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You are here: Home / Archives for bills

What You Need to Know About Google AdWords Billing

Last Updated: January 11, 2018

If you’re confused by the way Google bills you for AdWords, you’re not alone. Not even a little.
We have countless clients who feel like the Google AdWords billing system is overly complicated. We don’t blame them. Why can’t it just be a bill for the same amount on the same date every month—you know, the way practically every other company in existence does its billing?
If we were conspiracy theorists, we’d be tempted to think Google confuses AdWords customers on purpose so they spend more money.
However, we’re realists, and we’ve done our research to crack the code of Google AdWords billing. If you’re 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.

Your “Daily” Budget Is Not What It Seems

When 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, you’re really setting a *monthly* budget.

Why does Google use your budget this way?

Because Google can’t 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. That’s 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 they’re 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 isn’t 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.
There’s 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 ad’s performance, so it won’t have to “guess” your budget on a daily basis. All you have to do is stick with it.

Thresholds and Billing Cycles

Above, we cover how Google AdWords charges your account—in other words, how it spends your budget. Now, we’re 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 doesn’t bill you for your total charges at the end of the calendar month. Instead, it goes by a 30-day billing cycle and bills you every time you hit a certain charge “threshold.” So, you may rack up $670 in charges in the month of January; however, that won’t be reflected in your bill.

Here’s how Google AdWords billing thresholds work:

  • Your starting threshold is $50. Google does this to make sure you can actually pay before you go any further in your campaign.
  • If you spend $50 within your first 30 days, Google bills you immediately and resets your billing cycle. Now, your threshold is bumped up to $200.
  • If you spend less than $50 within your first 30 days, you’ll be billed your exact spend amount at the end of the cycle. Your threshold will remain at $50 for the next 30 days, or until you surpass $50.
  • Next, if you reach your $200 threshold within 30 days, Google bills you, resets your cycle, and raises your threshold to $350. If you spend less than $200, Google bills you for the exact spend amount at the end of 30 days and keeps your threshold at $200 until you surpass it.
  • The process repeats itself for the $350 threshold.
  • The final threshold is $500. Once you reach $500, Google will bill you and reset the cycle, keeping your threshold at $500.

So, instead of just paying what you owe at the end of every calendar month, you’re billed every 30 days OR every time you reach your threshold. This leads us to two important points:

  • Because billing is triggered by thresholds, it’s possible for you to be billed more than once in the same calendar month. This is what messes up a lot of our clients and causes their credit cards to decline.
  • If your credit card declines at any point, your threshold will reset to $50. Then, you’ll have to go through the process all over again. This can wreak havoc on your campaign if it happens repeatedly.

What If You Don’t 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 don’t 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, we’ll resume your campaign once the billing cycle resets.
Google AdWords billing is extremely difficult to understand, and that’s 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!

How to Keep the Holidays From Ruining Your Online Marketing

Last Updated: February 15, 2024

It’s no secret that most of us stretch our budgets a little thin over the holiday season. With parties to host and gifts to buy, money disappears quickly. And for many small business owners, the slightly blurred line between personal and business finances means the holidays can impact some of your company’s operations—like online marketing.
If you’re feeling the squeeze of the holidays on your small business’s budget, it’s fine to tighten your belt—but don’t let it affect your online marketing. Canceling your marketing campaign temporarily or skipping a payment may reduce your expenses in the short term, but did you know there can be seriously negative consequences? The fallout will outlast the holiday season and your savings may turn into losses.
How can that be? Keep reading to find out.

Canceling Your Campaign Sets You Back for Months

Canceling an SEO-based campaign, even just for a month, can jeopardize your future profits. To explain how, we’ll use the way Prospect Genius works as an example.
When a client cancels their campaign with us, it’s our policy to immediately take down their website, pull down their listings, and halt all lead generation services. (Most advertisers have a similar cancellation policy.) Your business will stop receiving traffic and leads right away. So canceling your campaign for the holidays will likely cause you to stop getting new customers for at least a month, or however long it takes for you to restart your campaign.
There’s more. Now, whenever you decide to restart your online marketing, you’ll have to wait another few months for your web presence to ramp up again. Why? Because SEO is not something you can drop and pick up where you left off. As soon as you stop SEO, everything goes back to zero.
As Prospect Genius clients may recall, there’s typically a 90-day buildup period after you start a new campaign. This ramp-up window is unavoidable, regardless of how many times you’ve started and stopped your online marketing. So after all is said and done, you lose several months of business even though you only canceled for one month.

Skipping a Payment Is Hard to Bounce Back From

Another thing that some business owners do is let their marketing payments slide for a month. They think it’s the harmless alternative to canceling entirely. While it’s true that making a late payment is better than canceling, it’s far from harmless. For example, when you miss a payment with Prospect Genius, your account is partially disabled until payment is received, causing a dramatic decrease in leads received.
But the real kicker comes later: After delaying one payment, most business owners find it difficult to get back on track with their monthly billing cycle. This is because they now only have a couple of weeks, instead of a full month, to save up for the next payment. Often, this begins an unfortunate pattern of falling behind that’s difficult to stop.

What Can You Do?

We aren’t trying to scare you. We understand there are peaks and valleys in every fiscal year and that the holidays can be especially trying. If money is tight, here are some things you can do that won’t hurt you in the long run:

  • If you’re doing AdWords or any other PPC campaign, pause it. While you can’t turn SEO off and on again easily, PPC can be started and stopped with ease.
  • Budget wisely. Plan out all of your income and expenses for the month to see how much money you’ll realistically have for gifts, decorations, food, and, yes, marketing costs.
  • Pay in advance. If you think there’s a chance you’ll overspend on holiday goods and not have enough money at the end of the month to pay your bill, be safe and pay your bill ahead of time—before your money runs out.

Remember: You’ve invested a lot in your online marketing. Don’t let your web presence come crashing down by canceling your campaign or not paying your bills. You might save a monthly payment, but it will cost you much more down the road.
Questions or concerns? Please don’t hesitate to reach out for help.

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