Sep 14 2018
Basis Technologies

The Rise of Automated PPC Bidding


If You’re Still Doing Manual Bidding, You’re Doing it All Wrong

At its core, the idea behind automated bidding is a simple one: it's a process designed to take all of the heavy lifting and guesswork out of the equation within the context of your online advertising campaigns, allowing you to use real data and actionable insight to achieve specific goals for your brand in easier ways than ever before. In essence, it's an opportunity for you to work "smarter, not harder" — crafting the right strategy to meet your needs that lets you focus less on bidding and more on actually making a connection with the people you were trying to reach in the first place.

For years, online marketers have been using it as an opportunity to generate higher levels of return on investment with far less work required than ever before. But it also represents something far more powerful and important. It's confirmation of the fact that, in this day and age, with the technology we now have available to us, there is absolutely no reason to manage your advertising bidding manually any longer. Any benefits you think you're gaining in terms of control are at the sacrifice of insight and expertise, not to manage a process that creates more time for you to focus on all of the qualities of your campaign that matter most of all in the eyes of your consumers.

All told, the rise of automated bidding is a fascinating story, indeed — and taking a moment to appreciate how far we've come can easily help shed light on where we might be going, together.

The Rise of Automated Bidding: In the Beginning

The story of automated bidding, in general, begins in the early 2000s, back during the dawn of what would eventually become known as pay-per-click (PPC advertising). As advertisers moved into the digital world and onto the Internet in droves, many ad platforms (like Google Ads) needed advertisers to actually set a maximum cost-per-click (CPC) that they were comfortable with. This quickly proved to be a lot easier said than done.

For starters, maximum CPC isn't necessarily the top priority of a digital marketer -- they're (correctly) focused on things like visibility, conversions, sales, leads, etc. These are all tangible goals that weren't as directly related to CPC as they needed to be, and were more appropriate to gauge against something like cost-per-acquisition (CPA) or even return on advertising spend (ROAS).

CPC was important, yes —  but it was only one small part of a much larger story. Yet at the same time, advertisers needed to essentially find a way to convert all of their short and long-term business goals through this one particular lens — essentially bringing together what they were trying to accomplish with the information they needed to find a kind of "Happy Medium" or middle ground.

Even advertisers who liked manual bidding usually agree that while they were able to make this system work, it was hardly the best possible use of their time.

Beyond this was the fact that, over time, services like Google Ads themselves grew more complicated. Things got particularly tricky during the mobile revolution, when advertisers suddenly had access to huge volumes of new data that were unavailable a few short years ago. Which types of device, geographic locations, and demographics impacted nearly every level of their campaign, yet they still had to funnel everything through one particular (and limited) lens.

This is where automated bidding quickly proved its value, not only in terms of how it could help the average marketer save a great deal of time, but also with regards to how it could help people with more advanced and important goals in far easier ways as well.

But at the same time, it's important to acknowledge that automated bidding itself is not necessarily a silver bullet. It's not a magic wave of the hand that will instantly allow you to achieve all of your goals and send your return on investment into the stratosphere. It's ultimately a tool, the same as anything else. It is possible to misuse a tool or fail to tap into its potential if you're still not quite sure what you're doing.

There are different types of automated bidding strategies, for example, that are designed to be used in entirely different ways. All of them require you to consider a few core factors.

Different Types of Goals Require Different Types of Strategies

As stated, an automated bid strategy is one that automatically sets bid values for ads on the advertiser’s behalf, based on the overall likelihood that the ad in question will result in either a click or conversion. Different types of strategies can be created based on exactly what it is you're trying to accomplish, such as increasing your visibility in search results on engines like Google, increasing clicks, increasing conversions, increasing the value of those conversions, and much more.

In a conversion-based automated bid strategy, for example, unique bids will be set for each auction based on all analytical data present at the time. So different bids may be made depending on where the specific ad is being shown, what type of device a user will be seeing it on, what type of browser they're using, or even the time of day. All of this directly impacts that ad's ability to achieve your goal, which in turn affects the bid, which then ties directly back into the amount you're expected to pay in the first place.

