4 Things That May Surprise You About Automated PPC Bidding

My Post - 2019-09-16T122741.084.pngIt’s no surprise that Google, with its massive capabilities in machine learning, is pushing hard to take as much control over PPC bid management as possible.

They believe that by letting the machines handle number-crunching and pattern recognition, advertisers will get better results.

And having more happy advertisers obviously helps the bottom line and makes Google and their investors happy, too.

But when bids are automated, it does not mean that PPC is automated. Good news indeed for those of us worried about our future prospects as PPC rockstars.

There are important things to know about automated bid management and I’m going to share a few here based on conversations with advertisers who expressed surprise when our tools and scripts uncovered some aspect of bid automation they were unaware of.

1. You Can Lose a Huge Impression Share (IS) with Automated Bids

I’m not sure I can explain why, but some advertisers I speak with believe that once they turn on automated bidding from Google, the things they used to worry about in the past will all of a sudden take care of themselves.

Impression Share is a good example.

Advertisers on manual bidding monitor this metric as an indicator of missed opportunity.

After they enable automated bidding, they stop monitoring it, and when their account later goes through a PPC audit, they are surprised to find there is a lot of lost IS.

There can be many reasons for lost IS, but the key point is that automated bidding only works to try and set the appropriate bids based on what it knows about the person doing the query (probability of conversion rate), and the value the advertiser may get from the conversion (predicted value of a click).

Bids may be increased when a competitor’s actions lead to changes in expected conversion rate and value per click, but the bid automation will also try to stay within the bounds determined by the advertiser’s targets for CPA or ROAS.

So if a competitor raises bids there is no guarantee the automation will be able to respond and more impression share may be lost.

Bid Automations Are Bad at Sharing Insights with Advertisers

If conversion rate drops after the launch of a new landing page, bid automation will dial back bids so it can continue to deliver conversions at the desired target, but it will not tell the advertiser that their new landing pages are terrible, and so more impression share may be lost.

But until an alert is triggered, for example using a tool like Optmyzr, or until the advertiser notices a drop in volume, they may have become so disconnected from what’s happening in their account that they find themselves shocked to see that they have lots of lost impression share even when they assumed that bid automation was handling things.

The bottom line is that advertisers should continue to care about details.

They should monitor metrics like conversion rate, IS, etc because these are INPUTS and OUTPUTS of automated bidding but they are not the things that are automated.

2. Bad Targets Are Just as Bad as Bad Bids

The previous point covered how externalities like changes to a landing page, changes in consumer behavior, or changes by competitors can cause problems with automated bidding.

But the reason can also be related to the bids themselves.

Issues arise when targets are set badly. Think about the first campaign you ever managed and how you set the CPC bids for that.

It probably wasn’t scientific or based on expected conversion rates because you were so new to PPC that you’d simply be guessing (or relying on third-party data).

So most of us, when we set our first bid, we probably used the Goldilocks principle and we picked a number that felt good… not too high, but also not too low.

This was OK because the day after, we’d log back into Google Ads to check results. If we saw that we were getting a ton of clicks but very few conversions, we lowered our bid.

Of course, bid automation handles increases and decreases to CPCs, but we are still asked a number at the beginning: what is your target from which the system will then calculate the CPC?

Despite Google’s best efforts to suggest a target based on recent history that is likely to provide continuity in the campaign, many advertisers see automated bidding as a magical system that will help them achieve the results they never could achieve manually before.

They set a target that is too low and then walk away since it’s now automated.

That is a mistake.

Remember that bid automation is fundamentally just about:

  • Predicting conversion rates and value per click.
  • Using those predictions from a machine learning (ML) system to set the CPC bid that the engine uses to rank ads in the auction.

Knowing this, it should be clear that if you set a bad target, it may lead to bids that are suboptimal:

  • If the target is too conservative, you may lose volume.
  • if the target is too aggressive, you may reduce profitability.

As with manual bidding, it actually makes sense to monitor the performance and change the target based on what you see.

For accounts managed in Optmyzr (my company), we use an automation layering methodology to identify when automated bidding is losing impression share for parts of the account that drive conversions.

By simply letting advertisers know that there is upside potential if they are willing to get more aggressive with their targets, they can take the right action, or even simply automate this process. – Read more

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