Bid automation is one of the top debated topics in the digital marketing industry. It’s not a matter of why you should be using automation, but how you are using it to achieve your goals and amplify growth efforts. Over the last few years, Google has recommended that advertisers move to automated bidding strategies to “take the heavy lifting and guesswork out of setting bids to meet your performance goals.” Though automated bidding isn’t perfect, it is a tactic that advertisers need to utilize.
Why Use Bid Automation?
Bid automation takes into account numerous bidding signals that aren’t visible to advertisers and uses machine learning to set appropriate bids. For example, advertisers can set bid modifiers for the time of the day, but not the browser that the searcher is using. These hidden signals are invaluable to advertisers because they help to decipher user intent as part of the bidding process. Manual bidding is slower, uses fewer signals, and is not conducted in real-time. When advertisers give Google the correct parameters and enough data, automated bidding can work effectively.
Two of the more common bidding strategies are Target Return On Ad Spend (tROAS) and Target Cost Per Acquisition (tCPA). With each strategy, you input what your target ROAS or CPA is and Google will optimize for this figure. You can enter your target in the bidding section of the settings. Google will give you a recommended figure if your campaign has enough data.
An advertiser selling car parts may set a tROAS of 500% in a widget campaign as this figure is necessary to achieve profitability. The axle campaign may be set at a 300% tROAS as sales volume is more important than efficiency. By using these strategies, you need to have conversion tracking in place and have a value setup for these conversions (whether the value is dynamic or static).
The more data you can provide Google the better so the system can make the most informed decisions. For example, Google recommends that for the tROAS bid strategy, you have at least 50 conversions in the past 30 days. With these targets, you should be realistic about the goals. Setting a $30 tCPA in a campaign where the average CPC is $60 is unrealistic.
Once you set these targets, it doesn’t mean that they can’t change. In fact, you should be consistently reviewing the targets and changing as necessary. For example, there may be a sale on widgets where sales volume is now the main goal and efficiency is second. Bid automation unchecked will hurt performance.
When making changes, review at least the last 30 days of performance and/or the previous year’s data. Let’s review a SaaS provider with a tCPA of $125. Over the last 30 days, the campaign has seen a CPA of $120, 200 conversions, and an impression share of 70%. When looking at the forthcoming 30 days the year before, we see a CPA of $150, 250 conversions, and an impression share of 80%. Though we’re currently under our tCPA, we have the potential to see additional conversions if we raise our target. Here’s a table of the additional number of conversions that we may see at various percentage increases.
The higher we increase the tCPA, the more conversions we see and the higher impression share we will receive. Though Google takes care of all bidding, we’re fueling the automation strategy.
Not all data should be included in your bidding strategies. You may have had a day where your conversion pixel wasn’t firing correctly. Or, there was an inflated number of conversions one day due to a once a year sale. You can create data exclusions to bar a day(s) worth of data so it will not negatively impact the bidding strategy.
Within the “Bid strategies” section is an option called “Advanced controls.” In the “Data exclusions” tab you can create the exclusion criteria. Here’s an example.
Data exclusions should be used sparingly and aren’t meant to manipulate bidding strategies. They shouldn’t be used to exclude data from days where the performance was poor. They ensure that your bidding strategies are making use of correct data and nothing more..
Seasonality adjustments are another feature available in the advertisers’ arsenal. They are temporary bid adjustments that override the bid strategy during a period where you expect a higher conversion rate. Google’s recommendation is to apply a seasonality adjustment if the conversion rate will swing by at least 30% compared to what it is normally. A perfect example of this occurrence is on Black Friday. For most advertisers, the conversion rate will skyrocket on this day. Thus, seasonality adjustments overwrite the bid strategy to capture this demand.
Seasonality adjustments can be applied to all campaigns or solely specific ones. They can be set by the hour or for an extended period of time.
The core concern with automated bidding is that it takes control away from advertisers. The better way to look at is to understand the numerous benefits it has over manual bidding and the ways advertisers can guide the system.