Will Google AdWords Changes Swallow Twice Your Budget?

Google has rolled out changes to AdWords that could potentially use more of your budget than intended, but they are unlikely to have an overall impact on most marketers’ spending.

As the internet is wont to do, digital marketers staged a collective freakout when Google announced recent changes to AdWords budgeting. The phrasing everyone honed in on was that Google could now potentially use twice the daily budget allocated to a campaign, making the account holder pay for the overcharges.

This assertion that Google could spend more than your chosen limit scared some and angered others. But, upon follow-up and clarification from Google themselves, the consequences of the change are likely to only affect a small minority of AdWords users — and even then not consistently.

Put simply: those who set a static, continuous month-long campaign will never have to overspend past their daily budget amounts. Those who have more-limited campaigns or who make changes to their monthly campaigns may see minor extensions past their budget in certain instances, but Google insists that it all evens out.

Read on to learn more about the nuances behind this complex change and how you can maintain precise control over your AdWords spending.

Why Would Google AdWords Take Twice My Daily Budget?

Google’s change seemed shocking given its implied broad scope and the fact that the changes went into effect the same day they were announced.

Though the PR aspect of this move could’ve been handled better, the AdWords budget change is not as dramatic as it sounds. Here’s how the logic behind the change works:

• All AdWords campaigns have natural fluctuations in search volume and traffic
• Some AdWords campaigns may have unusual dips in traffic, causing them to spend well below their daily allotted budget (around half as much or less); in these instances, you are underspending on your campaign
• If an unusual peak happens to occur after an unusual lull, Google expects that you will want to recapture the anticipated traffic you missed out on
• Therefore, they will spend the money you “saved” during the slow period — up to 2x your indicated daily budget

This change is really just an increasing of an earlier possible overspend threshold, which was set at 20 percent above a daily budget. Campaigns set to run unchanged for an entire month will not be subject to these potential overspends. If you have your campaign set to run for the full month, you will never spend more than your “monthly budget limit,” which equals your daily budget x 30.4 days (In the event that Google somehow does overspend, they promise to credit back your account)

So, in essence, Google expects everyone who overspends to have a total spend roughly even to a scenario where traffic stays flat. Those who set month-long campaigns never have to worry about these overspends since they will get their money back.

However, those who have limited-span campaigns or who adjust their month-long campaign budget may see overspend days.

Adjusting to the Budget Overspend Changes to Google AdWords

Those who are paranoid about the changes may feel the urge to cut their budget in half, but they will notice a dramatic dip in traffic as a result.

Instead, they should recognize that these fluctuations are (somewhat paradoxically) intended to make everything feel more consistent in terms of traffic and average spend. Google asserts that everything is controlled by an algorithm that takes into account expected traffic, actual traffic, and your previous spending habits overall.

By automating these budget functions, Google hopes once more to achieve their goals of having a pleasant user experience people don’t have to micromanage or think too hard about.

That said: pay close attention to your daily spending, and if you don’t like what you see, you can set Target CPA (cost per action) or Target ROAS (return on ad spend) parameters to control your results.

Need help managing AdWords or adjusting your strategy to these changes? EverSpark Interactive is here for you! We offer paid search marketing services, including AdWords management and multichannel campaign coordination. Get amazing SEM results with less stress when you contact us today!