On Tuesday Google announced new fees to Google Ads billing if you advertise in the UK, Austria, or Turkey. Beginning November 1st, advertisers will need to pay these additional charges, which had previously been absorbed by Google.
- 5% for ads served in Turkey
- 5% for ads served in Austria
- 2% for ads served in the United Kingdom
The new fees will be added to monthly invoices as a separate line items from total ad spend. Google provided the following details in their announcement:
“The Regulatory Operating Costs are being added due to significant increases in complexity and cost of complying with regulations in Turkey. In Austria and the United Kingdom, the DST fee is driven by the new digital services tax in these countries.”
How this Affects Your Campaigns and Budgets
For advertisers targeting the above locations, this change will certainly complicate planning in addition to increasing costs. Historically, Google has only charged advertisers on a Cost-per-click basis for ads, and its lack of an ad-serving fee made it an attractive alternative to other digital advertising platforms.
Advertisers who plan and execute on a monthly basis will need to add 2% of their original planned Google Ads spend to their budget, or reduce their current Google Ads budget by 2% and use the remainder to pay the fees.
“If you pay through monthly invoicing or automatic payments, these fees will be added in addition to your account budget. For example, if you have a budget of €100 and accrue €5 in Austria DST Fees for ads served in Austria, you’ll be billed €105 (plus any taxes, such as sales tax, VAT, GST, or QST, that may apply in your country).”
Advertisers who pay through manual payments or make a prepayment on their automatic payments account will be charged fees after your payment has been fully spent.
The changes should not affect campaign performance. Since fees are added to invoices based on ad spend, metrics such as CPC’s and Cost per Conversion will not be affected. However, when calculating more high-level profitability metrics such as ROAS, the 2% fee will have an impact on margins: particularly for ecommerce advertisers.
You May Need to Tweak your Google Ads Settings
Even if you are not targeting Austria, Turkey, or the UK it is important to adjust your campaign settings to ensure you don’t accidentally serve in those countries. Make sure to add the three countries as location exclusions, and to set the Location Targeting Method to “People in or regularly in your targeting locations” rather than the more aggressive targeting options.
These new fees may not have a large or direct impact on your campaign budgets, as they apply to a relatively small audience. However, there are some strong implications for what the future of Google Ads billing may look like. There are currently 19 additional countries that have incorporated a DST (Digital Service Tax) and many more have and intentions to implement such a tax. Former presidential candidates in the United States have even proposed incorporating a VAT (Value Added Tax) to advertising giants such as Facebook and Google. The cost of these taxes, however, is easily passed down the advertisers as Google has just shown. Amazon has also recently passed on UK’s 2% DST to it’s sellers.