July 10, 2024

How Google's bank-based payments impact DTC ecommerce brands' Google Ad spend

Kristen Campbell

Around 65% of small and medium sized businesses use a pay-per-click (PPC) marketing tool like Google Ads. Ecommerce businesses are digital storefronts, and digital storefronts often have digital advertising spend. Unlike brick and mortar stores, which might see traffic from a good physical location or a local review, digital ecommerce stores usually require digital traffic to make a sale. For ecommerce brands, digital traffic and customers are often garnered through Google Advertising, Meta, or other digital ad spend. When it comes to paying for digital ads, ecommerce brands often rely on credit cards. Although Google has yet to disclose its payment statistics, credit cards likely account for most of its Google Ads sales – especially given that in some countries, Google doesn’t offer any alternatives.

Recent announcements from the Google Ads team suggest this payment policy is about to change. Some Google Ads customers received a notice from Google that credit cards were no longer on the menu. Customers who wish to continue using the Google Ads service were notified that they’ll need to pay via check, wire transfer, or direct debit depending on the region and payment plan. To make the process smoother, Google invited users to apply for monthly invoicing, which gives users 30 days after receiving their latest invoice to pay.

Google Ads' push for bank-based payments: the impact for ecommerce brands who advertise with Google

Google’s solution may not work for businesses like ecommerce brands. Google’s monthly invoicing option is effectively a line of credit offered to eligible clients. For the companies that are approved, it gives the business a maximum of 30 days to pay. Although advertising agencies might be okay with 30 day terms for their ad spend, ecommerce businesses could potentially struggle with the change. For product-based businesses, digital advertising for 30-60 days in advance of product sale is typical and even more for key events, such as Prime Day or Black Friday and Cyber Monday. With some ecommerce brands ordering inventory up to 8 months in advance, even the monthly invoicing option may not be enough time. 

Credit cards are relatively easy for a new business owner to obtain, provided they have a strong payment history themselves, but ecommerce owners just starting out often struggle to access other kinds of loans – which leaves many ecommerce brands feeling anxious about the Google Ads payments change. As it takes time for the business to realize their revenue from their in-advance ad spend, a 30 day term may feel short.

Why are Google Ads important for ecommerce brands and businesses? 

As much as 18% of ecommerce revenue is driven by Google Ads. Ad spend for ecommerce businesses can range from $1,000.00 to $100,000.00 per month, depending on the size of the business and its marketing needs.

Fortunately, evidence suggests that the Google Ad spend is well worth it. 63% of people have clicked on a Google Ad, 33% of all mobile ad spending goes to Google, and a massive 65% of people click into Google Ads when they’re looking to buy. This customer engagement means Google Ads are a good buy for an ecommerce brand. 

However,  spending on ads can amount to needing plenty of cash on hand, something ecommerce founders might not always have. Some ecommerce businesses are required to fund $500,000 in 3 days or buy inventory 8+ months in advance of shopping heydays like BFCM and Amazon Prime Day. To maximize the return,  ecommerce stores may need to invest in Google Ads well before they anticipate having enough free cash to repay.

How ecommerce brands can adapt to the Google Ads payment change

Google’s bank-based payment push is one example of a company making the shift away from credit card options. With higher costs to contend with in other areas of the business, other large corporations are looking for ways to cut back on transaction costs  - eBay, for example, just dropped American Express over its fees. 

Google’s change in payment options for its ad spend leaves some ecommerce businesses in a bind. Buying new inventory can’t wait, but marketing this fresh inventory can’t either – in many cases, ecommerce brands will need Google Ads to promote their products and reach the level of sales necessary for this inventory to sell

There is an increasingly large market with direct-to-consumer brands looking for various financial options that can support advertising spend. With Clearco’s Invoice Funding, ecommerce businesses might find that this bank-based payment push ends up being a good thing. When working capital is readily available to access, ecommerce store owners know that the bills are paid – and can just focus on building their brand. Clearco can support funding for Google Advertising spend so that your ecommerce brand can focus on continuing the activities that drive growth.

Share this post
Kristen Campbell
Content Writer

Kristen is the co-founder and Director of Content at Skeleton Krew, a B2B marketing agency focused on growth in tech, software, and statups. She has written for a wide variety of companies in the fields of healthcare, banking, and technology. In her spare time, she enjoys writing stories, reading stories, and going on long walks (to think about her stories).