I want to start by saying that I’m a huge proponent of automated bid management.

I’m bullish on automation as a whole. You shouldn’t be in PPC today if you don’t think and implement automation in every way you can.

However, we shouldn’t get carried away. Just because something is called automation, machine learning, artificial intelligence, etc. then it doesn’t automatically make it better.

“Better” is also a relative term.

Most automation will do better than an amateur.

Few automation tools will do better than a seasoned pro when implemented at face value.

So, when Google posts a case study where “enhanced CPC increased conversions by 66%” in an account, then it’s not because enhanced CPC is necessarily awesome. It’s because the starting point was horrible.

Now, it doesn’t mean that it’s bad either. It’s just an isolated case under conditions that might not be similar to yours at all.

Google Smart Bidding Automated bid management

Btw. Did you read my rant post on PPC best practices, and why they suck yet?

Throughout this post, I mention keywords, but it really is any entity in Google Ads: keyword, product group, placement, audience, etc.

I write about standard automated bidding with Smart Bidding in Google Ads being one of the main ways most advertisers will get to work with automated bidding.

We’re following this post with one exclusively focused on Smart Bidding, so stay tuned for that.

The Benefits of Automated Bidding

Essentially, bidding is math. Ever since people joked in the 90s about having “calculators” in their pockets, everyone knows that machines are better at math than people.

With automated bidding, you are able to use a lot more data points than you can when you are doing it yourself. Most of us would just use average position, impression share, ROAS/CPA in order to increase or decrease our bids.

Not to mention that all the times you “forgot” to change bids will be a thing of the past.

We run automated bidding in about 80% of our accounts at SavvyRevenue. The only accounts we don’t run automated bidding in are accounts with severe challenges or long buyer’s journeys.

Good automated bidding will take other similar keywords into account as well as several time frames before making a decision on a bid. If a keyword hasn’t converted in the last seven days but used to be a high performer, then maybe bid it down for a couple of days, then increase again.

That’s what I’d do if I had the possibility to be on top of thousands of keywords and product groups.

However, no automated bidding does this (yet), but I know several are trying.

Automated bidding saves time for you to focus on other aspects of managing your Google Ads account.

Yes, performance should be better with automated bidding, but you will also save a lot of time that you would (read: should) have spent on managing bids.

Smart Bidding from Google takes a lot of aspects into account that you can’t do manually: search term, audience, device, etc.

Essentially, if you are working with Smart Bidding and let it run long enough, you don’t need to add negative keywords, review ad tests, change bid adjustments, or work with match types.

Google will do it aaaalll for you. Then it’s up for discussion, or testing, as to whether that’s a good idea.

The Issue with Automated Bidding

It downplays proactive bid management.

At SavvyRevenue, we are big on proactive bid management. We only work with eCommerce companies, so we have a lot of insight into seasonality and promotions. We pride ourselves on knowing our client’s business just as well as they do.

So not being able to bid proactively is a big deal for us.

Proactive bidding

With proactive bid management, I mean:

Bid higher before a sale, let a new brand or category run longer at a lower ROAS because it’s new.. All the machine sees is the cold data, then it assigns bids for them.

You might have enough data for you to enable it, but that doesn’t mean it’s a good idea for you to do it.

Not predicting the future means that you’ll often miss seasonal events, promotions, or other upticks in your conversion rate that you could have improved.

A big caveat here is if you don’t use any proactive tactics in bidding manually, then you have nothing to lose on this front by moving to automated bidding.

Automated bid management does not mean automated account management.

This might be the biggest challenge with automated bidding. Many advertisers will counterintuitively not optimize their Google Ads account regularly once they start using automated bid management – despite now having more time to focus on the other aspects.

It’s like most people assume that applying automated bidding on an account means everything will take care of itself.

But all the other aspects of campaign management—ad testing, negative keywords, ad schedule, keyword expansion, device strategy, seasonality, etc.—still play a huge role in how profitable your account is and especially on how much your account grows.

If your data is wrong, you might not notice it until way later.

The implementation of ITP was huge for many advertisers. At SavvyRevenue, once we found a solution to the problem, we loved it because it meant cheaper clicks from top-funnel keywords (see our post on a practical solution to ITP).

It’s not for everyone despite what best practices say.

Automated bidding is unforgiving for mid-tier advertisers and awful for small advertisers. The advertisers who could really use automated bidding are also the ones that it works poorly for.

If you’re in the range of 15 to 300 conversions a month, you should be able to use automated bidding. The reality is, though, you might not. I’ve seen it consistently perform horribly at this level. It almost always—without fail—starts decreasing bids in an account, which then decreases conversion volume, which decreases data, which makes the automation make worse bidding decisions, which decreases conversion volume, which starts a death spiral.

Long buyer’s journey? Goodbye automated bidding.

Most automated bidding doesn’t seem to be good enough when dealing with longer buyer’s journeys.

We’ve seen massive success with long buyer’s journeys and bidding for position. It’s so 2010 to bid for a “top three” ad position, but if your product converts, then it works so well it’s almost a hack.

A big caveat here is that as of late, I’ve seen accounts where Smart Bidding from Google shouldn’t be working well, actually work really well.

