Google AdWords has had the potential to spend 20% more than your daily budget for a long time. This overdelivery mechanism was designed to account for natural fluctuations in demand, to take advantage of conversion rate momentum, and to light a fire beneath underserving campaigns. The deal has always been that overspend would resolve within a 30.4 day period to meet (and almost never exceed) monthly spend goals. In cases when monthly budget is exceeded, advertisers are credited for overspend.
On October 4th, Google announced that the daily overspend limit had increased to 100%. This means that advertisers could see twice their daily budget spent within a 24 hour period. It’s important to note that overdelivery credits are only good for campaigns that spend for a whole month, and advertisers will be on the hook for overspend within shorter-term campaigns. According to Google, the former scenario is very unlikely. As in the past, mid-month budgetary changes will cause the limit (daily budget x 30.4) to adjust in real-time.
Takeaways for the Nonprofit World
- We all know how important end of year giving is. In many cases, nonprofits raise large percentages of yearly fundraising goals in December alone. The overdelivery update from Google is designed to take advantage of days with unusually high conversion rates, but is it prepared for statistically astronomical increases that simply get better and better as the month progresses? If no future updates are released, AdWords managers will need to keep a very close eye on daily spend as EOY approaches.
The danger of spending December budget before the end of the month is simply too dire to ignore. Although this update is specifically designed not to exhaust monthly budget before the middle of the month, the fundraising potential of December 31 renders this fact a non sequitur. We may find ourselves lowering daily budgets based on November overdelivery data, then raising them as December progresses in order to retain tighter control over spend.
- Watch short-term campaigns. If you’re running a short campaign designed to target a particular day of the year or a short donation matching window, pay close attention to spend. Although Google says it’s unlikely that campaigns such as this will spend double every day, there is a chance that you’ll surpass campaign budget. If daily budget is set too low, the chances of overdelivery increase.
- The change (probably) applies to Grants accounts as well. Based on a conversation I recently had with the Google Partners team, it seems that this is a functionality change that will affect Grants campaigns as well. If your Grants manager has the enviable situation of having created effective campaigns that are limited by budget, then they will need to apply strategies similar to those recommended for paid accounts.
I understand the spirit of this change. Ensuring that advertisers take advantage of available traffic in a fluctuating market without overspending is clearly a solid goal. This rollout took most people by surprise, and the reaction has generally been lukewarm, to say the least. Many advertisers feel as though Google is wresting control away from them—and if you know AdWords managers, you’ll know that we tend to be control freaks, especially in the nonprofit space. Fundraising is nothing if not seasonal, and when EOY rolls around, palms get sweaty. Single days of the year can make or break projections. For us, the time to adapt is now. This change isn’t going anywhere, although we should all keep our ears to the ground for edits before December. In the meantime, developing internal strategies and using the remainder of October and November to run tests and collect data is our best bet for fundraising success in the end of 2017.