What is Billing Threshold?
In online advertising, such as Google Ads, the billing threshold is a specific amount that serves as a threshold or a trigger point for billing advertising costs.
Once this threshold is crossed or reached, the advertiser will be billed for the accumulated advertising costs up to that point.
The billing threshold is usually set by the advertising platform, and it varies depending on the platform and the advertiser's billing history.
For example, Google Ads may set a billing threshold of $50 for new advertisers, which means that once the advertiser's advertising spend reaches $50, they will be billed for that amount.
After the initial billing, the advertiser may be put on a regular billing cycle, such as weekly or monthly, depending on the platform's policies.
Importance of Billing Threshold
Understanding the billing threshold is important for advertisers to manage their budget and cash flow.
Knowing the billing threshold can help advertisers plan their ad spend to avoid unexpected charges or interruptions to their ad campaigns.
Advertisers who don't understand the billing threshold may find themselves with unexpected charges or may have their ad campaigns paused if they exceed their threshold.
What are Billing Cycles?
In the context of online advertising, a billing cycle is the length of time during which an advertiser experience ad charges and receives a bill for their ad spend.
The length of a billing cycle can vary depending on the advertising platform and the billing options selected by the advertiser.
Once an advertiser exceeds the billing threshold, they may be billed immediately or put on a regular billing cycle, such as weekly or monthly.
For example, Google Ads allows you to choose your billing cycle, and once the billing threshold is reached, you will be billed according to your chosen cycle.
You should consider your cash flow and budget when choosing your billing cycle to ensure you have enough funds to cover the charges.
How Does Billing Threshold Work?
Here's how the billing threshold works:
The advertisers set up an ad campaign: An advertiser sets up an ad campaign on an advertising platform, such as Google Ads or Microsoft Advertising. The advertiser sets a budget and targeting options for their ad campaign.
Ad spend accumulates: As the ad campaign runs, the advertiser's ad spend accumulates based on the number of clicks, impressions, or other actions generated by their ads.
Billing threshold is reached: Once the advertiser's ad spend reaches the billing threshold set by the platform, the advertiser is billed for that amount. For example, if the billing threshold is $50, and the advertiser's ad spend reaches $50, they will be billed for that amount.
Payment is made: The advertising platform charges the advertiser's chosen payment method for the amount of the billing threshold. Advertisers may be billed immediately after the threshold is reached, or they may be put on a regular billing cycle, such as weekly or monthly.
Ad campaign continues: After the payment is made, the advertiser's ad campaign can continue to run until their budget is exhausted or until they reach their maximum ad spend for the month.
By setting a billing threshold, advertising platforms can help advertisers manage their ad spend and budget.
Advertisers can set a maximum budget and have more control over their spending, while the platform ensures that they are paid for their services.
You should review the billing policies of your chosen platform to ensure that you understand the billing threshold and payment options to avoid any inconvenience during your ad campaigns.
Types of Billing Thresholds
There are different types of billing thresholds that may exist on various advertising platforms.
Some platforms may have a fixed billing threshold for all advertisers, while others may adjust the threshold based on the advertiser's billing history.
For example, a platform may increase the billing threshold for an advertiser who consistently pays their bills on time or decrease the threshold for an advertiser who has a history of late payments.
Here are some types of billing thresholds:
Fixed billing threshold
This is a billing threshold that is set at a specific amount for all advertisers on a platform. For example, a platform may set a fixed billing threshold of $50 for all new advertisers.
Dynamic billing threshold
This is a billing threshold that is adjusted based on the advertiser's billing history or ad performance. For example, a platform may increase the billing threshold for an advertiser who consistently pays their bills on time or decrease the threshold for an advertiser who has a history of late payments.
Prepay threshold
Some advertising platforms offer a prepay option, where advertisers can add funds to their accounts in advance to cover their ad spend. In this case, the billing threshold is the amount of the prepayment.
For example, an advertiser may choose to prepay $100, which becomes their billing threshold for their ad campaign.
Rolling billing threshold
This type of billing threshold is used by some platforms to calculate an advertiser's billing threshold based on a rolling period of time, such as the past 30 days.
For example, if an advertiser's ad spend (over the past 30 days) exceeds a certain amount, that amount becomes their billing threshold for the next billing cycle.
Monthly billing threshold
Some platforms may have a billing threshold that is based on a monthly billing cycle. For example, an advertiser may be billed once a month for their ad spend, with the billing threshold set at the amount of their expected monthly spend.
Overall, the type of billing threshold used by a platform can affect how an advertiser manages their budget and cash flow.
