When Should You Use Google Ads Automated Bidding?

Introduction

I’m just going to come out and say this Smart Bidding (aka auto bidding, automated bidding – for the purposes of this article I will stick to Smart Bidding for consistency) can deliver better performance than manual bidding.

The key word (pun intended) though is can

Bad Reputation

Let’s dial back for a moment, Smart Bidding doesn’t have the best reputation and to some extent, I can see why. 

Scenario: You’re going about your day checking in on your shiniest, best campaign in Google Ads and you see a notification saying you could improve performance by using Smart Bidding (i.e. maximise conversions). 


Great! You enable the strategy and put your feet up ready to see the results roll in.

After a few days, you check in to see how close you are to becoming employee of the month…uh-oh, A LOT of money has been spent and there are little to no results to show for it…EEK.

Sound familiar? This is usually the type of experience people have encountered when it comes to Smart Bidding.

Through the accounts I’ve managed and audits I’ve carried out over the past 12 months, a few similar themes have cropped up as to why this is the case and it’s usually due to account setup and timing, more so than the strategies themselves not being effective. 

The good stuff

Let’s take a look at why you would want to use Smart Bidding. 

Smart Bidding strategies are effective because they are able to utilise more data signals than manual bidding when calculating bids and do so in real-time. This means that you can take advantage of having your bids tailored for each individual ad auction based on the intent of the user to convert rather than just the presumed intent of the keyword. 

This is an important distinction as it means not only is Smart Bidding going to bid more for the right users, it will also bid less for the users less likely to convert, each and every time an ad is able to show.

Of course, you can get somewhere towards automating your keyword-level bids with adjustments, scripts, and 3rd party tools, but those adjustments are more of a blanket approach and there will always be a degree of inaccuracy, even if you’re updating them regularly. 

Control

You might feel like you have more control by sticking to manual bidding and that’s fine if you’re getting great results, more power to you! 

The biggest push-back on automation when it comes to bidding, in particular, is usually the handover of control. It can be a daunting prospect to allow the beneficiary of your ad spend to have control over how much you bid.

The reality is though, with all of the extra signals available and the ability to adjust bids in real-time based on intent, that you actually have more control over bidding with automation – you just need to be open-minded to the change of mindset. 

If you are thinking of venturing into the world of automation, here are our 3 steps to ensure you can be successful with Google Ads Smart Bidding;

1. Correct conversion setup 

In order for Smart Bidding strategies to work correctly, you will need to have conversions in your account for them to optimise for. 

It might sound obvious but this is the first step. 

An automated strategy is only going to be as good as the conversion data it has to optimise for. As the saying goes, garbage in, garbage out.

The important bit: If you have multiple conversions in your account, the strategies will optimise for any of which are set to ‘Yes’, ‘Include in ‘Conversions’. This is the default setting for conversions in the account, so, more than likely all of your conversions will be set to yes.

This can cause issues if your main KPI is a transaction (e-commerce) or an enquiry (lead generation) but you also have multiple other conversions such as; 

  • Call from ads 
  • Brochure downloads
  • Time on page
  • Key page views 

Set up in your account, Smart Bidding strategies will optimise for any of these conversions and adjust bids equally without understanding the difference in value to your business.

I.e. if you enable maximise conversions and you have a page view as a conversion, you might get a whole lot of page views and no more sales. 

We split out these actions into categories of macro and micro conversions. 

A macro conversion is the most valuable action a user can take on the website. Types of macro conversions include a transaction for e-commerce or an enquiry for lead generation. 

Micro conversions are other valuable actions which usually appear in the funnel before the macro conversion event. Types of micro conversions are things such as brochure downloads and newsletter sign-ups. 

It is worth tracking both macro and micro conversions within your Google Ads account, to see the full picture of the value your traffic is adding. 

For example, if you only have macro conversions in the account, you may decide to pause a particular keyword/campaign thinking it is not adding any value. If that keyword or campaign was driving brochure downloads and as a result was creating more business, you would want the visibility.

Therefore anything you want to track, but not optimise for, should be unticked on ‘Yes’, ‘Include in ‘Conversions’, within the conversion settings. 

You’ll still be able to see reporting data for these actions the same as before in your campaign dashboard but it will be bucketed under ‘All conv.’ as opposed to ‘Conversions’. 

