There are many things in this world that sound too good to be true, and often, they are. Examples like candy corn Oreo’s, Pop Rocks martinis, and classifying pizza as a serving of vegetables are just a few of the many things that make the list. Another item to add would be Automatic Bidding in Google Ads (previously known as Google AdWords).
I recently wrote a piece on switching from automatic to manual bidding. In this article, we’ll explore the reasons behind making such a change. While Automatic Bidding’s “set-it-and-forget-it” nature might seem appealing and yield decent results for smaller advertisers with limited time, there are five things to consider before deciding between Automatic and Manual Bidding if you’re looking to go beyond the basics:
#1: Impression Share
Bidding on a specific keyword doesn’t guarantee that your ad will appear every time someone searches for it. In reality, your ads might be displayed less than 10% of the time for keywords in your account! Lost Impression Share is frequently caused by a low Ad Rank. While Quality Score is important, increasing your bid is often the fastest way to improve your rank. Automatic bidding doesn’t allow you to selectively raise bids on keywords that are essential to your product or service. This means you can’t influence or improve Impression Share on those keywords, resulting in lost impressions and potential conversions.
#2: Page Position
Search engine optimization can grow your business exponentially faster than traditional channels, but only if people see your ad. If your ad is buried at the bottom of the Search Engine Results Page (SERP), searchers are likely to overlook it. Consider the last time you looked for a product online. Did you even look past the first 3-4 results? You’ll want to bid higher on those specific keywords to make sure you’re getting impressions for them and to get your ad at the top of the page, or at least in positions 4-5, to reach the most likely converters. Again, Automatic Bidding prevents you from individually adjusting bids on important keywords, relegating your ads to the bottom of the page.
#3: Tiered / Stacked Bidding
Tiered or Stacked Bidding, a more advanced strategy, focuses on the different match types used in PPC advertising. Specific match types can result in higher click-through rates (CTRs), improve Quality Scores, and even cost less per click than broader match types. These targeted match types and terms frequently result in higher conversion rates at lower costs than broader options. Because these keywords are more valuable, they are given higher bids than Broad Matched variations. As your Match Type becomes more specific, you increase your bid by 10-15%: Broad < Modified Broad < Phrase < Exact. Your Exact Match keyword should have the highest bid because it is the most specific, while bids for other match types should be tiered lower as specificity decreases. While advertisers prefer to have all clicks come from the most specific match type for higher CTRs and lower costs, Google (when bidding manually) prioritizes your Max CPC. If your Broad Matched keyword has a higher Max CPC, it will likely attract Exact Matches as well, even if you have a specific Exact Match keyword in your account (Impression Share also plays a role). The Bid Stacking strategy is typically used to prevent this. However, because Automatic Bidding does not allow for bid editing, you cannot tier your match types, leaving Google to decide where to assign your clicks.
#4: Exorbitant Bids
To be completely honest, this isn’t so much an unavoidable problem as it is a revealing look into how Google manages your account when you give it control. Expensive bids can be avoided with a reasonable maximum cost-per-click (CPC) limit, but one keyword without one perfectly illustrates why you should never relinquish bidding control. The keyword below is long-tail, a relatively selective Modified Broad match type, and employs Automatic Bidding. It is from a competitive industry, but average CPCs range from $10 to $50. It only received one click. The price of that click was $362.63. (Click on the image to enlarge it.)
Again, this can be avoided by establishing a lower maximum CPC bid limit, but it does highlight the extremes that Automatic Bidding can produce. Even in fields such as insurance or law, clicks rarely reach such heights. While the Maximum CPC was set high to achieve a high Impression Share, the majority of clicks remained in the anticipated $10-$30 Average CPC range. Having greater control over individual bids would ensure that such a situation would never arise. Google lacks your intuition and aversion to wasteful spending, so don’t rely solely on its judgment to determine the worth of your keywords.
#5: Manual Management of CPA
If you’re taking the time to read this or learn more about PPC, you most likely want to manage your account yourself. The main goal for most search marketers is to reduce their CPA, or the cost of acquiring a conversion. Automatic Bidding can be a significant impediment to that objective. Consider the keywords in your account that may convert at a higher rate than others. You would ideally want to receive more impressions and invest more in keywords that convert. A higher bid price for converting keywords and a lower bid for lower-converting (but still relevant) keywords would reflect that “attention.” When you use Automatic Bidding, Google decides how the budget and bids are allocated across all keywords. This prevents you from making more specific preferences for your converting terms as well as identifying and adjusting underperforming keywords that may be increasing cost rather than value.
Is Using Automatic Bidding EVER Acceptable?
It isn’t always a bad idea. (That would be far too simple!) It is true that the majority of advertisers prefer to use Manual Bidding as their Google Ads bidding strategy. I would suggest the same thing when starting a new campaign or revising a poorly performing one. However, with updates to the Google Ads platform and algorithms, automated bidding has vastly improved in recent years, and many marketers find it to be the best option for their needs. To determine what works best for your account and goals, experiment with both bidding strategies to see how they perform. Follow the best practices outlined here to switch from Automatic to Manual Bidding. If you want to try automatic bidding, look at our suggestions for setting up automated rules and be sure to weigh the benefits and drawbacks of each bidding strategy.