PSA: Google Ads – Digital Services Tax

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From November 1st, 2020, UK users of the Google Ads platform have incurred an extra 2% charge on spend, in the form of a Digital Services Tax (DST) fee. Similar measures have also been announced for Austria and Turkey specifically, where Google will charge advertisers an additional 5%.

Why is Google doing this?

Now, you may be asking yourself, ‘why is Google doing this?’, why would the company and platform holder deliberately make the advertising platform less attractive to potential digital marketers? As it turns out, the fault lies largely at the feet of the UK Government. Following the introduction of the Digital Services Tax on April 1st, 2020, which saw a 2% tax on revenue from search engines, social media services, and online marketplaces, Google saw the need to respond with a 2% tax of their own in order to compensate.

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. Golley Slater are transparent with all digital advertising and therefore will detail this for our clients on invoices, media plans and campaigns.

Are other PPC platforms doing the same?

One question that does come to mind is whether other advertising platforms will be doing the same and be charging an additional 2% fee on top of advertising spend. Thankfully, we have the answers. Amazon has already passed the 2% DST fee on to Amazon marketplace sellers, whilst 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. Microsoft Advertising, on the other hand, have not made an official announcement as of the time of writing.

So overall, it is a mixed bag. Some platforms have decided to eschew the costs to the advertisers themselves, whilst others are taking the proverbial bullet instead. Depending on which platforms you make use of you either may or may not see any change to the fees being incurred. Of course, no business will be particularly pleased to see a 2% fee on their spend, especially during an arduous economic climate, however, if you are concerned about how this may affect your upcoming campaigns or media planning, please do not hesitate to get in touch with any questions or comments you may have. We would be more than happy to assist you.

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