8249 West 95th Street, Overland Park, KS 66212

Why Does AdWords Go Overbudget?

Anyone who has administered an AdWords account for any length of time probably wonders why the account’s spend never quite matches what you’ve set for a limit. Here’s a little look into why Google goes over your budget occasionally.

How Many Days Per Month?
One thing that will impact your monthly account spend is understanding how a budget is divided.  Say you have $1,500 to spend on AdWords per month and you to calculate your daily budget by dividing $1,500 by 31.  For a month like October with 31 days that’d be just fine, but in a month like February your account won’t hit the monthly spend because there are only 28 days.  There are two options to deal with this:

  1. Recalculate your daily budget every month based on the number of days in the month.  Monthly budget ÷ number of days = daily budget
  2. Enter a daily spend based on the average number of days per month.  This strategy will average out your spend over the year and hit your total available budget for the year.

Calculating Average Number of Days Per Month
Finding the average days per month isn’t hard. 365 days per year ÷ 12 months = 30.42 days per month.  Go ahead and use 30.4.  Divide your monthly target budget by 30.4, enter the result in Google as your daily limit and let it ride.  On months with 28, 29, or 30 days you won’t spend your entire monthly budget, and on months with 31 days you’ll go slightly over.  It’s ok.  If your monthly budget is determined by a yearly max budget, you’ll be just fine.

Remember, Google Will Go Over Budget & There’s Nothing You Can Do About It!
Google will go over budget, sometimes as much as 20%!  If your yearly AdWords budget is set-in-stone you’ll need to check year to date (YTD) numbers periodically to make sure you don’t bust the budget before December.  I recommend auditing them quarterly to make sure they are on budget.  If you have popular keywords and it seems like you’re going over budget fairly often, you probably need to audit monthly, and possibly reduce your daily budget.  In this case I’d calculate how much you’re going over and then reduce the budget by that amount. During you monthly or quarterly audit, calculate how much has been spent year-to-date, subtract that from your total budget and find out how much is left.  Then figure out how many more months (or days if you want to be precise) are remaining in the year, and adjust your daily spend accordingly.  If you’re right on track in December, it’s best to be safe and reduce December’s daily spend by 10-20% to make sure you don’t accidentally go over.

Now Really, Why Does AdWords Go Over Budget?
It has to do with keeping their database available to a lot of requests at the same time.  To put it simply, I’ll use a cookie jar as an example.  Let’s pretend you have a cookie jar.  That cookie jar is full of cookies.  Your cookie jar has a lid.  You know you have 10 cookies in your jar, and you open and close your lid 10 times to let 10 people each have a cookie because you promised each one.  Great.  It worked, but it was slow.  Every time you place and remove the lid you extend the amount of time until the next person gets their cookie.  To make things go faster you decide to just remove the lid and let people to take cookies as fast as they can.  Same 10 cookies, same 10 people and you’ve promised each of them a cookie.  With no lid on the jar, hands go flying in and out of your jar and you can’t tell who has what.  It turns out that in the flurry of action two people each took two cookies by accident instead of one.  There are now two people left with their hands out because you promised each person a cookie.  All 10 cookies have been eaten, so the only thing you can do is buy two more cookies to fill the shortfall.

In the example above, the cookie jar represents your AdWords account, and the people taking cookies are Google’s distributed servers.  The servers are decentralized and when things get going really fast it’s hard for them to keep up with what each other are doing.  One server sees the number of cookies dwindling and takes two cookies because it thinks they are available because it doesn’t realize that there are three other servers waiting to take cookies.  It’s not a perfect way of explaining the concept, but it gets the point across.

Enough About Cookie Jars, What’s Really Going On?
Glad you asked.  Google had real growing pains in developing a highly-available, extremely stable database for AdWords.  Because the database can’t be locked every time a transaction happens they use a management method called optimistic locking.  Google’s latest database is named F1 and in a paper Google describes it as:

F1 is a hybrid, combining the best aspects of traditional relational databases and scalable NoSQL systems like Bigtable. F1 is built on top of Spanner, which provides extremely scalable data storage, synchronous replication, and strong consistency and ordering properties. F1 inherits those features from Spanner and adds several more [including] Optimistic transactions.

I made “optimistic transactions” bold because when it comes down to it, that’s why Google goes over budget.  (Detailed Wiki Explanation)  This same kind of database management is used by airlines and is why they sometimes oversell flights.  There is no way a pessimistic database could handle all the requests from all the travel agents, airline employees, and websites if every record had to be locked when someone was looking at a particular flight.  Under pessimistic locking, when one person is booking a ticket on a plane, nobody else in the world could book a seat on that flight at that moment (heck, they couldn’t really even check how many seats were available!). Overselling does happen and it does cost airlines money, but nowhere near as much as it would if they could not book multiple tickets at the same time.  If your flight is oversold it’s because a lot of people bought tickets really quickly for whatever reason.

Why Are They So Optimistic When It Costs You Money?
Well, in order for Google to be able to serve results for the 3.5 billion queries they receive per day (40,000 per second!) they have had to split up and distribute their server farms around the country (and world).  Google has to use replication to keep the AdWords database synced and distributed all over the world.  Let’s say you have $10 left to spend in AdWords and you cost per click is $5.52.  Google is going to show your ad around a bit to try to get at least one more click for the day with an attitude of “surely two clicks won’t happen at the exact same time” (optimistic).  Let’s say they show your ad in three sets of results at the exact same time and all three people click your ad at nearly the same moment.  Google actually delivered your ad and brought you traffic, so yeah, you owe them $6.56 over your remaining $10 budget.  Going over budget is the price you pay for such huge reach for your campaign.

Google Has Gotten Better.
Google has gotten a lot better at tightening up the spend to hit their targets.  They will scale your spend up and down to try to get closer to your actual target budget.  They’ll try to run your ad a little more cautiously in places to keep to your budget but remember, it’ll never be perfect.

I’ve Seen Refunds In My Account, Is This Because They Oversold My Ads?
Nope.  Google won’t give you money back for visits to your site from legit users with legit ad clicks.  However, Google does refund money for fraudulent clicks. Fraudulent clicks are ones Google determined were specifically intended to drain your account of money.  Back in the day Google didn’t have good protection against this and some people <ahem> would click on competitor ads a bunch of times in a row first thing in the morning to run out their daily budgets.  Running competitors out of money first thing in the morning reduced cost per click a lot because there were fewer competitors left bidding on keywords (sometimes only that person’s client remained and clicks were won for 1¢ each. A $50 per day budget would go a REALLY long way).  Back then it was even possible to hire companies in India to do this automatically every day.  It started to make Google look bad and they responded with good click fraud detection and refunds to advertisers who had fallen prey to the tactic.

Don’t Give Up! Get a Pro!
If your AdWords campaign isn’t running as well as it should, or you tried it once and it was a complete waste of money, reach out to us.  We’ve been making PPC accounts perform well since before Google AdWords existed.