2. Picking the right strategy at the right time

There are a number of Smart Bidding strategies available. The one you select should depend on the wider goals and strategy of the business as a whole, for example, if the business is focussed on aggressive growth, campaigns are likely going to perform best on maximise conversions, whereas, for those who are more ROI focussed, Target CPA or Target ROAS would be preferable once they are able to be implemented. 

Our recommendation is to start with maximise conversions, this strategy will work to get the most conversions possible for your daily budget and does not require historical conversion data to start optimising. Pre-warning, this strategy will try to spend your daily budget every day, so, if your campaign has been historically underspending, you could be in for a shock – make sure you check before enabling and also check your conversions actions as mentioned earlier in the post. 

If your goal is to get as many conversions as possible, your campaign can stay on this strategy and that’s completely fine.

If the business is more ROI focussed, it’s at this point (now you’ve got stacks of conversion data) you might be better moving to Target CPA or Target ROAS.

Be mindful with Target CPA and Target ROAS, you need to set your targets in line with your actual performance. 

If your current CPA is £15 and you put in a Target CPA of £1 – it won’t work. Start with your current CPA and scale down gradually in increments once you are hitting the target. The same thing applies for tROAS, start with your current ROAS and look to work the target up in line with your actual performance. 

A key factor for both tCPA and tROAS is once you’re hitting your target, you can adjust the target based on if you would like further profitability or more conversion volume. For example, if you’re hitting your target CPA of £10 but you want to get a little more conversion volume, you can increase the target CPA to allow your campaign to enter into more auctions, similarly with tROAS you can lower your target to enter more auctions and increase conversion volume.

In order to work most effectively, Smart Bidding strategies need data. You can help out here.

3. Data Inputs

Attribution

Google says: 

“The average person clicks on about four different search ads before converting.”

Last click attribution is the default setting for conversions in Google Ads, which therefore means, a number of touchpoints in the conversion journey are ignored.

Try using a non-last click attribution such as time decay or position based – ideally data-driven when it is available.

Audiences

Whether you’re linking via Google Analytics or using the Google Ads tag, adding audiences as ‘Observation’ to your campaigns gives the bidding strategies more data to work with and more of an opportunity to optimise for the right users.

Smart Creative

Smart Bidding strategies work really well in conjunction with Smart Creatives such as Responsive Search Ads and Dynamic Search Ad campaigns. 

The Learning Phase

Once you enable a Smart Bidding strategy, there is a period of up to 14 days where the campaign will need to optimise, called the learning phase. This period might only take a few hours or days (if there is a lot of conversion data) but is worth being mindful of before you start to assess performance.

If you click on the name of the bidding strategy in your campaign reporting columns, you can check the progress of how the strategy is currently performing vs its targets.

Bid Strategy Report (maximise conversions)

When reviewing if your newly enabled strategy has been a success, you should compare the 2 weeks prior to the strategy being enabled to the 2 weeks after the learning phase completed for an accurate picture of how performance changed. Using annotations in the account can help to make this as simple as possible.

Summary

So, when should you use automated bidding? For us the answer is always, however, you can’t just turn it on and leave (sorry!), you can, however, with the right setup and implementation, see some really great results. We ran experiments in each of our client accounts when Smart Bidding launched and we always found better performance.

Therefore it’s not a case of Smart Bidding vs manual bidding, AI and machine learning are becoming a more prevalent part of all aspects of our daily lives. Moore’s Law states that computing power doubles every 18 months, with that in mind, this is clearly the future of bidding in Google Ads.

I’ll end with a couple of key points to remember:

  • The Smart Bidding strategies mentioned are conversion-focussed. By using these strategies you are saying conversions are what is most important to you, so, don’t be surprised if you see some scary Avg CPCs from time to time – it shouldn’t matter as long as you’re getting more conversions/business for the same budget on a monthly basis;
  • You can use the drafts and experiments tool in your account to test a Smart Bidding strategy on a percentage of your traffic before you commit to fully enabling it;
  • Make sure your conversions are set up correctly and set realistic targets if you’re using tCPA or tROAS;
  • You should be monitoring the performance of your campaigns all of the time, to get the best results.

Struggling to get the paid search results you’re looking for from Google Ads? Contact us to find out what’s possible with Google Ads, and in the wider world of paid media

 

Achieving better results with Smart Bidding. Check out our guide 'Why Smart Bidding?' and how to implement your next smart bidding strategy.

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