Four Reasons Why You Should Never Use Google AdWords’ Pre-Pay Option

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As you may know, Google AdWords offers two main types of payment options: Pre-Pay and Post-Pay. There are some pros and cons to each method, it’s important to select the right payment option from account inception as it cannot be switched later. For instance, a pre-pay account cannot later be changed to a post-pay account.

While there are occasions where pre-pay may seem like the right approach, there are major drawbacks to this method:

1. Pre-Pay Cannot Be Changed to Post-Pay

As I mentioned before, payment options cannot be changed between pre-pay and post-pay after the campaign is established. This causes a major problem if you decide to change to post-pay billing after setting up a pre-pay account. Currently, the only way to change from pre-pay to post-pay is to:

  • Download the current pre-pay account data via AdWords Editor and archive it.
  • Create a new, post-pay account.
  • Upload the archived information into the new post-pay account.
  • Enter billing information for the post-pay account.
  • Terminate the pre-pay account.

The only problem with using this method is that you then lose historical account data — although it will be available via the AdWords Editor archive, just not in the new Google AdWords post-pay account.

2. Pre-Pay Payment History Cannot Be Used to Establish Invoicing as a Payment Option

Because invoicing is an option with post-pay accounts, an account must be post-pay to qualify for invoicing. Also to qualify for invoicing, you must establish at least three months of payment history with Google — in a post-pay account. So if you believe that you may ever want to use the invoicing option, remember that you’ll have to: a) follow the steps listed above to change from pre-pay to post-pay and b) then establish three months of payment history before you can qualify for invoicing.

3. Once Funds Are Exhausted, Google May Not Send Notification

I have two clients who chose the pre-pay option, and when their funds were depleted, no one received an email notification from Google. We double checked the notifications settings, but we did not receive notifications for either account, even though our account settings indicated that we should receive those alerts.

4. You May Owe the Pre-Pay Funds, Regardless of If You Spend the Budget

I saved the best for last. If you’ve ever worked with American Express and Google AdWords, you may have found that American Express can be a bit over-zealous to investigate possible fraudlent charges with Google — even if you bill the same amount on your AMEX with Google every month.

Recently, a major non-profit client on pre-pay encountered this problem. AMEX considered a $5,000 fee (one of several) a possible fraudulent charge. It initiated a “chargeback” with Google, meaning that it reversed the payment of $5,000 and credited the client’s AMEX account. This immediately stopped the pre-pay account’s ads. To rectify the situation, we immediately added another $2,500 in pre-pay funds to the account. For about 24 hours, the ads were running again, then, suddenly, they were inactive again, even though the pre-pay account had a positive balance of over $1,900.

After several online conversations and phone calls with Google reps, the explanation I’ve been given for this situation is that the pre-pay account still has a chargeback, which has paused my ad serving. Why, though, is this an issue, if we have a positive balance? Because each time you enter funds in a pre-pay account, Google creates an “invoice” for this amount.

Google believes, because they have created an invoice for the amount, that you owe this amount, regardless of whether you have a positive balance. It’s as if you have “promised” them those funds. In the case study I mentioned, adding the $2,500 to the pre-pay account only created yet another invoice, bringing our new invoice total to $7,500 between the two invoices. The $2,500 was not credited to the first, outstanding $5,000 invoice.

In Conclusion

There is little documentation on pre-pay accounts in Google Help, and I’ve found that most of the Google reps can’t help much with this payment option. I’d highly recommend avoiding it at this time. For an option that sounds easy, it’s just too much trouble!

Janet Driscoll Miller is the President and CEO of Search Mojo, a full-service search engine optimization and pay-per-click advertising management agency.

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  • CarstenCumbrowski

    Hi Janet,

    Interesting post.

    I did not even knew about the pre-pay option and can’t remember seeing it during the account creation. It is not an option that is visible in the sign up forms already, or is it?

    The default is post-pay, where would you change that? Could you elaborate on that a bit.

    If you could add screenshots to the post, that would be great too. Thanks.

    …. and I will check the Google help page now (after my comment 🙂 )

  • Janet Driscoll Miller

    Hey there. I’m not sure when they started offering it, but it is an option when you set up your billing information when you set up a new account.