Google’s Smart Bidding might be getting a lot better, and it seems that it has a leg up on third-party automation in understanding the time from click-to-conversion better.

How to Effectively Use Automated Bidding

There is no doubt that automated bidding is the way to go for most advertisers. Having seen more than 250 PPC managers in my time, then I’d say bid management is one of the things most of them simply just don’t do well.

Bidding isn’t just strictly math, which is where many people go wrong.

Go from a speedboat to a freight ship.

The speedboat to freight ship analogy might be the best explanation I have of what it means going from manual bidding to automated bid management.

You need to get into the habit of steering your ship rather than making the small changes to the bids. For many PPC managers, the idea of automated bid management sounds great—until they start it and suddenly want to change a bid. You can’t.

Get it out of your head that you can or should look at a single keyword’s bid or performance. That’s no longer the name of the game.

If your performance isn’t what you’re expecting, what other things than bidding can you improve? Is your target too high for the current seasonality? Are your ads ideal? Is your pricing competitive? Are your search terms lowering your ROAS?

When you go with automated bid management, it’s essential that you trust the machine. Don’t just ignore it forever. If performance isn’t increasing after two months (TWO MONTHS, ANDREW?!?! – more on this later) and after you’ve made corrections to your bidding strategy, then you can leave it.

It’s just important that you get out of the habit of thinking that you need to make these minor changes to bids here and there when you run automated bidding.

Target CPA or target ROAS?

I have to write about this, but you should (almost) always use a target ROAS. A target ROAS allows the automation to take the conversion value from each sale into account when setting the bids.

The only caveat to this is when you have a very high average order value. Then your target CPA can be an advantage. I’ve seen automation fail to understand that a keyword can have a 100x ROAS without setting a $20 bid.

In those cases, if your average order value doesn’t vary much, then your target CPA might produce more reliable results.

You should have a bidding tool that allows you to black out dates.

Some tools allow this. Most don’t.

The idea is that during a Black Friday sale—or any sale—your conversion rate will go up:

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Conversion Rate increasing from around 1% to 6.46% on Black Friday despite using MUCH broader keywords.

But it’s also for a lot of other reasons. Let’s say your conversion tracking stops working for a week, or your shopping cart didn’t work for a couple of days. It should never happen, but it does. You want the ability to tell the system that it shouldn’t take these days into account.

As of this writing, Google’s Smart Bidding came out with a similar feature, which is the ability to tell the automation when you expect your conversion rate to go up (or down). It’s not exactly the same, but it’s a step in the right direction.

You should apply manual overrides of your bids consistently.

The biggest mistake I see is people letting automation run by itself.

A common scenario is that your automated bidding will have decreased bids for certain keywords or products when they are out of season (or for another one of the million reasons).

Let’s take a category like snow gear.

You don’t have a lot of conversions for snow gear during the summer months. The automation picks up on this and decreases your bids. But then November hits and the season picks up again:

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You can do two things:

  1. Wait for the automation to notice this, and starts bidding higher
  2. Use your own common sense and bid higher!

Which tactic do you think you’re getting paid to do and will generate the best results?

The key is not to think, “oh, the automation has got this” or “well, I’m running Smart Bidding, so my hands are tied.”

NO, THEY’RE NOT.

You can always take a campaign off automated bidding for a bit and then re-enable it later. Don’t let automation be an excuse for not doing whatever it takes to get the performance you need.

You should actively change your targets.

Had a bad ROAS month? Decrease your target for a couple of weeks to boost traffic. Then increase your target gradually as conversions pick up again.

Do you consistently see that Smart Bidding isn’t accounting for conversion lag? Decrease your targets and measure the effect.

Is the discrepancy between mobile and desktop ROAS too big? Consider separating mobile campaigns into mobile-specific campaigns, so you can set different ROAS targets.

You get the idea.

Constantly work with the targets. One of the guys on our team was able to double revenue in an account (from 200k to 400k in 30 days) by setting a ROAS target of 500% rather than 750%. We still hit the 700% we needed.

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Mandatory GIPHY credit

The Basics Behind Automated Bid Management

Automated bidding should almost always be portfolio based. Do not split your automation up too much. An example of this is that you shouldn’t set targets on the ad group level.

Instead, bundle campaigns together and set a joint target.

The more you split your automated bidding, the less data the machine will have to do its job.

Don’t rock the boat. Mimic current performance initially.

Many people make a mistake and think that automated bidding will come in and save the day.

It’s not a magic pill.

If you are currently at 400% ROAS and apply a 600% target ROAS bidding, then the system will bid down, and you’ll lose revenue.

Higher ROAS Lower revenue

To prevent automated bidding from decreasing your current bids too much, then it’s recommended to set an initial target close to what your performance is currently. “Currently” means the last 28 days.

So look at your last 28 day data, and whatever that ROAS is set your target ROAS to this. This will make the automation decrease bids for keywords that are performing way off target, and increase bids for keywords that are performing above the target (yeah, DUH, Andrew).

After three to four weeks, you can then start increasing your target ROAS by 10-20% increments.

