Google is no stranger to change. The platform has rolled out several updates throughout 2024 including core algorithm updates in February, May and August, introductions of new paid ad campaign types and features and a spam update in June. Recently, the company has also made headlines for being at the center of a landmark antitrust case where a federal judge has ruled the entity a monopoly, which many speculate may bring further changes to how the platform operates. Amid this news, a new Google Ads update placing a surcharge on ads targeting Canada has emerged. Read on to learn about this Canadian surcharge and how it will impact advertisers.
Canada DST Fee Being Passed on to Advertisers
In August, it was announced that Google will be introducing a 2.5% Digital Services Tax (DST) fee beginning on Oct. 1 for ads served in Canada. Google has cited that the surcharge is being implemented to cover “regulatory operating costs” and maintain compliance with DST regulation. This surcharge will apply to all ads targeting Canada, regardless of where advertisers are located. The fee will be applied based on the number of ad impressions or clicks that are served within Canada.
How The Surcharge Will Work with Google Ads Billing
In terms of how the surcharge will be applied to Google ads billing and invoicing, the following has been confirmed:
- Surcharges will be added as separate line items to monthly invoices or statements
- For Google Ad accounts using automatic payments and monthly invoicing, fees will be added at month’s end
- Manual or prepayment accounts may see these surcharges charged after payment has been fully spent
The image below shows details of where advertisers can view these surcharges in their Google ads account:
Impact on Advertisers
While this recent announcement applies specifically to ads targeting Canada, Google ads has previously implemented jurisdiction-specific surcharges in other countries including:
- Austria- 5% DST Fee as of Nov. 1, 2020
- Spain – 3% Regulatory Operating Cost as of Jul. 1, 2024
- France – 2% Regulatory Operating Cost as of May 1, 2021
- United Kingdom- 2% DST Fee as of Nov. 1, 2020
- India – 2% Regulatory Operating Cost as of Oct. 1, 2021
- Italy – 2.5% Regulatory Operating Cost as of Jul. 1, 2024
- Turkey – 7% Regulatory Operating Cost as of Jul. 1, 2024
It’s predicted that further expansion of these fees into other countries may be yet to come.
For advertisers targeting these locations on Google ads, surcharges can result in the following:
- Increased Marketing Costs: These fees tacked on to existing ad budgets can lead to an increase in the overall cost of ad campaigns. In the case of the Canadian DST Fee specifically, for every dollar ($1 USD) spent, an additional 2.5% tax will be charged. Though the percentage may seem like a small amount at face value, these surcharges can add up.
- Decreased Reach: As a result of these fees, advertisers may also find that their budgets don’t stretch as far as they used to previously. This may require them to either increase their total budget to maintain the same prior level of reach and performance or adjust their spending strategy accordingly.
- Reduced ROI: The return on investment (ROI) for ad campaigns targeting ads in the jurisdictions where these surcharges are applied can also be a potential area of impact. In this case, ROI might also decrease as more money is being spent without a corresponding increase in ad performance.
How Beyond Fifteen Can Help
Navigating these changes successfully takes a great deal of planning and strategy. Optimizing campaigns in the face of these additional fees requires skillful budget allocation and potential adjustments along with ongoing monitoring and effective keyword research. Luckily, these are all areas in which the marketing experts at Beyond Fifteen excel! If you are looking for hands-on guidance in traversing the Google Ads landscape for your business, we are here to help. Contact us today to discuss a customized strategy that works for your specific business goals.
