Managing your AdWords budget has gotten a lot more complicated.
Recently, Google announced that AdWords campaigns can spend as much as twice their average daily budget – a steep increase from when Google allotted itself only a 20-percent leeway to increase a campaign’s budget.
As a result, as Google noted, “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.”
That’s right: Google has empowered itself to exceed your allotted AdWords budget by twice the amount you had planned. So, let’s say your campaign budget is $300 a day for the month. Conceivably, during spikes in search volume, Google could lift the ceiling on your spend to $600.
Google assured its customers that “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.”
But even with Google’s assurance that monthly charging limits would not be exceeded, customers were angry. Here are three reasons why:
- Large advertisers running hundreds or thousands of campaigns rely on the ability to constantly adjust their keyword spends daily depending on spikes or drops in demand. They might lower their budgets when spikes in demand occur to protect themselves from their budgets skyrocketing. Now along comes Google disrupting their finely calibrated campaigns and potentially doing the exact opposite of what they intend.
- Businesses running shorter (less than 30 day) campaigns, such as event-based campaigns, could have their budgets blown within the first few days of their spend. To be sure, Google would cap their budgets, but a spike in demand could cause these customers to essentially end their campaigns sooner than planned if Google were to increase their spend by as much as twice the amount budgeted.
- The wide budget variance could also hamper anyone performing campaign, keyword or ad copy tests by disrupting their allotted spend levels.
On the other hand, smaller businesses that do not change their budgets often are likely unaffected. In fact, having Google recalibrate its budget could make the business’s spend more consistent throughout the month.
So, what should you do? I suggest three course of action:
- Pay more attention to the results of your spend on a daily basis (which we do already for our clients). Be ready to adjust spend sooner than you might have planned.
- For shorter-term campaigns, set your spend levels lower to have some level of protection, especially if you know you’re going to get high volume traffic within that time period. You might want to pull back from the get-go.
- For existing campaigns, study your performance data carefully to set your budgets more carefully. Many companies that have been actively involved with paid search for years have a lot of data to draw upon in order to calibrate their budgets.
In any case, this change is permanent. It’s not going away. If you are not doing so already, watch your AdWords campaigns more closely and be ready to change them. True Interactive can help you. Contact us – managing your online advertising is our business and passion.
