AdWords Tips

How Your AdWords Daily Budget Works With Ad Scheduling

By Brad McMillen January 20, 2014 Posted In: AdWords Tips Comments: 10

AKA, How to Keep Google from Turning Your $500 Budget into $600 in Spend

Take a look around any Google help forum and you’ll likely see questions about how AdWords budgeting works. They usually come from advertisers who’ve run over their monthly ad budgets for lack of understanding of this topic. I have to admit, I was one of those advertisers.

I would have felt a lot of embarrassment about my past mistakes if not for the fact the Google help experts had to do some double-checking of their own on it—that’s how (intentionally?) confusing this topic is.

Most, if not all, advertisers use monthly budgets. Of course, AdWords runs on daily budgets. The way you work within this environment depends on whether or not your campaign runs every day of the month.

With full confidence intact, let’s review how budgeting works, especially when you’re using ad scheduling.

The Way Your AdWords Budget Works For Campaigns That Run Every Day

The most straightforward rule to remember is this, both for campaigns that run every day or that use ad scheduling: Whatever number you put in as your daily budget, multiply it by 30.4 to determine the maximum amount you’ll be charged that month. Google uses a fixed 30.4 days for every month, so if you’ve got a budget of $500 to spend in a month, set your daily cap at $16.45 ($500/30.4 days = $16.55) if your campaign runs every day of the month.

AdWords Daily Budget Tips

Now, keep this concept of ad overdelivery top of mind. Ad overdelivery allows AdWords to spend up to 20% more of your daily budget on any given day. Now that $16.45 daily budget could become actual spend of $19.74 ($16.45 + 20% overdelivery = $19.74). Remember here, though, that your maximum monthly spend is your daily budget multiplied by 30.4, so to keep you from exceeding your monthly cap, Google will underspend your budget on other days to make up for the overage you spent on previous day(s). In short, they even things out.

Ad Scheduling Makes Your AdWords Daily Budget Murky

If you’re using ad scheduling, forget everything I just said (okay, not everything). Ad scheduling adds a layer of complexity to setting monthly budgets. The key thing to remember is what I mentioned previously: Whatever number you put in as your daily budget, multiply it by 30.4 to determine the maximum amount you’ll be charged that month. Google sticks to its 30.4 days per month even if you’re not running ads every day of the month. It would be great if Google factored in ad scheduling, but they don’t, so you have to do some math.

AdWords Ad Scheduling

Let’s go back to our $500-a-month advertiser, but this time we only want to run ads on weekdays (M-F), and there are 20 weekdays in our example month.

Simple math would dictate a budget of $25 per day ($500/20 days = $25 per day), but Google actually interprets this as a monthly budget of $760 ($25 x 30.4 days = $760) and therefore could go ahead and feel free to spend up to 20% more each day your ads run. You (or your client) could end up spending $600 ($25 + 20% overdelivery x 20 days = $600) instead of the budgeted $500 because Google doesn’t have the “missing” 10.4 days to underspend your budget and even things out. The point: Google doesn’t account for the ad scheduling and the fact you’re actually only showing ads on 20 days, not 30.4.

The solution to this issue requires a little math and some assumptions. First, assume you will incur costs that are 20% higher than what you have set as your daily budget. So in our example, I would reduce my daily budget to $20 to allow for 20% overspend (which would be $24) and finish the month just under budget at $480 ($24 x 20 days = $480). Going back to the daily budget x 30.4 rule, Google will interpret my $20 budget as a $608 monthly budget ($20 x 30.4). However, I won’t hit that because my daily budget is capped at $24 and I’m only running for 20 days.

Final Takeaways

  • If you’re using ad scheduling, one thing to remember is you must recalculate your daily budget at the beginning of every month because not every month has the same amount of weekdays.
  • The tips above are best applied when you’re in a competitive market and regularly hit your budget. If you’re having trouble hitting your budget, you might not need to be concerned with the 20% overdelivery and can therefore use a higher daily budget.
  • You can also use AdWords automated rules to set your campaign(s) to pause when they hit certain spend thresholds, but these too come with some nuances to be aware of.

AdWords Performance Grader




If you enjoyed this post, please consider leaving a comment.

Comments

Monday January 20, 2014

Anonymous (not verified) Said:

Very good info on budgeting with Adwords

Tuesday January 21, 2014

Brad McMillen (not verified) Said:

Great, I hope you find it helpful!

Monday January 20, 2014

Ricardo Furtado (not verified) Said:

Hi Brad:

How are you?

I will be very honest in saying that I do not use Adwords for the simple reason that I find it really too costly.

But, your insights on this topic are very helpful.

Thanks for sharing.

Take care.

Best wishes and regards.

Ricardo Furtado

Tuesday January 21, 2014

Brad McMillen (not verified) Said:

You're welcome, Ricardo. It's easy for your costs to spin out of control if you don't know exactly how AdWords works.

Best of luck!

Tuesday January 21, 2014

Sunday (not verified) Said:

The takeaways from this post are very clear. The most significant is that marketers should ensure that they understand that adwords daily budget can  work with ad scheduling. Failure to realize this would probably lead to extension of the monthly budget.

Tuesday January 21, 2014

Brad McMillen (not verified) Said:

You got it, Sunday. I hope you can put these tips to use in your campaigns.

Tuesday January 21, 2014

Paolo (not verified) Said:

Very interesting. One point: when I print the article with Readability I get on the front page a huge picture of the author in the front page which uses half of the toner of my printer!

Could you please avoid this? It would save a bit the planet. Thank you!

Thursday March 27, 2014

Hope (not verified) Said:

Brad,

Great blog. But, one thing that I have been searching for a long time isn't covered in any blog and that is how do we decide on the % increase/decrease.

Is there any thumb rule to follow, or ae there any KPI's that we must cnsider while deciding the %?

Will appreciate if you can recommend anything here.

 

Thanks,

Tuesday July 01, 2014

Damian (not verified) Said:

one of my favorite topic for google adwords daily budget,  I was not able to spend my all daily budget in Adwords thanks to you, now let's see what works. 

Wednesday July 02, 2014

JD (not verified) Said:

Thanks for this, very clear and useful for a new Adwords user. Can I ask if it's possible to know definitively if and when a daily budget is used up? I can see that the number of clicks I'm getting is roughly matching (based on their cost) the daily budget, but I don't know when during the day the budget is being exhausted; it could be gone in 2 hours or last most of the day, I've no idea. I would have thought this is useful knowledge but can't see how to find out.

Leave a Comment

Type the characters you see in this picture. (verify using audio)
Type the characters you see in the picture above; if you can't read them, submit the form and a new image will be generated. Not case sensitive.
 
Free Keyword Tool

Get thousands of relevent keyword suggestions - more,
faster, free!

Free Keyword Niche Finder

Discover profitable pockets of keywords for your
business.

Free Negative Keyword Suggestion Tool

Identify wasted spend before it happens and increase
your paid search ROI.

Contact Us | Company | Support | Site Map | Trademarks | Privacy Policy © 2007-2014 WordStream, Inc. All rights reserved.