As of November 1st, Google will be charging advertisers additional fees of 2% in the UK and 5% in Austria and Turkey on top of their standard tax & ad spend. As some users have been notified via email, the charge covers all advertising on it’s Google Search and Youtube services for tens of thousands of their clients. Reports say the annual costs of this increase for UK marketers will be over £120 million to cover costs of the government’s plans to tax the tech giant. This was announced in June that the UK and other European countries would implement a new digital tax in an attempt to close the gap between the corporation’s eye-watering revenues and comparably small taxes paid. While this seems logical, is passing the cost over to the advertisers the right thing to do?
Google isn’t the first big corporation to announce this transfer of cost, Amazon has already stated that they will be increasing their fees in September to account for the digital tax while Facebook and Microsoft are reported to follow suit.
The clear answer is that if left unchecked it will either increase the spend you’re currently paying on your digital advertising or reduce your visibility online. While some companies will just accept the additional fees, others with more stringent budgets may want to modify their ad spend to safeguard against exceeding their monthly or annual budget limits. Along with this, users who advertise in the UK, Turkey or Austria may want to reduce their visibility, to avoid paying the cost. Both of these actions will likely see a drop in conversions
Of course, a 2% increase in spending isn’t the end of the world to a lot of advertisers and the majority will just take this on the chin, however, it is what the fee represents especially to small businesses, which is the greatest issue.
From the 1st of November, if you have room in the budget to accommodate this increase then it will be business as usual, just don’t forget to expect a slightly higher spend on your ads at the end of the month. If you’re thinking the Google Tax might negatively affect your already tight advertising budget then it’s important not to worry. You can simply adjust your spend or ad location to acclimatise to this change but be prepared to lose out on some terms.
If you’re concerned about the Google Tax or how you’re spending on your digital advertising, speak to one of our friendly marketing experts here!