Google AdWords Billing
The Google AdWords Billing system was a source of great confusion to many new advertisers during my time on the Google AdWords Support Team. Google has made some changes during the past 12 months which I am sure has only added to the confusion. In the past, during the process of setting up your AdWords account, you were given the option of manual or automatic billing. I would always recommend manual billing to new advertisers because this option was much simpler. Manual billing is no longer an option. If you AdWords account is older you may have been given that option. If you have an AdWords account set up with manual billing you should think very carefully if you ever decide you want to switch to automatic billing because once you switch to automatic now you cannot go back to manual again.
Since manual billing is no longer an option in AdWords I won’t spend much time on it here. Manual billing means you must deposit money in your AdWords account before your ads start running and when your account is depleted your ads stop running. This gave you a lot of control over your advertising budget. If you only wanted to spend $300 in advertising with AdWords then you only deposited $300 into your account and you would never spend more than what you deposited. I only mention this benefit for those of you who may still have manual billing set up in your accounts.
Automatic billings are how all new accounts are set up now and, as I stated earlier, new advertisers can find this confusing. With automatic billing, Google is basically extending you a line of advertising credit. You must enter a credit card for billing purposes before you can build your ads and begin running them. Once you have done this your ads are allowed to run and your first billing terms are set to $50 or 30 days. Whichever comes first. Once you reach $50 in clicks your credit card is automatically charged for those clicks. If you have not received $50 in clicks in the first 29 days then on the 30th day you are charged for the amount in clicks you have received and the next 30 day billing cycle begins. The confusion comes in when you do reach $50 before the 30 days has passed.
If you reach $50 in clicks in less than 30 days you are automatically charged for the $50 and your advertising credit line is increased by $150 to $200. Now your billing terms are $200 or 30 days, whichever comes first. If you receive $200 in clicks in less than 30 days, you are automatically billed the $200 and once again your credit line is increased by $150 to $350. If you receive $350 in clicks in less than 30 days you are billed the $350 and your credit line goes to $500. $500 is the maximum credit line so once you reach this point you will be on $500/30 days from then on.
The reason this can be confusing is many new AdWords advertisers do not notice the increase in the terms in the beginning and therefore are never certain when they will be billed. AdWords automatic billing combined with their daily budget system and their 20% over delivery policy can make it very difficult to effectively manage your advertising budget in the beginning.
If you are new to AdWords and are confused by the Google AdWords billing system, you are not alone. Feel free to contact me for your free consultation from the AdWords Services page and I will help to make sure you get off to a good start with Google AdWords without over spending.