Your AdWords Budget? Google Just Declared War!

If you are managing Google AdWords, and you have a fixed budget for your campaigns, you will want to listen up to this week’s PPC newsletter. Because Google just declared open season on every last penny of your budget.

Late last week, Google quietly announced that they will now conveniently allow you to spend up to 2x your daily budget on “days with lots of high quality traffic.”

Here is the quiet announcement from Google (in the form of a support article).

This is big news, because it potentially changes everything we have come to know about AdWords budgeting. Let me explain.

Monthly budgets calculated daily​​

While almost all companies work under a monthly advertising budget paradigm, Google only allows you to set daily budgets. Most advertisers will divide their monthly budget by ~20 to ~30 days to find a daily budget number (depending on how you feel about weekends).

On a daily basis, Google would allow you to spend 20% more than your daily budget on peak budgeting days. That means if your budget was $100 a day, you might spend $120 on one day, and then $80 on another.

Now your daily budget might be $200 on one day, and $0 on another. That’s significant, and could really mess with the results for a lot of advertisers.

The good news is that Google won’t let you go over 30.4x your daily budget in a given month. Basically, you can still be safe with your days-to-months calculation, and things will even out over time. They will even return your money if you go over.

But the reason why this is concerning is that in theory, you could go the first 15 days of the month and spend your entire budget. Then have nothing showing the rest of the month. Imagine explaining that to your boss (or your clients).

While this probably won’t affect campaigns for most mature advertisers (and might actually be viewed as a positive for those who are locked-in and profitable), my concern is in those just getting started out with AdWords.

New campaigns beware​​

I’ve talked with countless advertisers who have already blown their entire budget with Google in a few days by trusting default settings. Now you can potentially lose everything even faster.

This creates an even bigger barrier of entry into AdWords, which should be concerning to Google. But I guess they have $89 billion reasons to say otherwise.

One thing I always advocate is doing a soft-launch of your new campaigns to test the waters. Use a small fraction of your budget to test out campaign settings, measure results, and reflect on what happened.

With this new development, soft-launches become even more important. Start with a fraction of a fraction of your budget, and work your way up from there. And pay extra close attention to everything when you are launching anything new.

As I say in PPC Course, “your first month is always your worst month.” That sounds tame by comparison. ​​Soon I might have to say “your first month is going to be a dumpster fire.”

More coverage of this article: Google announces AdWords daily budgets can overspend by 2x, automatically.

What do you think about Google’s 2x Budget increase?

No big deal? Worst development since enhanced campaigns?

Let’s hear it!

  • Hi Jeff,

    i definitely agree that this will be a challenge for accounts that are just getting started, especially if there’s limited budget for initial testing and campaigns are limited by budget.

    For those interested, i decided to create a script that monitors Google’s overdelivery on ad spend.

    The script will compare the anticipated ad spend based on your campaign daily budget settings with the actual ad spend.
    It will check for overdelivery in any of three periods: yesterday, last week and last month.
    In case of big differences (overdelivery by Google) it will report an alert, log the alert in the specified Google Sheet and inform you about the alert via email.

    Here’s the script:
    http://nilsrooijmans.com/daily-budget-overdelivery-alerts-script/

  • Marni says:

    What about if you do an Agile process for your campaigns? Split the budget out into weekly campaigns? Would that be a work around?

    • Jeff Sauer says:

      Hi Marni – that probably won’t work, if you spread out across different campaigns. But the problem then is that each of those campaigns will be treated as 30.4 days in a month by Google, so you could actually spend 2x your budget for the whole month vs. just half the month with the other paradigm.

  • Jay says:

    Sounds like it’s gonna be like having accelerated ad delivery on permanently.

    “But the reason why this is concerning is that in theory, you could go the first 15 days of the month and spend your entire budget. Then have nothing showing the rest of the month. Imagine explaining that to your boss (or your clients)”

    This right here is one of my main concerns. Your test budget could run out before a full business cycle required to see insightful behavior and engagement. Capitalizing on spikes in traffic over the business cycle is fine, but they don’t fully represent user behavior over an entire business/purchase cycle. So now we might have to make optimization and budget increase decisions based on incomplete data.

  • zee says:

    If there is “quality” traffic and its converting, I guess I would not care. I’d increase my budgets if I can still get an ROI. How does Google define “Quality” traffic?

    • Jeff Sauer says:

      In the case of Google, quality traffic is high click through rates. It’s not tied to conversions at all. Basically, if they find that you can possibly spend money in a click, but are limited by budgets… they will spend that budget for you anyway!

      So you have to be even more careful with your budget / settings, or else you might find your budget gone early in the process.

  • Bill says:

    Can we still set the over-delivery to 20% ourselves and NOT take the default 2x?