Google Agrees To Pay $20 Million To Search Marketers Over AdWords “Daily Budget”

Apr 1, 2009 at 2:20pm ET by Barry Schwartz

MediaPost reports that Google has settled on a class action lawsuit brought by search marketers for exceeding the daily budget within the AdWords system. The settlement means Google can pay up to $20 million, including over $5 million to the plaintiff’s lawyers.

The suit was over how Google allegedly charged advertisers 120% of their maximum daily budget. Two advertisers are receiving $20,000 worth of AdWords credits for this daily budget excess: Minnesota printing company CLRB Hanson Industries and New Jersey resident Howard Stern (not related to the radio show).

Google argued that the excess is often used in the following days. A Google spokesperson said:

Google believes the claims are without merit, but we are pleased to have the litigation behind us and to move forward with our business objectives.

I often see advertisers complain that Google exceeded their budgets. I have never seen Google credit advertisers for this.

Barry Schwartz is Search Engine Land's News Editor and owns RustyBrick, a NY based web consulting firm. He also runs Search Engine Roundtable, a popular search blog on very advanced SEM topics. Barry's personal blog is named Cartoon Barry and he can be followed on Twitter here.

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ONE COMMENT ON Google Agrees To Pay $20 Million To Search Marketers Over AdWords “Daily Budget”

JezC, April 3rd, 2009 at 2:18 am ET:

Google can and does reimburse spending in excess of 120% of the daily budget. HIstorically it is listed as an “Account Budget Overrun” in billing reports – see this short 2006 blog article describing the issue http://blog.merjis.com/2006/09/14/adwords-budget-overrun/

It is possible to manipulate an account to deliver a “free excess” of clicks. There are clauses in the Terms of Service apparently intended to allow Google to take action against an advertiser who appears to deliberately exploit that weakness.

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