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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