Last week (October 4, 2017) Google made an announcement that they have changed their daily bidding strategy in an effort to help advertisers with pacing.
Your AdWords campaigns can now spend twice the normal daily budget, per the below tweet:
While this change is not optional, Google has stated that the campaigns will not be charged more than the “monthly charging limit,” defined as the average number of days in a month (30.4) multiplied by your average daily budget. This monthly charging limit will go by the calendar months, not a continuous 30.4 day period. This rule plays a key role in your campaigns and should help advertisers understand that this change by Google is to help regulate fluctuations in daily pacing, not spend double the budget each month. Remember, AdWords has been working off a model that could allow campaigns to spend up to 20% more than the daily budget without exceeding the monthly budget for some time now – this update is another extension of that.
Advertisers can see over delivery by day from the Reports section in AdWords. However, if you adjust your daily budget or pause campaigns during the current month, Google will automatically recalculate your new monthly charging limit. This is very important to keep close watch on when running campaigns with a short time frame. Here is a quick example comparing the old 20% buffer rule versus the new rule:
If your campaign runs for three days with a daily budget on each day of $20, $25 and $30 your total spend would be $75 up to $90 with the old 20% rule. Using the new Google update, you could potentially spend $40, $50 and $60 over the three days of your campaign – leaving your total monthly budget at $150.
The largest question coming from this change is “Should I cut my budgets in half to respond to this change?” That strategy is not recommended as this could lead to under performance. The best recommendation is to be aware of this change, why it has occurred and know the campaigns it could affect the most.
If you have any further questions on this update please contact MoreVisibility or your Client Strategist for more information.