As an advertiser, you should review the billing policies of your chosen platform to understand the type of billing threshold in place and adjust your ad campaigns accordingly.
Billing Threshold - Google Ads vs Microsoft Advertising
Google Ads and Microsoft Advertising (formerly Bing Ads) are two popular online advertising platforms that use billing thresholds to help advertisers manage their ad spend and billing.
Here are some differences between the billing thresholds on these two platforms:
Google Ads | Microsoft Advertising | ||
|---|---|---|---|
Default threshold | Google Ads has a default billing threshold of $50 for new advertisers. | Microsoft Advertising has a default threshold of $25. | |
Payment options | Google Ads allows advertisers to choose between automatic or manual payments and weekly or monthly billing cycles. | Microsoft Advertising only offers manual payments and weekly or monthly billing cycles. | |
Budget adjustments | Google Ads allows advertisers to set a maximum monthly budget and adjust it as needed. | Microsoft Advertising requires advertisers to manually add funds to their accounts to cover their ad spend. | |
Payment methods | Google Ads accepts various payment methods, such as credit cards and bank accounts. | Microsoft Advertising only accepts credit cards or debit cards. | |
Billing cycle | Google Ads has a rolling billing cycle that starts on the date when an advertiser's billing threshold is met. | Microsoft Advertising has a fixed monthly billing cycle based on the date the advertiser signed up. |
Both platforms offer a prepayment option, where advertisers can add funds to their accounts in advance to cover their ad spend. However, the prepayment threshold and process may differ between the two platforms.
While both Google Ads and Microsoft Advertising use billing thresholds to help advertisers manage their ad spend and billing, there are some differences too.
Advertisers should review the billing policies and options of both platforms to determine which one is best suited for their advertising needs.
Find your Google Ads account's payment threshold
To find your Google Ads account's payment threshold, follow these steps:
Sign in to your Google Ads account.
Click on the "Tools & Settings" icon in the upper right corner of the page.
In the drop-down menu, select "Billing & Payments".
On the "Billing & Payments" page, you'll see a summary of your account balance, payment history, and payment methods.
Look for the "Payment Threshold" section, which will show you your current payment threshold and when you'll be charged. If you haven't yet reached your payment threshold, it will show as "Not met".
You can also change your payment threshold by clicking on the "Edit" button next to the payment threshold amount. You may be asked to enter additional billing information or payment methods before you can make changes.
Find your Microsoft Advertising account's payment threshold
To find your Microsoft Advertising account's payment threshold, follow these steps:
Sign in to your Microsoft Advertising account.
Click on the "Accounts & Billing" tab in the upper right corner of the page.
In the drop-down menu, select "Billing".
On the "Billing" page, you'll see a summary of your account balance, payment history, and payment methods.
Look for the "Payment Settings" section, which will show you your current payment threshold and when you'll be charged. If you haven't yet reached your payment threshold, it will show as "Not met".
You can also change your payment threshold by clicking on the "Edit" button next to the payment threshold amount. You may be asked to enter additional billing information or payment methods before you can make changes.
Note that the payment threshold may vary depending on factors such as your billing history and account standing, so it's important to review your billing and payment details regularly to ensure you are aware of any changes.
Common billing issues
The most common billing issues that advertisers may face are.
Payment method declined
Advertisers may receive a notification that their payment method was declined, which may be due to insufficient funds, an expired card, or other issues.
Delayed payments
You may experience delays in payment processing, which can result in your ads being temporarily suspended or paused.
Unexpected charges
You may be surprised by unexpected charges on your billing statement, which may be due to ad clicks or impressions that were not properly tracked or billed.
Billing threshold confusion
You may not fully understand the billing threshold system or how it affects your ad spend and billing.
Inaccurate billing information
You may discover inaccuracies in your billing information, such as incorrect billing addresses or contact information.
Disputed charges
You may dispute charges that you believe are incorrect or unauthorized, which can result in a delay in payment processing or account suspension.
To avoid these common billing issues, you should review the billing policies and options of your chosen platform, regularly monitor your billing statements and payment history, and promptly address any billing issues or discrepancies with the platform's support team.
Takeaway
Understanding the billing threshold is important for advertisers to manage their ad spend and avoid unexpected charges or interruptions to their ad campaigns.
As an advertiser, you should review the platform's billing policies and adjust your settings accordingly. You should also be aware of common billing issues and contact the platform's support team for assistance if necessary.
By staying informed and proactive, you can effectively manage your ad spend and achieve your advertising goals.