If youre confused by the way Google bills you for AdWords, youre not alone. Not even a little. We have countless clients who feel like the Google AdWords billing system is overly complicated. We dont blame them. Why cant it just be a bill for the same amount on the same date every monthyou know, the way practically every other company in existence does its billing? If we were conspiracy theorists, wed be tempted to think Google confuses AdWords customers on purpose so they spend more money. However, were realists, and weve done our research to crack the code of Google AdWords billing. If youre as mystified as everyone else about how your account is charged, then this blog post is for you! Keep reading to find out how it actually works. Show Your Daily Budget Is Not What It SeemsWhen you first set up AdWords, Google allows you to set a daily budget. When most people hear this, they assume this is the amount AdWords will spend on their ads each day. This is the logical assumption. However, this is not what actually happens. Instead, Google takes the amount you set for your daily budget and multiplies that number by 30.4. The result is what Google allows itself to spend on your ads for the whole month. So, in effect, when you set a daily budget, youre really setting a *monthly* budget. Why does Google use your budget this way?Because Google cant 100% predict how much clicks will cost on a daily basis due to the way AdWords bidding works. Thus, it needs to allow for wiggle room in what it spends from day to day. Thats why Google allows itself to increase spending (up to 2 times your daily budget) on any given day, as long as it decreases spending accordingly on other days so that your monthly total evens out in the end. Google needs this wiggle room because not every day of the week is equal in terms of user behavior. For instance, an ad for something like roof repair is likely to receive more clicks on a weekday than a weekend. This means bids for clicks on certain weekdays will be more expensive because theyre more in demand. Knowing this, Google will loosen the reins on your budget in order to spend more in bids and clicks during the week, and then tighten up on the weekend when your ad isnt seeing as much action. In fairness to Google, this strategy does make sense once you understand what it is. However, it also makes your AdWords charges super complicated. Theres an upside to all this confusion, though. The longer you continue on the same daily budget for the same ad campaign, the more effectively Google will spend your budget. As time goes on, Google will collect enough data to learn the optimal days and times for your ads performance, so it wont have to guess your budget on a daily basis. All you have to do is stick with it. Thresholds and Billing CyclesAbove, we cover how Google AdWords charges your accountin other words, how it spends your budget. Now, were going to talk about billing. This is where people really start scratching their heads. In this context, charging and billing are two separate things. Your charges are what your account has spent on clicks and bids. Your bill, on the other hand, is what Google debits from your credit card. Contrary to most other services you pay for in your normal life, Google doesnt bill you for your total charges at the end of the calendar month.Instead, it goes by a 30-day billing cycle andbills you every time you hit a certain charge threshold. So, you may rack up $670 in charges in the month of January; however, that wont be reflected in your bill. Heres how Google AdWords billing thresholds work:
So, instead of just paying what you owe at the end of every calendar month, youre billed every 30 days OR every time you reach your threshold. This leads us to two important points:
What If You Dont Want to Pay More Than X Amount Each Month?One obstacle many businesses face is the fact that they have their own monthly budgets in the real world, outside of AdWords. Often, they dont want to be billed beyond a certain amount in the same calendar month for fiscal reasons. When this is the case, you have to manually pause your campaign as soon as you reach your limit. Otherwise, your charges will continue to accumulate and you might be billed again at the next threshold. If Prospect Genius is managing your account, we are happy to do this on your behalf. We closely monitor all of the accounts we run, so we will watch your spending and pause your campaign as soon as it gets too close to your personal limit. Then, well resume your campaign once the billing cycle resets. Google AdWords billing is extremely difficult to understand, and thats probably not an accident. However, we hope this blog post brings you some clarity and helps you manage your payments in a more effective manner. Good luck! |