How the AdWords Budget Update is Impacting Advertisers
Back in October Google announced they were making some changes, and campaigns would now be eligible to spend up to twice their daily budget. Here we discuss the background on that change, feedback from around the industry, and how it has impacted Synapse clients.
Beginning October 4, 2017, Google announced their AdWords budget update, which stated that campaigns would now be eligible to spend double your set budget. This was a good thing they argued, as some days internet traffic is stronger than others, and Google would proactively adjust for any fluctuations in traffic. Overdelivery – allowing up to 2 times the clicks per day that your budget allows- would result in fewer missed opportunities for leads.
How will Google prevent overspend if as of now campaigns can spend twice your budget? They calculate based on your daily spend times the average number of days in a month (365 days/12 months = 30.417). Google also regularly recalculates, so if you get incremental budget later in the month, they’ll adjust based on the new set daily budgets. “At the end of the month” says Google “despite those unpredictable waves, you’ll find your costs at right where you expected them to be.”
Initial reactions to Google’s update were not seemingly positive. This was a large jump from the previous 20% potential overspend for AdWords campaigns. Many felt that Google was making it more difficult for them to properly budget accounts, and had major concerns over various budgeting scenarios.
More recently, Ginny Marvin posted a 2x budget change article on Search Engine Land which outlined some of the responses she heard from various industry contacts. The more positive responses seemed to stem from advertisers that were using additional 3rd party tools for bid strategies as well as more robust budget management tools. Negative feedback for the 2x budget AdWords update included advertisers that felt this update caused a need for more time spent on budget monitoring. Spend issues noted were particularly prominent with new campaigns, and any automated campaigns. Some even had their entire budget spent by google in the first few days of launching a new campaign, and exceptionally high CPCs in campaigns such as the Smart Google Display Network campaign.
Additionally, advertisers had concerns in accounts where they saw strong performance on certain days, and proactively pushed or pulled back budgets to reflect those trends. Google might claim their formula would automatically adjust for that, but as SEM experts, should our M.O. really be to let an ad serving platform do the thinking? Seems like a conflict of interest.
Similar to Ginny Marvin’s feedback from various advertisers, Synapse has seen mixed results with this Google update. Some accounts have been impacted very little, and for those accounts we’ve barely noticed any shift in spending or traffic with this 2x budget update. Other accounts have been much more difficult to manage in terms of budget, and it has required additional operational hours to continuously check pacing to ensure we aren’t in danger of overspend. Many small-to-mid-sized businesses have strict budget limitations on a monthly basis, shifts in geographical priority, incremental dollars applied during the month, and some have budget reduced mid-month. Some want to pace evenly throughout the course of the month, and some require uncapped campaigns early on, and then get capped later in the month. Add in accounts that have 100+ campaigns, and all of these factors make the Google 2x budget update more difficult to adjust for on a regular basis.
In certain accounts, Synapse has seen exceptionally high spend early in the month. Google would say to this, leave the budgets as-is throughout the course of the month and we’ll charge you for average monthly spend and credit you anything above that. But Synapse typically tries to keep campaigns as uncapped as possible, to control spend at the CPC level. This ensures any impressions you’re losing are due to rank and not to budget. To keep these campaigns uncapped, Synapse often sets daily budgets higher than they should be, and make bid and other optimizations to bring spend down. Google would not be calculating based on CPC adjustments however, they’d be calculating a monthly budget based on what daily budgets we set. To adhere to monthly budget restrictions, Synapse will often start scaling back certain bids and certain campaigns towards the end of the month. With Google’s update, Synapse now often needs to be even more aggressive and proactive in scaling campaigns back towards the end of the month to ensure no overspend.
It is no longer as simple as calculating how much budget is left, and dividing by the number of days left. It’s a guessing game as to how much Google will exceed its budget this time. While we used to adjust throughout the month and scale back very slowly, now campaigns are becoming abruptly capped, and our clients may be missing out on key leads as a result.
There have been both positive and negative reactions to this Google update, but ultimately the consensus seems to be that this change has made advertiser budgeting and pacing much more difficult. While we understand Google says they will not charge for any overspend, we cannot rely on a calculation after the month is over to determine whether we overspent our clients’ budgets. We need to instead, proactively ensure there is no possibility of overspending. That, after all, is part of why our clients are trusting us to invest their dollars to begin with. The purpose of a cap is that it should not and can not be exceeded. If Google is willing to spend up to twice that cap, it seems to defeat its own purpose. It may benefit Google in the long run to look into an alternative budgeting solution that will work better for the industry as a whole.
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