertising accounts.
What is Google AdWords Overdelivery?
According to Google, internet traffic is like an ocean:
“Some days, there will be small waves. Other days, there will be great big ones. So, 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. That’s why we allow up to 2 times the clicks in a day than your daily budget allows. This is called overdelivery.”
From Google’s perspective, overdelivery is a good thing.
“If we end up showing your ad too much — to the point where you accrue more costs than your daily budget allows for over a billing cycle — then we’ll give you a credit for those extra costs.”
If you’d like to see whether Google has provided you with overdelivery credits, follow the steps provided here.
Pro-Tip: If your daily budgets are pretty much maxed/capped on a daily basis, you will likely not see an impact as this change is focused on campaigns that have headroom based on available inventory & target settings.
According to our Google Agency Rep, with this update overdelivery threshold will be increased from 1.2x to 2.0x of daily budget for all campaign types in AdWords, meaning campaigns can now spend up to 2.0x daily budget in order to get them back on track to achieving target metrics.
As always, advertisers will never spend more than 30.4x daily budget in any given month (monthly over delivery limit has not changed).
Why will Google never spend more than 30.4x your daily budget?
The reason Google will never spend more than 30.4x your daily budget is because 30.4 is the average number of days in a month (365 days in a year / 12 months = 30.417). Google multiplies your daily budget by this number so they know what your budget should be over the course of a month.
Let’s apply this to an example scenerio:
Joel, a yoga apparel advertiser sets his budget at $5 a day and his billing cycle is 30 days. Over the course of the month, he notices that the charges vary. Some days he is charged $2, on other days he is charged $10.
But at the end of the month, (according to Google) his charges won’t exceed $152 (that’s 30.4 multiplied by your $5 budget). So even though his campaign costs tipped above and fell below his $5 budget from day to day, at the end of the month, he is still charged no more than what he budgeted.
What do our experts have to say?
“Google’s recent update has caused some concern for some of my clients, especially for clients that have strict budget constraints,” Dianne Manansala, Lead Retail Search Manager at CPC Strategy said.
“I’ve seen some clients that actually haven’t been impacted by the change, but for clients where we constantly change budgets on a weekly basis, I am being forced to come up with other strategies to avoid any big unintentional upticks in spend.”
“This is a season where we are constantly opening up budgets as we see conversion rates increase for the holidays, which can be helpful so we don’t limit our reach by the dreaded ‘limited by budget’ status during great performance periods,” she said.
“However, post holiday peak period, when things need to be dialed back is when we will need to be extra careful. During that period the campaign daily budgets are used as a way to dramatically decrease spend, so what might end up happening is advertisers will set budgets even lower by half.”
“It would’ve been great if this feature incorporated a performance component – where your spend will not exceed daily budget so long as a certain performance threshold was met. Or, even better, if there was an opt out option.”
Got questions about Google’s double budget spend feature, email email@example.com