Google AdWords recently ran a Beta of a monthly budget option. Instead of just the daily budget option, where Google would cap your spend each day regardless of demand, you could set a monthly budget (which was computed by multiplying your daily budget by 30.44, the average number of days in a month) where Monthly Budgeting at Google - Don’t Get Bitthe daily spend could fluctuate. If you had a low traffic day and didn’t spend your daily ppc advertising budget, the excess could be applied to the following day or days, just as long as you stayed within your monthly budget total at the end of the month.

It’s a great concept, especially if you really want to hit your monthly spend and your traffic fluctuates a lot by day. Here at JumpFly, we’ve tested it for a few of our clients that were in the Beta and were pleased with the results, but as with all new things, there’s a learning curve. Here’s one of the biggest “catches” to the monthly budget, which could bite you if you didn’t know about it and react accordingly.

If you reduce your budget at some point during the month, the total budget for the month decreases which can actually back-fire in constraining how much you spend for the remainder of the month. For example, my client had a $7000 per month spend, which comes out to $229.96 per day. About 2/3 of the way through the month, we split out a portion of the existing campaign into new one, and allocated a portion of the $7,000 to the new budget. I reduced the daily budget on the existing campaign to $179.98.

Now here’s where it gets tricky. Google takes the $179.98 times 30.44 (average number of days in a month) to figure out the new monthly budget, which is $5478.59. I’d already spent $4829.16 for the month. Subtract what I spent from my new monthly budget and I have a total of $649.43 to spend for the remaining 10 days – or $64.94 per day, which is less than 1/3 of what I actually wanted to spend. I’ll be honest, it took me several days to figure out why this account had a decrease in impressions and spend. Everything LOOKED fine – the daily budget still said $179.98, the monthly still said $5478.59. I wasn’t getting any messages that my budget was being constrained. I was just about to call my dedicated Google rep for help, when I decided to investigate a little deeper into monthly vs. daily budgets, and there was my answer. Google’s help page says that if you do reduce your budget during the month, they’ll remind you of the number of days left in the month and how the budget change could affect your account, but I don’t remember seeing any type of message that warned me.

So, if Google releases Monthly Budgeting to all AdWords customers, it’s something that might be worth trying. Just remember, as with most Google tools, there’s nuances that can catch you if you are not careful.

More about Nikki