    So when you set up a new account, you’ll see the alert at the top of the campaign summary page to set up payment info:

    If you click on the link in the red box, you’ll first come to a page where you select your country. Then, on the next page, you select payment options:

  • Janet Driscoll Miller

    Oops… the images didn’t show on the comment area. I figured that might happen. Here’s the screenshot of the red box:

    And of the prepay option screen:

  • David

    The pre-pay option must be newer because it was not available when I signed up a few years ago.

  • CarstenCumbrowski

    Yup, I didn’t see it either. I created recently (this year) a new account for another business and did not see it either. It must be fairly new.

    Thanks for the screen shots Janet btw.

    … and thanks David for the reassurance that I am not crazy. I started to have my doubts. hehe.

  • DaveW

    Fantastic article about the payment options provided by Google.i have bookmaek the post so that it can be shared with the masses who are interested in getting this valuable information.

  • Hanson So

    I never knew a prepaid option existed. Thanks for letting us know!

  • MSN hacken

    I agree full with this opinion of course it is incredible spending money which is nog allowed to increase money circumstances aswell as oppurtunities

  • Erin

    If you set your monthly budget to a certain amount, and you post-pay, you should already know what they’re going to bill you for, right? I understand that timing of the billing cycles may vary, but if I want to spend $100/month, that’s what I’ll get billed for using post-pay, right?

  • Andrew Diamond

    I’m new to advertising myself. I haven’t the first clue about what it entails. I have had my site up for a couple days now, basically as a pet project, but decided it might be nice to cash in on my hosts Google and Yahoo ad credits.

    I was curious about the prepay/postpay options so I typed them into Google and this web page was the third or fourth listing. One of the other links that popped up was Google’s own explanation of the difference between the two:

    My concern as a beginning advertiser, is that I’m on a limited budget and “pre-pay” is more attractive, as when the funds I submit run out, the ads simply stop; no more charges until I submit additional funds. I know for larger, already established sites, this is not a major concern, but as a fresh face I definitely have my concerns.

    All I remember is preset billing amounts of $50, $100… I have no idea if you can turn billing on or off with post-pay. If this is allowed, then this is certainly another option to consider (including the perks you commented on above). These are concerns I have as a “rookie” and thought perhaps my questions might help another novice taking the advertising plunge. These are just some questions I didn’t see answered in the Google facts sheet.

    I’d appreciate any comments you might have.


  • Rob

    Is it possible to go from post pay to prepay? I know it’s not advised 🙂

  • Greg Beyer

    Another thing to avoid with Google Ads is the coupons for Adwords Express that many hosting providers mail out. These are often for $100 value. When I attempted to use one of those coupons it permanantly wrecked my existing Adwords Account. Let me explain.

    I attempted to use the coupon, per the instruction on the card, and after taking all of the time to setup the ad campaign Google refused to honor the coupon, with a message that it was too old. I attempted to use it well before expiry. My time was wasted, but the really bad part is what happened to my already existing Adword account.

    The Adword Express campaign was inserted into my Adword account, and it automatically created 40 “Express Ads” and “Places_Ads”. I did not create these ads myself, and Google gave no warning that it was doing this. Because the express coupon was not honored, the adds are inactive. And I cannot delete them, even though I will never use them. I presume the creation of all those ads was to “burn” the $100 value of the coupon very quickly.

    I called Google for help and the best they could offer is that I can hide inactive ads. But that is not a good solution. When I deactive my REAL ads periodically and then need to filter all my ads to just look at deactivated ads, I will have to wade through all this garbage to find them. Google: There is no way to permantly delete any ad. The chicky I spoke with just talked in circles telling me to show only active ads. I explained repeatedly why that leaves chaff in my deactivated list, she went back to add cannot be deleted.

    Hosting providers are doing a serious disservice to your unsuspecting customers by passing out these Google Adword coupons. If people already have Adword accounts, or want to create full Adword accounts in the future, the will have a bunch of old junk ads in their way. AND for all of this grief and permanant damage to my Adword account, I never got the $100 value. Google did not honor the coupon!!!