The ease and speed of online advertising can be a blessing and a curse. Online advertising platforms make it easy to spend a lot more money on ads than someone originally intended. This is why many advertisers and marketers use daily budgets to keep costs in line. Google AdWords users who use daily budgets will need to be more careful as Google will now allow advertisers to go over their daily budgets.
The idea of letting AdWords users go over their daily spending may sound strange and counterintuitive, but this is definitely something Google is doing. In fact, the policy is already in effect. Google explained the new policy in a recent post on the AdWords support guide.
“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,” Google explained in a recent post. “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.”
Google refers to this technique as “Overdelivery” and while it may sound strange it does have some legitimate uses. The basic benefit of overdelivery is that it allows the ad platform to flexibly move ads to the days where they are doing the best.
To illustrate, let’s say an advertiser was spending $50 per day on an ad, but the ad performed somewhat better on Monday and Friday. Google can now spend $100 on Monday and Friday while lowering the daily spend from the other days in the week. The benefit of overdelivery is that it allows the power of algorithms to ensure the best allocation of resources.
The important thing to keep in mind is that while Google may double the daily spending budget for a particular day, the system is designed to keep the total amount spent roughly the same. In the worst case scenario, Google would only go over by half a day’s budget. The maximum AdWords will spend for a month, even when using overdelivery, is the daily budget by 30.4 (the average number of days in a month).
As Google puts it, “The waves of Internet traffic might make your daily costs go up and down. But at the end of the month, despite those unpredictable waves, you’ll find your costs at right where you expected them to be.” And though it’s possible to go over, Google has said it will credit back any extra charges related to overdelivery in the following month.
The one reason business owners may need to be concerned is if their daily spending budgets are tied to hard constraints. If you told someone that their spending would be $10 a day and you show them a chart that says they paid $20 on some days, you would have to explain to the person why you didn’t follow the budget.
It’s unlikely for there to be a situation where the overdelivery policy of AdWords leads to a credit card being overcharged or a business owner needing to pay more money and sooner than intended due to overdelivery. For the most part, overdelivery just helps business owners get the best results for their AdWords budget.
For more news about recent changes at PPC ads, read this article on new ad features from Google and Facebook in time for the holidays.