As opposed to the alternative of manual CPC bidding, you don't actually need to manually update your bids to take into consideration specific ad groups or even unique keywords. Absolutely everything happens on your behalf, based on the strategy in place and the specifics that you've decided at the outset of the campaign.

Not only does this often involve a campaign that is far more cost-effective and easier to run, but one that also performs better than you would be able to achieve on your own as well.

There are a number of other automated bidding strategies that you can choose to use depending on your current campaign goals. These include but are certainly not limited to the following:

  • Increasing visits to your website. On Google's advertising platform, this is an automated bidding strategy called "Maximize Clicks." If you notice that a keyword is performing particularly well with your target audience, you can maximize clicks to that keyword to generate as much traffic as possible within your desired budget.

  • Achieve more conversions. Once you set a target cost-per-acquisition, your CPC will be adjusted automatically every time a particular ad is eligible for auction.

  • Increase search engine visibility. Google calls this "Target Search Page Location," which you can use in an effort to help your domain rank as high as possible on search engine results pages. Your bids are automatically increased or decreased to help guarantee that your ad is served in the first position as often as possible. The exact location of your ad will always ultimately come down to the outcome of the ad auction and other factors like your quality score, but this is still a perfect opportunity to increase search engine ranking in a way that you wouldn't otherwise have access to.

  • Gain visibility over the competition. This is a lot like increasing your search engine visibility via automated bidding as outlined above, but with a unique twist: instead of always vying for that first position, you're trying to rank higher than other specified domains (namely, those of your competitors). This isn't going to help your overall rank, but it will help you when compared to your competitor's ads in a way that can make all the difference in certain campaigns.

  • Optimize your cost-per-acquisition. Google's own advertising platform has gotten so smart that it actually uses both historical information from your campaigns and machine learning to handle the lion's share of the work in this area on your behalf. What you're doing here is optimizing your bids to not only get as many conversions as possible, but to also fall within your average CPA at the exact same time.

  • Optimize your return on ad spend, or ROAS. This is a particular type of automated bidding strategy that optimizes either conversion value or revenue (depending on how you choose to configure things), all while averaging your bids to a specific return on ad spend value. So long as you have 15 conversions in the last 30 calendar days, Google will be able to use that historical data to hit your target return -- which is a little like getting a computer to automatically print money on your behalf.

These are the seven strategies that are currently available in Google's own advertising platform. They've gone by a number of different names in the past, but the core objectives at the heart of them all have remained the same. You can always come up with your own strategies to get more specific and customized with your efforts, of course -- but for a lot of people, especially those who are just getting into automated bidding for the first time, picking one of these existing strategies is the perfect foundation to build from moving forward.

However, Google Ads automated bidding capabilities are only the tip of the iceberg. There are a number of amazing platforms now that can put automated bidding on steroids and can fundamentally transform your SEM and PPC campaigns into revenue-generating machines. 

With predictive advertising platforms, you can not only automatically generate 8.2 million combinations of bid adjustments for each keyword, but also set the platform to maximize profit or revenue capacity.

What's the Difference Between Standard and Portfolio Strategies?

As you begin to research this topic in greater detail, you'll be immediately greeted by two terms: standard bid strategies and portfolio bid strategies.

A standard bid strategy is one that was only ever designed to be applied to a single campaign. Even if you're running multiple campaigns using the same standard target strategy, they're still all going to be treated as individuals. Decisions will be made within the context of those silos and one campaign won't affect another in any appreciable way.

Generally speaking, standard bid strategies are ideal for situations where that lack-of-crossover isn't a disadvantage, but an asset. If you're running a branded and non-branded campaign, for example, you don't necessarily want those two to mix. You've likely got very different goals and you're trying to hit very different targets. When you use a standard strategy, the difference between what you actually paid and what you were willing to pay won't be re-allocated from the branded campaign to the non-branded campaign and vice versa.