For new campaigns/accounts,  just use manual bids. Depending on how fast your data comes in, then enable the automated bids within a week or a month.

Give. It. Time.

You can’t set automation up and then discard it after two weeks. If you truly want to take advantage of automated bidding, you need to allow it at least four weeks to run and preferably eight weeks before you reach a verdict.

Automated bid management needs time

Raise your target by smaller increments.

A great hack is to make only minor changes to your target ROAS. Change it 10% at a time every two to four weeks. That allows the system not to make any drastic changes.

Small changes in ROAS when using automated bid management

Only if you are really unlucky should you resort to making big changes to your target ROAS.

As with everything, the higher the target, the lower the volume you’ll get (both conversions or revenue).

Remember to optimize other factors.

The automated bids will take advantage of anything you do to increase your performance. So don’t forget to optimize the rest of your account.

Here’s a list of all the factors you can optimize in a Google Ads account.

Flush the system once in a while.

Increase your bids for categories or brands, where you have become more competitive. What didn’t convert six months ago might convert better now.

There are many reasons why a keyword or category suddenly starts converting:

Reasons for keywords to convert

In “automated bidding words,” increasing your bids mean to:

  • Set a lower target if you already have the traffic coming in, but want to generate more
  • Move to manual bidding for two to three weeks
  • Change to another bidding automation where the focus is to spend the budget, maximize conversions, or achieve an ad position

Manual bidding is typically my favorite, as I can ensure the bids aren’t sky-high.

Is Enhanced CPC Bidding Automated Bid Management?

Partially, so yes, it is. It can increase or decrease your bids however much it wants based on the likelihood of a given search ending in a conversion.

However, at the same time, I don’t think that it is.

eCPC is, for me, the worst mix between automation and manual bidding.

You’re basically capitulating and saying:

“You know, I’m so bad at setting bids that the system is allowed to override them completely whenever it wants on whatever data grounds it wants no matter what my target ROAS is.”

Let’s say you are working towards a 500% ROAS, but a keyword is at 200% ROAS, so you set a lower bid. But enhanced CPC can see that you can get more conversions by increasing the bid. So it does.

And that’s my issue with eCPC. I can’t tell it to stop. I can’t tell it what my target is. I just set a bid, and then it overrides.

Your account has to be mismanaged for such a technique to be effective. And even in that case, I’d venture that any other bid automation will work faster.

How to Get Started with Automated Bidding

three ways to automated bidding

There are essentially three ways to get started with automated bidding:

  1. Run Google’s Smart Bidding: Easiest implementation, but black box
  2. Run third party bidding (SearchAds360, Kenshoo, Marin, AdFerence): Highest cost, but can take more channels into account and is often more customizable
  3. Create your own rules, and apply via Optmyzr: Biggest room for error, but is cost-efficient

For starters, I recommend reading through this blog post and ensure you understand the conditions for making Smart Bidding work (Above ~300 conversions / mo., straight-forward average order value, fairly short buyer’s journey).

From there, I’d try Google’s Smart Bidding.

If that doesn’t work, I would apply rules automatically using Optmyzr. It’s very straight-forward.

I would then consider talking with some of the third-party bidding providers if you still aren’t seeing the performance you want.

Just make sure that it is actually your bid management at fault (ping me, I’d love to give my input) before you chase other options.

My Big Plead To All Automated Bid Management Solutions: Give Us The Insights!

This not an “it’s my right to see my data” kind of thing.

I really couldn’t care less about being able to see my data.

I think it would be a powerful marketing play.

Let me explain.

We have all these automated bidding solutions: in-house agency “proprietary” solutions, third-party solutions, Google Smart Bidding, etc.

They all say that they need X amount of data in order for their bidding to work. I agree.

But then when you ask for the insights that the machine is basing its bidding on, then all of a sudden, every single bid change is made on the tiniest bit of data that they couldn’t possibly begin to explain to me.

Come on. I’m not asking for the data on every single conversion, but if you say your platform is making bidding decisions based on X factors, then give me those insights.

Is my conversion rate much higher on Mondays or around payday?

Are people clicking on Keyword X first and then converting on Keyword Y five days later?

Are mothers in democratic states with toddlers converting better than mothers with teenagers in sunny states?

THAT’S AMAZING DATA. We could use that to power our messaging, selection, etc.

And that’s what I mean. Imagine the product you could create if you were able to pull those kinds of insights out based on the decisions that the bid management is doing.

However, they don’t. And this is why I’m a skeptic when third-party tools tell me about all the million factors going into bid management.

I hope we get the data one day. That would be amazing.

In Conclusion, Automated Bid Management Should Be For You If The Conditions Are Right

I’d like to end as I started:

Bidding is math.

And math is done better by a machine.

Until other factors need to be taken into account, and the machine can’t do that (yet). If your account for some reason or another is not performing well with automated bidding, ask yourself what the causes might be and see if you can correct those factors before you blindly discard it forever.

If you tried automated bidding two years ago and it didn’t work, try it again. Google’s Smart Bidding has improved tremendously, and other solutions have become much better. Just be sure to ask questions and become knowledgeable about when to apply automated bidding.

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