Last week, Google announced that AdWords daily budgets can now overspend by up to twice the amount you set. Previously, there has been a 20% overspend threshold to limit the amount Google can overspend your budget when search volume is at its highest.

However, now Google can double your daily spend when it sees fit (monthly spend will always remain the same). Which has prompted a bit of a backlash from some advertisers and a lot of questions from others.

So here’s what we know about the latest changes made to daily budgets in AdWords.

What has actually changed?

In AdWords, you can control the amount you spend across your account by setting your Daily budget. The thing is, rather than a fixed budget this is an average daily spend, which means you could spend more on some days and less on others. However, you’ll never overspend your monthly budget, which Google calculates by multiplying your daily budget by the number of days in a month.

Nothing has changed in that regard.

The key difference is that Google had a 20% threshold on overspending, until last week. So you would never overspend by more than 20% of your daily budget on any given day. This is what has changed.

Now you can overspend by up to 100% of your daily budget.

If you want to see the full explanation from Google, you find it over at AdWords Help.

Why are advertisers so angry about this?

First of all, we should make it clear that not all advertisers are angry about the change. Yes, there is some online grumbling but this is always the case when there’s any change made to budget allocation. And it certainly didn’t help that Google announced the change on the same day it rolled out last week.

 

Without warning, this announcement came as a shock to all of us and plenty of advertisers were quick to express their frustrations. As always, there are complaints about Google trying to squeeze more money out of advertisers but we should reiterate the point that monthly spends will remain the same.

A number of advertisers are also upset that there’s no opt-out option or (here’s an idea) a setting that allows advertisers to choose how much daily budgets can be overspent.

Aside from that, there are a few questions that the change raise – which is what we want to look at in the remainder of this article.

Questions raised by the new changes to daily budgets

AdWords budgets aren’t exactly the most straightforward thing to begin with so any change is going to raise a number of questions. So let’s go into a little more detail about what the changes will actually mean for you.

How does this benefit me?

We’re not going to deny this is a guaranteed money-maker for Google, but there is logic in the change from the advertiser’s perspective as well. If your daily budget is preventing you from getting the maximum amount of traffic when search volumes are at their highest, then this change will benefit you.

You’ll spend more of your budget when it matters most but you’ll still spend the same amount on a monthly basis.

So I’ll never overpay, no matter what happens?

Well, this isn’t strictly true, but it never has been – before or after this change. So let’s clear this up.

For campaigns that run continuously throughout a calendar month, you won’t pay more than the monthly budget limit: your daily budget x 30.4 days. In this instance, any time you are overcharged, you’ll be credited the difference back at the end of the month.

Things are different when your campaigns don’t run continuously throughout the month or you make budget changes, though. In these cases, you will be responsible for paying any “overdelivery” charges.

This is because your monthly budget limit is reset when you change your daily budget or pause a campaign.

Is there anything else that can reset my monthly budget limit?

Yes, there is. In fact, there are three other things that reset your monthly budget limit:

  • Changing the end date of a campaign
  • Changing your ad delivery mode
  • Choosing a different time zone

Once again, the list of actions that cause your monthly budget limit to reset is the exactly the same as before this change. The difference is the amount you can overpay is considerably larger now – one of the obvious complaints about the change.

Is there any way to switch this off?

No. There’s no way to switch this off or opt out of the change. It has already happened and we simply have to deal with it.

How will this actually affect me?

This is the most important questions, when it comes down to it and the answer will vary from one campaign to the other. For campaigns that run continuously throughout the month (without triggering any monthly budget resets), the implications will be minimal – assuming your goal is to maximise the number of leads your AdWords campaigns generate.

If you’ve previously been using daily budgets to limit the number of daily leads (eg: you can only handle a certain number of leads per day), then you risk paying for leads you don’t want on certain days.

This is a rare occurrence, of course, but worth understanding if it applies to you.

In the case of campaigns designed to only run for less than a month, there is the risk of overpaying by a greater margin than before. The same thing goes for campaigns that are paused for some reason (eg: poor performance) or daily budgets are changed.

Are advertisers right to be angry about the change?

Of course, the change means you could end up paying more for certain types of campaigns than previously, but most of us should be unaffected. Let’s remember that the kind of campaigns that risk overspending are exactly the same kind of campaigns that we’ve always had to keep an eye on – it’s only the extent of which we might be overcharged that has changed.

And let’s be clear. You won’t necessarily be overcharged at all, much less by the full 2x your daily budget.

Likewise, it’s not all about budget spend with AdWords. The whole point of this change is to help you do more with your budget. There are occasions where it makes sense to spend more and others, less. This is why agencies work so hard to manage budgets and Google has developed machine learning algorithms to help your budget go further.

After all, the better you do with AdWords, the more money Google gets.