The budget feature, as it applies to Google AdWords, works like this: set a daily budget, and when that amount is met for the day, ads will no longer be served for that campaign for that day. The budgeting feature in PPC promises a level of automation to campaigns – a perfect solution for businesses advertising on a budget but without the resources to maintain PPC budgets manually on a daily basis.

Yahoo! Sponsored Search also offers a budgeting feature. The feature is activated account-wide through the Money Manager area by turning the budgeting feature on and setting a daily budget. Much like Google, the daily budget is then extrapolated by Yahoo! to encompass a 30 day period. So, for instance, a daily budget of $100 would be understood by Yahoo! as a $3,000 monthly budget. Supposedly, the account will not accrue more than $3,000 in charges for the month, and no more than approximately $100 in charges per day. However, that’s not always the case.

I recently set up a new Yahoo! Sponsored Search account for a PPC client. AAA Payday Cash (AAA) is an online financial company specializing in payday loans, an industry highly competitive in the PPC arena. Some keyword terms garnish a maximum cost-per-click (CPC) of upwards of $49/click. As my team set up the campaign for AAA, they set the budget to $1/day, to ensure that the campaign did not receive very many clicks, if any, while the account was being optimized with keywords and ads and bids were being appropriately set. At a budget of $1/day, the monthly budget would only be $30, a budget that would not even allow one click on a $49/click term.

Within the first 24 hours, however, the account was over $500 over budget! With a daily budget of only $1, how could this happen?

The page help on the Yahoo! Sponsored Search budgeting feature page explains the feature:

“The budgeting feature is designed to provide you with financial control by allowing you to determine the approximate amount your account is charged every month. By entering an amount for your approximate daily budget, your target monthly budget is calculated (your approximate daily budget multiplied by 30). Budgeting then automatically adjusts the daily rotation of your listings so that, over the course of 30 days, your daily click charges should be close to your target monthly budget. This makes account management easier by eliminating the need to constantly monitor your balance, as well as helping to provide a daily flow of leads to your site."

The key phrase in this description is “your daily click charges should be close to your target monthly budget". Essentially, Yahoo! is not very specific about how much an account using the budgeting feature may go over budget. But $499 over daily budget seemed pretty excessive, so I contacted Yahoo! Sponsored Search customer service.

A representative at Yahoo! explained to me that because this account included highly searched keywords that had high maximum cost per click, such as the $49/click keyword, that was the cause of the account going over budget. Additionally, the representative told me that Yahoo! cannot turn off Content Match ads as quickly as Sponsored Search ads, so it is easier to go over budget with Content Match.

After a pointless discussion with the representative about how Google’s same model turns ads off immediately when daily budget is reached, I realized that Yahoo!’s budgeting feature, like some other features with its interface, is simply flawed. However, Yahoo! should explain these incredible possible overages to advertisers; else many PPC advertisers risk high budget overages with a tool that they may believe they can trust.

A budget feature should be just what it infers – a spending limit. Ads should stop being served once a budget is reached – regardless of how quickly the budget may be reached on a given day and regardless of the popularity or CPC of the campaign keywords. While Google AdWords’ budgeting feature works well and follows those appropriate guidelines, Yahoo! Search Marketing’s budgeting feature does not. Any advertiser using Yahoo!’s tool should be wary and pay close attention to how well the budgeting feature works for any given campaign.