Campaign Daily Budgets – An Ignorable Suggestion, Not a Limiter

The Digital Essentials, Part 3

Developing a robust digital strategy is both a challenge and an opportunity. Part 3 of the Digital Essentials guide series explores five of the essential technology-driven experiences customers expect, which you may be missing or not fully utilizing.

Get the Guide

Starting October 4^th, Google is allowing themselves to spend up to twice the campaign daily budget on any particular day. Advertisers can’t opt out, either.
The intention is “to help you reach your advertising goals, like clicks or conversions.” Google can now better accommodate the unexpected ups-and-downs of traffic on a day-to-day basis to help advertisers maximize their potential each month, which is generally a good thing, but there are some things to watch out for. If your desire is to spend 100% of your budget each month and you have carefully set your daily budgets (and don’t change them often), then this is likely a good change.
The concept isn’t exactly new. Google has had the ability to increase daily spend up to 20% over the daily budget in years past. The strangest part about this update is that it’s officially become a monthly budget. Why still call it a “daily budget?” That’s the question on most SEM practitioners’ minds. Daily budgets should be just that – daily budgets (interpreted as “daily limit” for most reasonable minds). If you send your kid to the store and say “only spend up to $20 today,” do you expect him to return having spent $40 because the last 2 times he only spent $10? Only if it’s a monthly budget, would that logic make sense.
Most ad managers are getting used to these types of self-declared, “Google knows better than you” updates that seem to undermine the advertiser’s attempts to control their own campaigns. Without a doubt, they tilt the table towards higher spend and profits for Google. So some eye-rolling is expected. Pessimism aside, this can be a great feature for advertisers with a budget that they hope to maximize and spend 100%, and can actually help advertisers increase their own profits as well – as long as those campaigns are profitable and well-managed. Mindful, alert SEM teams won’t be affected.
Google promises that advertisers won’t be charged any more than their own set monthly allowance for spend, which is the average number of days in a month (30.4) multiplied by your average daily budget. Because it’s not an optional change and it’s in effect right now, advertisers should be mindful and careful when setting monthly budgets, and likely have a calculator handy.
In cases where daily budgets are changed, or when campaigns run less than 30.4 days, the math can be tricky for the advertiser. An example on Google’s help center showed how:

Did you catch that? The advertiser wanted to spend $120 ($30 + $40 + $50) over 3 days, but can be charged up to $240 – and a monthly charge limit “won’t be used.”
Needless to say, advertisers should to be hyper-aware of these compulsory changes, new calculations and exceptions when setting “daily” budgets and be vigilant in their calculations and forecasts.