Google Advertising “operating cost” Surcharge | October 2021 Update

From the 1st October (2021) Google will be introducing a 2% “Regulatory Operating Cost” surcharge to advertisers’ invoices for ads. ‘Another revenue stream from Google’, you think? Correct.

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This will be rolling out across the UK, France, Spain, Austria, and Turkey, and more recently India and Italy were added to that list. 

Whilst this change is due to take place in October (so we have a bit of time) we are all aware that we have Black Friday and Christmas on the horizon. With peak gifting season and advertising budgets in full flow at this time of the year, there are a few things we should be looking at in order to prepare for this update.

Key factors about the Google Surcharge update: 

  • The added tax charges will be exclusive to the account budget you set on your Google Ads account. (if your October account budget for a campaign targeting the UK is £1,000 you will receive an invoice for £1,020 (Media spend + 2% DST fee)
  • These fees are applicable to all ads purchased through Google; therefore this means PPC ads, Google Shopping ads, and even YouTube ads. 
  • These charges do not impact the same inventories purchased through DV360 however – a platform you can only access through a media agency with buying power (like VERB!) 

How will the google surcharge impact luxury brands?

Measurement

Google is applying these charges only from the point of billing, so important metrics like cost per conversion or ROAS won’t be affected directly. Google will be simply add on the surcharge so you can continue to measure benchmarking against previous quarters. 

That being said, overall the cost of advertising will increase and advertisers may have to relook at the way they measure metrics to accommodate these surcharges for a true view of ROI.

Campaign builds & targeting settings

If you have campaigns targeting multiple locations, sorting out your invoices can turn out to be more complicated than you thought, as only clicks accrued in the impacted jurisdictions (AKA markets – noted above) will have the surcharges, while other markets within the same campaigns are not affected. So it might be a great time for a good old-fashioned account restructure where you make sure these markets are targeted in their own separate campaigns. 

If you set your campaign geo-targeting to “Presence or interest” you’re more likely to be getting charged higher on your media spends.

It has to be said, Google’s newly imposed charges are not really the first of that kind and should not be a surprise to anyone in the industry, similar charges have been announced earlier this year from players like Amazon and Apple

As digital becomes even more saturated and a key part of a marketeers strategy, do expect advertising to become more expensive. Speak to an expert at VERB if you are interested in activating your google ads. We are always here to help and would love to hear from you!

VERB Brands

Reaching Affluent & Aspirational Audiences through Data, Search, Creative & Media. VERB is a digital agency that drives strategy, growth, and revenue. The world’s only data-driven, creative media agency for luxury and premium brands. Based in London, Manchester, New York and Shanghai.