Google Ads passes on 2% Digital Services Tax to UK Advertisers
Thu, 15th Oct - 2020 | Posted by Jerry Donegan
'As of November 1, 2020, a 2% UK DST Fee will be added to your next invoice or statement for ads served in the United Kingdom.’ - source: Google Support
Google have announced that UK users of the Google Ads platform will incur an extra 2% charge on spend, in the form of a Digital Services Tax (DST) fee. This will come into effect on 1st November 2020. Similar measures have been announced for Austria and Turkey, where Google will charge advertisers an additional 5%.
Why is Google doing this?
Google has announced this as a response to the UK’s Digital Services Tax, which is a 2% tax on revenue from search engines, social media services and online marketplaces, such as Google.
How will this impact advertisers?
The additional 2% DST fee will be shown on a separate line in your invoice from your overall campaign spend. This means that your cost per click, cost per conversion and other campaign level metrics will not be affected. However, this means your total invoice could be 2% over your current budget. Advertisers will have to decide whether to stick with their current budgets and pay slightly more, or reduce their budgets to include the DST fee.
Review your upcoming sales to ensure maximum ROI
When working out the ROI from your Google Ads campaigns, it is important to take the additional 2% DST fee into consideration. As we come into the holiday season where large scale events such as Black Friday, Cyber Monday and Boxing Day are being planned, the additional 2% fee could have a significant effect on your profit margin.
Many businesses will have agreed their holiday sale plan in Q1 or Q2, before the DST was passed over to advertisers. Depending on how heavily a business relies on Google Ads to generate sales, their profit forecasts could be impacted by the 2% DST fee. If your forecasted profit margin is slim, then now is the time to rethink your strategy.
Are other PPC platforms doing the same?
Amazon has already passed the 2% DST fee on to Amazon marketplace sellers, whilst Microsoft Advertising have not made an official announcement yet.
eBay and Facebook have both decided to front the additional cost themselves, meaning advertisers on these platforms will not have to pay the additional 2% tax.
Concerned about your PPC ROI?
No business will be happy to see an additional 2% fee on their spend, especially in the current climate. The 2% DST fee could be the final nail in the coffin for underperforming campaigns. If you’re concerned about your PPC ROI, we can help you.
At The Digital Marketing Partners, we offer a free PPC audit to ensure you’re getting the most out of your PPC campaigns. Get in touch with us today and we’ll be happy to arrange a PPC audit.