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Jessica Malnik on July 29, 2021 (last modified on July 26, 2021) • 12 minute read
Want to know the quickest way to start a raging debate among PPC advertisers? Ask anyone who runs Google Ad campaigns if they should use automated bidding.
On the surface, it is tempting to use automated bidding. After all, Google designed it to make the ad buying process more efficient.
However, Google is also a business designed to make money. Their goals are to get businesses to spend more money on ads. Your goals are to get more sales.
If you don’t know what you are doing when you set up your Google Ads account, or you feed Google the wrong traffic and conversion data, you could wind up spending a ton of money on your smart bidding ad campaigns with little to nothing to show for it.
So, in this post, we’re taking a closer look at the pros and cons of using Google Ads automated bidding.
There are two types of bid strategies in Google Ads: Automated and Manual.
While it might seem obvious to choose the automated option (less work!), that’s not always the best idea.
With automated bidding, you can optimize for either clicks or conversions, depending on your company’s goals.
To understand the nuances of whether or not to use automated bidding, we reached out to 29 Google Ads professionals. For full transparency, here is a breakdown of these pros’ monthly ad budgets.
Editor’s Note: Want a simple way to track your ad campaign performance? Use this customizable Google Ads Dashboard template to monitor and analyze your important metrics such as impressions, clicks, cost-per-conversion, conversion rate, and so much more. Use the wealth of data available to help you improve your campaign performance.
Smart bidding leverages machine learning and Google’s vast pool of data. There are four types of smart bidding, each targeting a different outcome:
The first two types work great if your campaign has little to no conversion value (think: brand awareness campaigns) or you don’t have a specific CPA goal.
The latter two – Optimizing for target CPA or target ROAS tends to work best for campaigns that know exactly how much they want to spend and aren’t budget restrained.
Many think that smart bidding is the future.
“Google Ads Smart Bidding is the future (whether us marketers like it or not),” says Brodie Schroeder of Demand Machine. “With smart bidding, you’re able to leverage Google’s massive data sets, machine learning, and AI expertise to your advantage and campaign goals. You simply can’t do this with manual bidding because you don’t have the data. When used correctly, smart bidding will outperform traditional bidding strategies over the long term if you provide the correct inputs for smart bidding to be effective (i.e. proper conversion tags, conversion value, offline conversion data, etc.)”
In fact, 79.31% of respondents stated they use Google Ads Smart Bidding. Of those who use Google Ads Smart Bidding, 95.65% are satisfied with its features.
And, 52.17% of those who use Google Ads Smart Bidding think that its main benefit is that it saves time. So, you can kind of run “set it and forget it” campaigns.
But, there is a push and pull between convenience and control. Smart bidding is more convenient and saves you time, but you are giving up a lot more control to Google to run your campaigns and bid strategies.
In fact, of those who don’t use Google Ads Smart Bidding, 50% stated that the main reason not to use Smart Bidding is that one has no control over the data being used. Another reason is not knowing the specific nuances of your business.
It also requires that you have trust in your conversion data and that everything is set up properly in your Google Ads account. Google can only work within the parameters you give it. So, if your conversion data is messed up, this could be disastrous for your ad campaign/budget.
“Do not use Smart Bidding if you do not understand how it impacts reaching your account goals,” says Andrew Schulz of Lake One. “Our team recommends testing automated bid strategies through experiments or other sequential frameworks to understand performance impacts.”
Talyah Regusters of Choosing Therapy says, “One reason to not use Google Ads Smart Bidding is if you’re using smart bidding on a fresh or low performing campaign that does not have a lot of conversions or data in general. For example, if you’re using a revenue-focused automated bidding strategy such as Target ROAS, Google recommends that a campaign has at least 50 conversions in the past 30 days for Search Ads.
Using Smart Bidding can be harmful to your campaign if Google does not have the proper amount of information to be smart for you in the first place. I think of it as pressing extra hard on the gas, when a car is running on fumes and barely has any gas in the tank. Smart bidding allows Google to squeeze your best data into a more concentrated and powerful dynamic strategy, but that requires more fuel to push it in this way”
Sasha Matviienko of growth360 adds, “We did an experiment and found it to be true, Google is better at doing Google Ads, hands down. With that said, we do use manual bidding until the campaign has sufficient results online. In other words, as specialists, we start with manual bidding and shift to smart bidding slowly with every new account.”
Editor’s note: Use this free, intuitive, and customizable Google Ads Dashboard template to constantly monitor the competitive search landscape that your account occupies. Keep track of your traffic and conversion trends in real-time, and see how you compare to your competitors.
So, now that you understand what smart bidding is, here are some six use cases for when it makes sense to leverage automated bidding.
If you don’t know who your ideal customer is and what your customer acquisition costs (CAC) are, then you should probably stick with manual bidding.
Anthony Chen of PaidSearch.Pro Inc. explains, “Automated bidding should only be considered once the account has at least 30 conversions within 30 days of data so that there is sufficient learning on the account. If not, the bidding strategies will have to do the guesswork which will lead to high cost per click, high cost per acquisition, and even zero traffic.”
