Automated Bidding in PPC

Author: Richard Wallace
1st February 2021
Digital Marketing / PPC / Search

Over the last few years, the way paid search accounts are optimised has drastically evolved. Gone are the days of manually reviewing bids across thousands of keywords every day and dedicating hours trying to squeeze as much efficiency out of a keyword as you possible could. This was a time-consuming process that didn’t allow for focus on other vital aspects of paid search advertising.

Historically advertisers were rewarded for having a granular campaign structure, often segmenting campaigns by match type would help with budget management and ensured you would have the right balance of efficiency (through exact) and discovery through phrase and broad match keywords. Accounts built this way had highly tailored ads and ultimately this meant campaigns would be efficient because quality score and relevance was strong. This was the basis of good PPC account.

This approach has slowly evolved and whilst all of the above are important we’re seeing a shift in the way to manage campaigns effectively. This year, for example, Google is changing its requirements to achieve partner status with them. Account optimisation score and achieving at least 70% of Google recommendations is required to achieve partner status. One of the key elements of Google Optimisation score is the adoption of their automated products such as bid strategies, smart shopping, dynamic search ads, responsive search ads, to name a few. So, it’s clear to PPC marketers where the future of PPC advertising on Google lies.

Bid strategies are key

Google went from enhanced CPCs to rolling out more sophisticated bid strategies like target ROAS or CPA and target impression share. These have been around for a while and we have tested these to understand if they bring additional value and what value they can bring. Over the years, due to the very nature of machine learning, these bid algorithms have continually improved, particularly over the last 18-24 months since Google have been pushing advertisers to use smart bidding. Greater adoption of these bid strategies has meant more data for the bid algorithms to learn from and that, ultimately, results in smarter bidding decisions. 

Whilst there are still many downsides to using many of Googles automated products, our conclusion is that using automated bid strategies extensively is the way forward. Given time, they will generate the results you want them to. If you have tested these in the past, and they haven’t worked, then test them again because their effectiveness has moved on significantly over the last couple of years.

We know that many advertisers have moved over to automated bidding in some form, but we also know, based on auditing many accounts, that some well-developed accounts are still using manual bidding extensively. This is often because they stick to what they know has worked in the past and also because often it can require a large-scale restructure for bid strategies to work effectively. This can be risky in the short term but there are ways to mitigate the impact of a restructure and the longer-term benefits justify any short-term loss.

This leads to the question; how do you structure accounts to use bid strategies effectively? Like with any account build, this will vary from one client to another and there is no set way, but two fundamental aspects we believe should be kept in mind when building an account which utilises smart bidding:

  1. Business Goals
  2. Audiences

These are important because you want to have a structure which feeds enough data for its bidding algorithms to work effectively, so those highly granular campaign structures of the past might mean many campaigns wouldn’t meet the optimal volume thresholds for the AI to draw patterns of behaviour to help predict outcomes. Instead of building an individual campaign for every type of product you sell, build campaigns around key business goals and audiences. Remember, you can always ensure quality score & relevance remains strong through well-structured and granular ad groups, or you can use portfolio bid strategies if a more granular structure still make the best sense for your business.

Business Goals

Understanding key business goals helps to mould a bid-strategy-centric account structure and facilitates achieving those objectives. Develop an understanding of both long term and short-midterm objectives and then build a framework of what the PPC account structure looks like to help achieve those goals using bid strategies.

Let’s take a simple example: You work for an agency and one of your retail clients is focussed purely on the profitability of their PPC campaigns. They have a range of different items they sell, some that have much higher profit margins than others. In this scenario you will likely want to segment your campaigns to account for any of these margin differences. Doing this allows you to set specific campaign goals and bid strategies to help achieve a certain ROAS for one ‘group’ of products and another target for a separate set. Once you’ve done this the bid strategies will do a lot of the legwork for you in terms of hitting the ROAS targets set and your focus can be around building a framework to test and learn to help understand the maximum potential of the campaigns.

Audiences

If a fundamental aspect to growing your business is bringing in new customers who have not interacted with your brand before, or haven’t for a significant period of time, and you are happy to ease an otherwise strict CPA, you might create a group of campaigns targeting these users with a less restrictive CPA target than you would for returning customers. The key takeaway here is to try to build an account framework which groups users into segments based on their expected behaviour or value to the business. Doing this then allows you to build different bidding strategies around each of your audience segments.

Summary

Whilst we don’t think there is any set way to structure your accounts around smart bidding – because every account will be different, we encourage that if you are not already using automated bid strategies, then start to build a plan on how you can best roll them out. Use a staggered approach and start testing to understand the value it can bring to your business and over time look to migrate to bid strategies wherever you can. Not doing this now means you’ll be losing out on valuable traffic and in the long run you’ll continue to lose out to competitors who are using AI to drive smarter investment decisions on paid search.

POSTED IN: Digital Marketing - PPC - Search