Tony is the VP of Marketing here at Sales & Orders, along with heading up the inbound and customer marketing teams, Tony also oversees partnerships and branding for our award-winning company and platform.
As of November 1st 2020, Google Ads advertisers located in or serving ads in the UK, Austria, and Turkey will be required to pay additional fees on top of their monthly ad spend.
The new Digital Services Taxes for Google Ads have just been announced as of Tuesday September 1st 2020. Advertisers serving ads in the following countries will see a hike in their bill from Google (respectively):
- 2% in the UK
- 5% in Austria
- 5% in Turkey
Google outlines the specifics on their help page.
The Fine Print
Not only will advertisers be impacted by the new DST, but other applicable Taxes such as VAT will also come into play here. Per Google, here's an example of how the new DST and other taxes could by applied:
If you have a budget of €100 and accrue €5 in Austria DST Fees for ads served in Austria, you’ll be billed €105 (plus any taxes, such as VAT, that may apply in your country).
What is the DST?
Back in March, the UK Treasury announced that a 2% "digital services tax" would be imposed on search engines, social media platforms, and online marketplaces.
As of now, Austria and Turkey are the only other two countries that have adopted such a tax that will now be enforced by such entities as Google Ads.
Facebook has yet to pass these taxes on to advertisers while Amazon informed sellers back in August that the taxes would begin being enforced as of September 1st 2020.
Ecommerce : How to Prepare
Stores, both based in and not based in the aforementioned countries, should take heed and understand the impact of this tax on their overall cost to advertise.
Even if your country of sale is not based in said countries, your overall costs to serve ads there are now to increase by a considerable margin.
Merchants may want to consider blending the tax into their average margins.
Striking a balance based on campaign performance will now also become far more of a "mission critical" endeavor for retailers. Here are some things our team and our advertisers are doing with Sales & Orders to prepare:
- Build and manage Shopping campaigns at the product level. This degree of granularity is the only true way to isolate products that are wasting your budget.
- Review device-level performance stats. By using bid adjustments for Computer, Mobile, and Tablet shoppers you can hyper focus your ad spend on only the top-most performing segments.
- Leverage remarketing audiences. Key in on the top 4 shopper behavior segments and attach your audiences to your Shopping campaigns.
- Offset some advertising costs with Google's Comparison Shopping Services in the UK. Today, we support merchants on our Certified Google CSS PriceJoy - keeping their overall ad costs low while driving highly profitable traffic to their stores.