As the digital advertising world keeps evolving, businesses need to stay on their toes, and Google is making sure of that. There have been two major developments in the past month that will reshape and impact the way advertisers approach their campaigns, and we’re here to break down what these changes mean for you—and how to stay ahead.
As a Premier Certified Google Partner, War Room stays at the cutting edge of digital advertising. Our expertise covers all Google ads including —Search, Display, Video, Shopping, Demand Gen and beyond. We’re at the forefront of ad changes and trends, and our team ensures your campaigns remain ahead of the competition and optimized for performance.
1. Canada’s New 2.5% Surcharge on Google Ads
Here’s what’s happening:
Starting in October 2024, Google will implement a 2.5% surcharge for businesses advertising in Canada.This surcharge is a direct result of Canada’s new Digital Services Tax (DST), designed to create a sustainable fund for the government’s own ad inventory and incentivize local investments in Canadian digital advertising.
The Digital Services Tax (DST) applies to companies with global revenues exceeding €750 million and Canadian-sourced digital services revenues above $20 million annually. The tax is set at 3%, though Google has chosen to pass through 2.5% to advertisers. In contrast, Meta is passing the full 3% surcharge to its advertisers. This tax targets companies that earn significant revenues through online services such as advertising, marketplace services, and user data monetization.
The DST has been implemented to incentivize businesses to invest in local digital advertising and ensure that a portion of the revenue generated from digital services stays in Canada. By supporting Canadian-content ad channels, the tax will help strengthen the domestic digital landscape and create more opportunities for local businesses and content creators.
How will this impact you?
Your ad costs will be going up.
- Increased Cost per Click (CPC): The surcharge will directly increase your Cost per Click (CPC) by 2.5% for campaigns targeting Canadian audiences.
- Higher Cost per Acquisition (CPA): As CPC rises, the cost to acquire new customers will naturally climb as well. This could hit your bottom line if you’re not optimizing efficiently.
- Lower Return on Ad Spend (ROAS): With rising costs, your return on every dollar spent will take a hit, reducing overall ROAS.
Our Advice
Now is the time to review your ad budgets and bid strategies. This change may seem small at first, but a few tweaks could make a big difference in keeping your campaigns efficient. War Room is here to guide you through these changes and ensure you’re getting the best results from your ad spend.
2. Google’s Antitrust Trial: The 20% Commission Under Fire
Here’s what’s happening:
Google’s antitrust trial with the Department of Justice (DOJ) has sparked debates across the industry. One major point? The 20% commission Google takes from ad transactions—much higher than what many other channels charge.
How will this impact you?
- Higher Transaction Costs: Google’s commission fee means a significant portion of your ad spend goes directly to them before your campaign even kicks off.
- Scrutiny Over Google’s Power: The DOJ has been examining whether this high commission reflects Google’s dominant hold over the ad tech market. If the case is lost, fees could increase further, potentially raising costs for advertisers. This could also shake up how ad platforms operate, possibly opening doors for new competitors and tools.
Our Advice
While Google is a key player, it’s important to diversify your digital ad strategy. Explore other platforms like Meta, Amazon DSP, especially if you want more control over your ad spend and performance.
Based on Google’s communication, we should anticipate a fee increases if Google loses the trial, so preparing for a broader ad strategy now will help mitigate any future cost spikes. We’re ready to help you navigate these changes and build a strategy that’s flexible and forward-thinking.
How to Stay Ahead of These Google Ad Changes
With these two big shifts, the key takeaway is this: be proactive! Whether it’s budgeting for higher Cost-Per-Click (CPC) or staying informed on industry shake-ups, now’s the time to fine-tune your strategy.
Here’s what we recommend:
- Audit Your Campaigns: Identify where rising costs, like CPCs or commissions, are affecting performance. At War Room, we conduct in-depth audits of your ad accounts and analytics to build a custom strategy tailored to your goals and budget.
- Optimize for Efficiency: Refine your bids, targeting, and ad formats to make the most of your budget. Adjusting these elements ensures you’re maximizing performance despite rising costs, and our team works closely with you to optimize across channels.
- Diversify Your Spend: Don’t put all your eggs in one basket and rely solely on Google. Explore other platforms that may offer better Return on Ad Spend (ROAS) or lower fees, especially in light of these changes.
At the end of the day, staying flexible and informed is the key to thriving in the ever-changing digital landscape. With War Room’s data-driven decisions and custom strategies, you can confidently adapt your ad approach and continue driving results.
Building an efficient and effective cross-channel strategy is how to get ahead of these trends and your competitors.
