4.0.1 Billing Model Choice
Before you start designing and implementing your Ads onboarding process, you need to decide how merchants pay for their ad campaigns. Your decision affects the complexity of the user experience, the amount of implementation effort required, and your commercialization options. This section reviews the different billing methods and discuss the advantages and disadvantages of each.
Overview of the Google Ads billing methods
There are two billing methods available:
Direct billing: Merchants pay Google directly. You provide your merchants with information on how to log into Google Ads and make their own payments. Your merchants are directly responsible for payments. For a complete description of payment options for your merchants, see Know your billing options.
Consolidated billing: Your organization assumes liability for Google Ads payments (one consolidated invoice to the Google Ads manager account) and passes along charges to your merchants, who pay your organization.
Details on consolidated billing
Consolidated billing is a popular choice for ecommerce providers who use multiple Google Ads accounts and want to simplify their billing by receiving a single monthly invoice for all Google Ads accounts under a manager account. This feature also lets you move merchant accounts to monthly invoicing and from one invoice to another without contacting Google.
As shown below, the activity of multiple Google Ads accounts is consolidated into a single monthly invoice for the manager account.
Comparison of the Google Ads billing methods
As an ecommerce provider, you likely already offer a way to bill your merchants for services. Therefore, the consolidated billing method can help minimize onboarding drop-off and lets you commercialize the integration, with models such as:
Performance-based commission (% of GMV generated by Google Ads)
Ad management fee, also known as agency model (% of ad spend)
Automation fee, also known as service fee for seamless integration with Google (monthly subscription fee)
However, the consolidated billing method requires additional integration efforts and offers less flexibility to merchants who may want to access advanced functionalities outside of the integration.
You can find below a summary of where merchant input is required for Direct Billing versus Consolidated Billing:
| Direct billing | Consolidated billing | |
|---|---|---|
| Merchant experience (UX) | More friction. Because this does not leverage the billing relationship you already have with the merchant, the merchant needs to re-enter their payment details. This increases the risk of drop-off. | Less friction. You can set up the merchant's billing completely behind the scenes, by leveraging the existing billing relationship you have with the merchant. You are saving the merchant from doing the billing step themselves. |
| Commercialization | Less flexibility. You have limited commercialization options without additional engineering effort. | More flexibility. If you've implemented consolidated billing, you have built the infrastructure you need to link their ad spend with invoicing. You can therefore experiment with commercialization strategies (for example, a % service fee on top of ad spend) with relatively less effort. |
| Effort to implement | Lower effort. You surface a link to the billing UI in the Google Ads platform and monitor whether the merchant indeed completed the payment details. | Higher effort. There is the one-off task of linking the Ads invoicing to your existing invoicing system. Additionally, the Ads redirect option is not compatible |
| Flexibility for merchants | More flexibility. Merchants with more advanced needs can access their accounts and campaigns using Google Ads, to use advanced functionalities that may not be available in your integration | Less flexibility. Merchants are fully restricted to the functionality your integration provides because they don't have direct access to the Ads account using Google Ads or Merchant Center to create or manage campaigns or to see reporting. |
UX guidance
The choice of the billing model impacts the UX, because it affects
A. The functionality you can provide to merchants
B. The input you need from them
A. Functionality
Enabling your merchants to access their Ads account access directly.
Direct billing: For direct billing merchants can use any ads account they have administrator access to, no matter if they have created it using your UI or on another surface. Merchants can have full access to the ads accounts.
Consolidated billing: For the ads accounts that merchants use within your UI, we recommend giving no access or restricting access to either "Email-only" or "Read-only". This means merchants are not be able to access the ads account and manage or create campaigns in surfaces like Merchant Center or Google Ads. This also means that merchants can't use ads accounts they have created outside of your UI.
Redirect for campaign creation, management and advanced functionality
Direct billing: As users have full control over the Ads account, you have the option to direct them to Google surfaces for more advanced features or even for the whole campaign creation and management.
Consolidated billing: Merchants have at most "Email-only" or "Read-only" access to their ad account so creating or managing campaigns through a redirect is impossible. Merchants only have access to functionalities available in your UI.
B. Input you need from merchants
Billing setup
Direct billing: When onboarding to Google Ads, merchants need to provide their billing information to Google before their campaigns can start running.
Consolidated billing: Because you are billed by Google and hand these costs on to merchants, they don't need to set up billing when onboarding to Google Ads.
Using pre-existing Ads accounts
Direct billing: You may want to allow merchants to use pre-existing ads accounts.
Consolidated billing: Merchants can't use pre-existing ads account.
It is up to you on how you want to surface the preceding actions in the UX. The general philosophy we recommend is to minimize the number of steps surfaced to the merchant. Whilst it is important to inform the merchant of what is happening on the backend, you want to avoid getting their input if you can still set them up for success without their intervention. This helps minimize friction in the UX and ultimately mitigate drop-off.
The following factors determine how much merchant intervention is required in the Ads onboarding process:
If you are implementing direct billing, you need to prompt the merchant to provide their payment details after you create the Google Ads account on their behalf. Depending on how you design the experience, you may want to surface the Ads account creation step in the UI.
You may first want to check whether the merchant has completed the prerequisite Merchant Center steps (for example, uploaded products). If they have skipped them, you may want to redirect them to complete them first. Otherwise, there is no point in creating a Performance Max campaign.
You can find below a summary of where merchant input is required:
Do you need merchant input if you have decided on…
| Direct Billing | Consolidated Billing | |
|---|---|---|
| Ads account creation | No - This can be done entirely on the backend (but should be transparently communicated) | No - This can be done entirely on the backend |
| Selecting an existing Ads account (optional) | Yes - You need to implement the authentication flow, so that you can display the merchant's existing accounts | N/A – not possible (detailed below) |
| Linking a Merchant Center account to a Google Ads account | No - This can be done entirely on the backend (but should be transparently communicated) | No - This can be done entirely on the backend |
| Billing setup | Yes - You prompt the merchant to input their payment details in the Google Ads platform (you can get a deep link from the Ads API) | No - This can be done entirely on the backend |
If you choose the consolidated billing method, you shouldn't allow the merchant to use an existing Ads account or log in to Google Ads outside of your integration. Consolidated billing means your business is responsible for invoicing. If a merchant uses an existing Ads account that they have direct access to, they can log in to Google Ads directly and create new ad campaigns outside of your integration and, therefore, outside of your oversight.