A portfolio strategy, by and large, is the opposite of that. With this type of strategy, multiple campaigns that are all sharing the same goal are treated less as individuals and more as a larger unit - or in other words, as a portfolio. The major advantage of this is that if you've got three campaigns that are performing well and one that is performing poorly, those successful campaigns can help subsidize a bit of the loss you're taking on the less successful one. Oftentimes this can be a great way to drive more conversions and it's a benefit that you don't really have when using a standard strategy.

You would definitely want to use a portfolio strategy if you were using multiple campaigns to sell different but similar items within the context of the same end goal. If you were setting up individual campaigns for PRODUCT A and PRODUCT B, but both A and B were made from basically the same materials, performed similar functions and you were targeting very similar groups of people, it's likely a good idea to let them share data and work together instead of separately.

If PRODUCT A was a sophisticated new type of flashlight and PRODUCT B was a new mobile phone, on the other hand, these two products couldn't be more different and a standard strategy would ultimately be the way to go.

Other Considerations

Having said that, there are still a number of important considerations you need to make to help guarantee that your automated bidding efforts get off on the right foot.

One of the most important things to understand is that you should really avoid making any frequent changes to automated bid campaigns if you can help it. Remember that the bidding algorithm is actually responding to a huge volume of information and every change you make to the campaign means that the algorithm needs to "learn" everything all over again. This takes time and can absolutely affect your performance in the short-term.

If you're going to be making any type of optimizations at all, proceed with caution and only do what is absolutely necessary. Most people agree that it will take about a week for your campaign to stabilize after that, so make sure that every move counts.

Likewise, you should always be sure to take advantage of the reporting tools that platforms like Google put at your fingertips. Not only can you rest easy knowing that your bidding is taken care of, but you can also view reams of historical data to help make more thoughtful and informed decisions moving forward.

Google's reporting tools involve bid strategy statuses, for example, that let you see exactly what is going on with your campaigns at any given moment. You can set up alerts and notifications that will instantly clue you in on issues with conversion tracking that you may be experiencing and provide actionable steps on how to fix them.

You can even use Google's own bid simulators to try to gain insight into the number of conversions an ad MIGHT have gotten had you set different targets at the outset. Along the same lines are campaign drafts and experiments, which are intended to let you test how automated bidding will fare against whatever manual bidding method you're currently using. You can even use this to help you pick out a strategy and make more informed decisions in the future.

These tools are available to you right from your user account. It would be an absolute shame not to take full advantage of them whenever possible.

In the End

Over the last two decades, digital advertising as a concept and as a platform has gone through one incredible transformation after another. There was a day where ads on the Internet were actually something of a novelty, if you can remember back that far. Flash forward to today and not only did digital ad spend come in at $83 billion in 2017 according to one study, but it's also predicted to reach a massive $129 billion by as soon as 2021.

Despite all that, one thing remains unchanged: Google still holds the largest share of total digital ad spend in the United States, coming in at an incredible 38.6%. This is with good reason, too —  for every $1 a brand spends on Google Ads (formerly AdWords), they can typically expect to make an average of $2 in revenue as a result. To that end, digital advertising has long proven itself to be more than just another marketing opportunity. It's become one of the dominant forms of communication on the planet, connecting businesses with their customers in new and innovative ways with each passing day.

Unless, of course, you're still setting your bids manually.

When it comes to the idea of manually bidding on each and every term, manual bidding is very much one of those things where the old saying "just because you CAN do it doesn't mean you SHOULD" applies. Technology itself has evolved over the years to make our lives faster, more efficient and more convenient than ever in a practically limitless number of ways. This can and absolutely should extend to the world of online advertising — provided you're willing to allow it, that is.

Make absolutely no mistake about it: if you're still working with manual bidding in the modern era, you're not only doing things the hard way — you're also doing them the wrong way.

In an era where competition is more fierce than ever and margins are getting thinner and thinner all the time, this is absolutely one mistake that you, your brand and your customers cannot afford to make.