Everything You Need to Know About AdWords Overdelivery
On October 4, Google AdWords both announced and enabled a change to daily budgeting, resulting in a campaign’s ability to spend up to twice its allotted budget amount. We know what you’re thinking: ‘How sneaky of Google to roll this out right before the onset of Q4 chaos, as if we needed another thing to worry about.’ And ‘As if Google needed another way to capitalize on advertisers who don’t have time to keep up with engine updates.’ Well, here at PMG we take the latter very seriously, so you can imagine the severity of our concern (read: cry for help) when we first learned about the change. So without skipping a beat, we took to the industry-leading blogs and forums for more information, and here is our POV on the topic.
Google AdWords previously allowed for campaigns to spend up to twenty percent more than their allotment, and this was often counteracted by preemptively lowering daily budget amounts by—you guessed it!—twenty percent.
For accounts with campaigns that are enabled throughout the month with no daily budget changes, a similar strategy doesn’t seem necessary, as “advertisers will not be charged more than the ‘monthly budget limit’ (daily budget x 30.4 days). If the campaign does exceed the monthly budget limit, advertisers will be credited for ‘overdelivery’ charges at the end of the month.” Other juicy nuggets of information are as follows:
“[The update] is aimed at accounting for daily fluctuations in traffic throughout the month: ‘If your ads don’t show up much because of low traffic, then we’ll make up for that by showing them more when traffic’s higher.’” We imagine most retailers won’t be affected by “low traffic,” especially in Q4.
“For campaigns that do not run an entire month, advertisers will be responsible for paying any ‘overdelivery’ charges, up to 2x the daily budget. That’s because the ‘monthly budget limit’ [as mentioned above] does not apply in this case.” Sounded much scarier until Google recently stated that this particular scenario is highly unlikely to occur. In fact, [they say] “that, in general, advertisers will not see additional days of overspending with this change.”
“Campaigns that run all month but with budget changes will have the ‘monthly budget limit’ reset to the new daily budget for the remaining days, as it always has.”
“Note, in addition to changing the daily budget, three other changes will trigger the monthly budget limit to reset: changing the campaign end date; changing the ad delivery mode; or choosing a different time zone for an AdWords account.” We’re not entirely sure why advertisers would want to act on the last item post initial account creation; however, the first two items could come into play at some point during the inevitably promo-heavy holiday season.
“There is no way to opt out.”
If you are advertising for a business that sets and then adjusts daily campaign budgets up and down based on low or high lead/conversion volume, you’ll need to consider the fact that those campaigns may spend up to twice their allotted amount in one day (should you suddenly increase a limited budget). That being said, “Google [claims] that, in general, advertisers will not see additional days of overspending with this change” since those campaigns were most likely not overspending on the days leading up to the budget increase. We imagine this mostly affects B2B accounts, but B2C accounts utilizing daily campaign budget caps should also be aware.
If you are a business or advertising for a business whose daily campaign budgets are never limited, it’s probably because the expectation is that those budgets will never fully be met and therefore they already take into account days when costs may suddenly increase. In this scenario, you are probably held to a Target CPA or Target ROAS, and either of those goals are what’s used to control spend.
TL; DR “If your campaign isn’t limited by budget, your monthly spend will remain the same. There are no changes to how your budget is spent for these campaigns.” We recommend keeping a close eye on these campaign types, and if you are unable to exceed an overall budget amount (like most of us) consider implementing preemptive measures like accounting for the potential overage when setting the daily cap as mentioned above. Do keep in mind, however, that preemptively cutting daily caps in half has the potential to impede ad delivery and ultimately hurt performance.
Other types of campaigns that could be negatively impacted include:
Short-term test campaigns that don’t run a full month
Promotional campaigns that don’t run a full month
Evergreen campaigns with daily budgets that regularly or seasonally change
Even with this campaign type, Google says “There’s no change to how adjusting your budget impacts what you’ll be charged for the rest of the month. As before, when you change your budget, your spend for the rest of the month won’t exceed your new average daily budget multiplied by the remaining days in the month.”
Finally, there are several other settings outside of daily budgeting that, when coupled with the overdelivery update, could have adverse effects on spend. They are as follows:
Ad rotation default setting: Optimize for clicks
Utilizing this setting could allow for as much as twice the amount of clicks than before.
Smart bidding: Maximize conversions
While Google says that “automated bidding is not impacted,” utilizing the Maximize conversions setting ensures that the daily budget cap is spent in full to increase the probability of capturing as many conversions as possible on any given day. Should conversion volume in a campaign be worthy of spending its daily budget cap in full, advertisers need to be aware that the update could result in overages on some days vs. others.
This change is not as bad as we initially thought it might be. In fact, it may even be a welcome change—one that has the potential to improve budget pacing throughout the month, especially since not all days are created equal. More specifically, for the days in which campaigns underspend unexpectedly, this update will make up for that by spending up to twice the daily budget cap on days that get an unexpected surge of high-quality traffic. Businesses and advertisers need to remember two main things:
As long as they’re ultimately comfortable spending their predefined monthly limits (the result of their combined daily budget amounts x30.4 days or a calendar month), then there are not many changes to be made.
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Google will never charge advertisers more than their monthly limit, and in the seemingly rare event that costs do exceed those limits, advertisers will receive overdelivery credits. It is also worth mentioning that daily overdelivery credits are available for review in all accounts under Reports>Pre-defined reports>Basic>Overdelivery.
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