Why Do You Bill According to Approved Advertising Budget, Not Ad Spend?

The “approved monthly ad spend” is a budget set by the Advertiser. Solutions 8 bills according to the approved budget regardless of the actual ad spend.

Let’s take a moment to explain this line in our PPC Agreement.

It sounds simple: set a budget, spend the money, increase traffic.

But the truth is, a whole lot of work goes into spending money effectively in Google Ads. In fact, Google often limits the amount of money you can spend on any given campaign. This means we have to do extra work to find new avenues for your ad spend in order to fulfill your budget.

So, let’s say we created three campaigns for your business and your approved budget is $10,000.

What happens if Google limits us to $2,000 on each campaign?

Well, with $4,000 left in the budget, we get to work.

The work behind the ad spend.

With money left over in the budget ($4,000 in this example), our team of strategists get to work to find new opportunities and pockets of traffic. What does this look like?

  • Conducting additional keyword research
  • Testing new bidding strategies
  • A/B testing new campaigns
  • Building different channels like YouTube and Display to expand outreach
  • Creating new ad copy

Traffic is inventory.

To visualize this spending challenge, let’s pretend that instead of asking us to purchase traffic for your site, you’re asking us to purchase apples—$10,000 worth of apples, to be exact.

We go to the nearest grocery store and purchase all the apples they have. But, we could only spend $6,000 (I know, that’s a lot of apples).

Now, we have to drive to every other grocery store nearby—maybe hours away or at tiny farmers markets—in order to spend the remaining $4,000.

Whether we hit our goal budget or not, the effort it took to drive around and find every apple possible was just as difficult (if not more difficult) as spending the full budget in one grocery trip.

To take this analogy another step further, this chase gets more difficult if the product is more obscure, like passion fruit or horned melon.

We’re not going to let your budget stay at an attempted threshold.

Overshooting your budget doesn’t benefit either of us.

If we have a difficult time meeting your requested ad budget in our first month together, we may give it another go—but we’ll never let your budget stay at a hard-to-match goal for long.

Basing our fees off the ad budget rather than spend holds us both accountable.

I’ll close with this:

Billing according to your ad budget enforces appropriate expectations by both parties. This keeps you from overspending and keeps us from depleting our resources chasing traffic inventory.

Additionally, there will be no surprises in your monthly billing; this keeps us from the meticulous nickel-and-diming that leads to management nightmares on both ends.

Have any other questions? We’re here to help!