The AdWords Budget Change: What You Should KnowFebruary 2018
In October of last year, Google announced a substantial change to the AdWords model. As of October 4, 2017, AdWords campaigns can spend “up to twice the average daily budget to help you reach your advertising goals.” This tweak could change the dynamics of bidding and redefine the best practices for Google AdWords going forward.
So, what does this change mean, exactly? First, be advised that it doesn’t mean that Google is indiscriminately doubling your AdWords budget without you knowing it. Such a move would have caused a good deal of outrage, and you surely would have heard about it.
Secondly, know that Google has always been able to exceed your AdWords budget. Since the AdWords platform is designed to deliver the best marketing results based on your budget, it will typically adhere to the budget. Sometimes, though, Google’s systems decide that they need to go slightly over your specified budget to achieve more clicks and conversions. If you think about it, this system makes sense. Google can’t spend your exact budget every day. Google also doesn’t want to underspend your budget, as doing so leaves money on the table. As a result, AdWords will sometimes go over your budget.
Google’s desire to make as much money as possible from AdWords is only part of the equation. The other part is that searches are not static from day to day. Say you are targeting a keyword that tends to get an average of 5,000 searches a day. Just because the average is 5,000 doesn’t mean that Google is, in fact, getting 5,000 searches for your keyword every day. Some days might be 5,000, but others might be 500, or maybe even 15,000. Particularly if product popularity hinges upon seasonality, the number of people searching for your keyword is going to vary significantly.
Google takes these factors into account. On days where your keyword is getting a ton of searches, Google might go ahead and overspend your budget. On days where your keyword is tanking, Google probably couldn’t hit your budget even if it wanted to. Typically, then, your overspends and your underspends average out, to the point where many companies never even know that AdWords was exceeding their budget.
Now, in the past, Google could overspend your AdWords budget, but only by 20%. Since October, the platform has been able to double your budget. Essentially, this means that AdWords can do even more to maximize your visibility, clicks, and conversions on popular search days. With that said, there will still be calmer days where your budget is underspent. Ideally, the numbers will even out by the end of the month, and you won’t go over budget. Since Google can spend more money on your behalf, though, you probably won’t go under your monthly budget either.
If your firm uses Google AdWords, you have two basic options here. One, you can do nothing. Let Google do as it will and see how the double budget rule affects your metrics. In most cases, you should see boosts. Two, you can cut back on your daily spend and see how the AdWords rule change affects your monthly budget. From there, you can adjust things accordingly.