If you are a small team with dialed-in CAC and conversion data running bottom of funnel campaigns, then smart bidding makes a lot of sense.
“If there’s one reason to use Google Smart Bidding is that it saves time,” says Natasha Rei of Explainerd. “As a digital marketer, planning a strategic campaign is critical to receive success. However, most of our time is spent on manual bidding. We often spend more time setting the right bid in order to achieve the result we want. Every bidding needs years of practical experience, yet it doesn’t guarantee good results. Using Google Smart Bidding, we can rest assured that the tool handles a part of our job. We can then invest our time to plan the digital marketing strategy that will help us make a strategic move for the next campaign.”
Zack Duncan of Root and Branch Group adds, “Smart bidding can definitely save time and free up resources for other things (in my opinion, the best reason to use it). The emphasis is on “can.”
For a campaign with a bottom-funnel conversion goal (let’s say a lead generation campaign for a B2B company) that has fully functioning conversion tracking AND a regular volume of conversions, a Smart Bidding strategy with a bottom-funnel conversion goal (like Target Cost Per Acquisition) can be perfect!
The problem is that Google wants everyone to use smart bidding and will make recommendations that are great for making Google money and terrible for advertisers. For example, an upper or mid-funnel bid strategy like Maximize Clicks or Target Impression Share is absolutely a terrible idea for a campaign with bottom-funnel goals. So in short, use Smart Bidding, but know what you’re doing!”
Google has access to a lot more data than you, and its machine learning capacities mean it can process a lot more contextual signals than the average marketer.
“Google uses automated bidding to calculate bid levels depending on the chance of your ad resulting in a click or conversion,” says Sep Niakan of Condo BlackBook. “To do so, they look at information like a user’s device, operating system, location, the time of day they’re browsing, and demographics. When computing bids, smart bidding techniques are more productive than conventional bidding because they may employ more data signals and do it in real-time. This implies you may modify your bids for each ad auction depending on the user’s desire to convert rather than the keyword’s assumed purpose. This is a significant difference since it implies that Smart Bidding will not only bid higher for the correct users, but it will also bid lower for the individuals who are less likely to convert each moment an ad is permitted to appear.
Obviously, with scripts, adjustments, and third-party tools, you can come close to automating your keyword-level bids, but such modifications are more of a rational strategy, and there will perpetually be some imperfection, even if you update them regularly.”
If your team skews heavily towards storytelling and brand marketing, then using smart bidding can sometimes feel in some performance marketing gaps.
“Like finance, marketing is an endlessly fascinating blend of storytelling and math,” says Quimby Melton of Confection. “Marketing teams tend to over-index on the former and neglect the latter. That is, as professionals, we tend to get bogged down in the creative, “auteur” parts of our jobs while neglecting important data models and stark, mathematical realities.
I like Google Ads Smart Bidding for the same reasons I like other forms of martech automation, AI, and machine learning: It leaves people free to do what they do best (storytelling) and gives machines the opportunity to do what they do best (math).
So much of what happens inside Google’s “black box” is hidden from us anyway. Arguments against this particular feature — “Google doesn’t know my business as I do,” “I have to give up a lot of control” — seem to miss the bigger picture: Whether we use Google Ads Smart Bidding or not, we’ve already given up a lot of control to Google as the ultimate consumer of information, arbiter of traffic flows, and provider of analytics.
If we draw an arbitrary line with ad bids, we maintain the illusion of control. And this may make us feel better. But, more likely than not, we sacrifice performance. It seems fair to assume Google is far better at communicating with itself than it is at integrating my limited, often myopic input. With that said — tactically, using qualified lead flow as an example — I’ve never noticed more than a ~10% variance when using manual or Smart Bidding. I’d say the same thing about daily budget and age-, income-, and gender-oriented bid adjustments. Thank you for the interesting question.”
A related advantage is that machine learning can unearth new keywords and opportunities that your company might not even think about.
“Find new keywords you didn’t think of,” says Jonathan Aufray of Growth Hackers Marketing. “Google Ads Smart Bidding can be a great way to discover keywords that you didn’t find or didn’t think of during your keyword research process. Indeed, in that case, the Google algorithm is targeting new sets of keywords and from time to time, the Google AI will find keywords that have low CPC (Cost per Click), high conversions, and low competition. It will help you find new high-converting keywords that you can then implement on your classic keyword campaigns.”
In addition, if you have been running manual campaigns for a while and have a solid negative keyword list, then switching over to smart bidding can save time.
“If you have your negative keywords dialed in and you’ve optimized your shopping catalog, a Smart Shopping campaign is worth a try with a target ROAS smart bidding strategy,” says Christian Nelson of Reminderband. “It takes about 3 weeks to optimize, but the stability and return after that point can be well worth it. It won’t be a home run with every campaign, but testing out smart bidding is important to try to see if it works well for your site.”
In sum, there are pros and cons to using smart bidding. It ultimately depends on your specific business, goals, and the existing customer acquisition data that you already have.
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