Who Benefits From Google’s Recent Change To AdWords Budgets?

Did you ever have somebody say they did you a favor, but after hearing what that favor was you didn’t know if the favor was really for your good or for theirs?

This recently happened with Google and their new change to how daily budgets are going to work.  Previously, advertisers would set a daily limit on how much they are willing to spend on a campaign (or multiple campaigns if using a shared budget).  By setting a budget, advertisers were assured never to spend any more than 20% over that budget on any given day.  Google gave themselves a little wiggle room in case the clicks for a campaign would come in fast and furious.  Understandable, okay.

However, I was shocked when I logged into my account last week and saw the following message:

Daily Budget Notification

Let me translate from Google speak.  An advertiser’s campaigns will no longer be limited to their daily budget +20% instead Google can charge up to twice as much as what an advertiser agreed that they are willing to spend per day.

In theory, this makes sense because if traffic for a campaign suddenly spikes and if your campaign is converting at a profit you wouldn’t want to have your ads stop showing, right?

Now Google wants their advertisers to be successful, after all those advertisers who are not successful/profitable will probably not continue to use Google to advertise.  However, Google also wants to make as much money as they can from their advertisers in order to grow.  So whose best-interest is the change to AdWords budget really for?

Well, consider these scenarios:

What if there is a spike in traffic that is not converting?

or

Make Each Click Count - T.O.P. Guide To Success Using Google AdWords

What happens to your ads near the end of the month given your daily budget has doubled on non-converting traffic and thus depleted your monthly budget?

or

What if you pause an underperforming campaign before the end of the billing cycle?

These 3 scenarios would all negatively affect an advertisers and scenarios that need to be considered when creating your daily budget.

Daily budgets have long been used as a protective net against large spikes in non-converting traffic.  Google has now removed this safety net and Google advertisers need to be fully aware of this fact.

So the question to ask yourself as you review your current budgets are the following:

  1. Always the most important question – are all of your campaigns currently profitable?
  2. Are you using negative keywords to limit your exposure for non-converting keyword searches?
  3. Are you currently managing bids on individual keywords within your campaign? Meaning are you bidding higher for keywords that convert compared with those that convert less frequently.
  4. Are you or is someone else on your marketing team regularly checking your AdWords accounts for both profitability and updating non-converting keywords to your negative keyword list?

If the answer is no to any of the questions above, you may need to consider lowering your budgets. This of course is difficult to do as we approach the holiday season, and I’m not suggesting you cut your budgets in half across your entire account, but profitability is the key to success using Google AdWords and you need to consider the question above when determining how well your account is currently optimized.

After all, you must do what is in your best interest even if a friend of yours says they have just done you a favor:>

Happy Marketing!

Andy Splichal

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ABOUT THE AUTHOR:

Andy Splichal is an online marketing strategist  with more than a decade and a half of experience helping companies increase their online presence and profitable revenues.  Although this blog focuses on driving profitable traffic through Google AdWords, True Online Presence offers additional services for lead generation as well as other proven marketing strategies customized for each client.