Google's exchange rate

Foreign exchange with a twist

[webdiversity]

I've been running a major campaign on both sides of the atlantic for one of my clients.

To simplify things I set the account up using £ sterling as the base currency.

On some of the keywords because we want to show the ads in the US it says we have to pay at least 42 pence for the keyword to register.

I set up the same campaign with the same keywords using US $ as the base currency and it said I needed to spend at least 60 cents for the keyword to register.

That works out at a conversion rate of £1 = $1.43, according to xe.com the current rate of exchange is £ = $1.61

My questions therefore are why do us Brits have to pay 4p as minimum CPC (works out to be 6.5 cents) and why are are paying 13% more for the same audience to be delivered to the same landing page and how frequently do Google update their minimum CPC to reflect the changes in currency?

Interesting.

[fathom]

Interesting - I assume that is because exchange isn't a single quoted value - there are actually 3. Highest bidding, Lowest bidding, and the median.

Depending on which way the exchange is going (some other currency to US Dollars, or US Dollars to some other currency) tends to determine which value is used.

Currency "floats" - or non-daily currency changes usually use highest/lowest bids, automators tend to use median

and why are are paying 13% more for the same audience to be delivered to the same landing page and how frequently do Google update their minimum CPC to reflect the changes in currency?

Don't really know - but is it the same percentage at higher values?

Exchange doesn't normally work well in coinage.

[webdiversity]

Maybe the lesson for us is to have 2+ accounts for each client and pause/resume the ads which have the best currency rates according to strong dollar/strong pound, it will add extra ROI but be a nightmare to manage.

[fathom]

That is an exceptional idea.

Your right is managing difficulty, but just the same those pennies/pence can add up, and at the end of any given fiscal year that would be a substantial savings... like a free campaign.

[bunder]

if you are running a UK campaign paid in UK currency, isn't Google going to charge VAT or incorporate an element of VAT somewhere into the charges for adwords?

I have only used US pricing for my adwords so don't know about UK pricing other than it is likely they would charge VAT as the are registered as a company here in the UK.

Leslie

[fathom]

As I understand international sales & services, tax collection is based on point of presence of the potential tax recipient, who normally does not have a tax account in any country unless a phyical presence has been established.

The destination of advertisement isn't a consideration. Google is a US company, Google UK is a brand name of Google. Regardless of what currency is used, tax is only collected in the place of origin.

Iceland for example also charges VAT but only on imports/exports virtual sales are neither imported nor exported.

I could be wrong though.

[vitaplease]

[webmasterworld.com...]

could be you are still lucky in the UK compared to Japan.

The VAT thing can be disturbing.

With overture and espotting in Europe they always have that addition, even if I add my companies registration location.

In my regular business, between member EU states VAT is 0% (but then thats for exporting goods to other companies with VAT registration).

[webdiversity]

I think that for now Google are still adopting the AOL approach of being an American company so VAT doesn't apply. The postal address is in California

In the end something will be done to get tax into the system, the chancellor won't let it go on forever, some G7 summit and they will be having a few brandys and talking about Google and AOL etc.. and I am sure those other PPC providers that have set up in the UK and charge VAT will fee they are disadvantaged.

Maybe the VAT issue goes some way to explaining the difference in exchange rates.