Google Ads Automated Bidding: 4 “Gotchas” to Watch Out For

google ads bidding analysis

Google Ads Automated Bidding: 4 “Gotchas” to Watch Out For

There are a lot of reasons to love the idea of automated bidding in Google Ads. Paid search can be a real challenge to stay on top of, so the idea of letting Google run things for you is very appealing.

But is Google Ads automated bidding all it’s cracked up to be?

When people hear the “word” automated, it evokes imagery of high-speed robots rapidly completing tasks at a pace no human could hope to match. Google’s algorithms certainly have access to more data than any of us can even imagine and those algorithms make decisions at blinding speed, so it’s easy to believe that Google can manage your ads far better than you ever could.

However, just because automated bidding offers a lot of advantages over manual bidding, that doesn’t make it a “set it and forget it” way to grow your business. Can automated bidding save you time and money? Yes, but only if you set it up and manage it properly.

So, if you’re trying to decide whether or not Google Ads automated bidding is right for your business, you need to be aware of what it can (and can’t) do. Otherwise, you can end up automating yourself right into bankruptcy.

With all of that in mind, here are 4 common automated bidding “gotchas” that often catch Google Ads marketers by surprise:

 

1. You Still Have to Check In On Your Campaigns

If you think that automated bidding means “automatic revenue stream”, you’re in for a rude awakening. Automated bidding can take care of a lot of the busywork of running a Google Ads campaign, but it’s no substitute for real, live marketing decision-making.

Would you hire someone to do a job and then never check in to see how it was going? Of course not! Google Ads is no different.

In fact, if anything, it’s even more important to check in on your automated bidding campaigns than it is to check in on an employee. An employee, after all, has a brain (though some business owners might debate with me about that) and can recognize when something is going horribly, horribly wrong.

Automated bidding, on the other hand, uses algorithms to make decisions. If those algorithms are based on faulty data or criteria, they can “optimize” you right out of house and home.

For example, say you want to run a campaign using the “Maximizing Clicks” automated bidding strategy. You’ve run a few calculations and decided that you can pay up to $4.51 per click, so you enter that as your “Maximum CPC bid limit”.

maximizing ad click bidding strategy

Google Ads will dutifully get you as many clicks as possible for $4.51 or less. However, there’s no guarantee that you’ll get actual conversions from all of those clicks. This bidding strategy might be absolute gold for your business…or it could be a complete waste of money. The only way to know is to track everything and keep a close eye on things.

In general, most of the problems will become obvious during the first few weeks that you run an automated bidding campaign, but even after it’s clear that the campaign is working, you still want to check in on things at least once a month. You never know when something will change and suddenly throw things off.

 

2. Automated Bidding Takes Time to Get Dialed In

If you think that you can just turn on automated bidding and get great results from day one, you’re in for a rude awakening. As mentioned above, Google’s algorithms are only as good as the data you give them. If you don’t have data yet, it’s going to take Google some time to figure things out.

With automated bidding, Google uses looks at the data in your campaign and uses that information to predict which users will respond best to your ads. Facebook’s campaign algorithms work the same way. It’s all educated guesswork, but for that guesswork to pay off, the algorithm needs good data to analyze.

According to Google, their algorithm needs at least fifteen conversions over the last thirty days to figure things out. If you can give it fifty or more monthly conversions to work with, the algorithm can really start to get things dialed in.

Until you reach that point, though, Google’s automated bidding algorithms may actually perform worse than manual bidding. Without good data, Google will do its best to meet your goals, but it’s basically shooting blind. That’s why it’s often a good idea to start with manual bidding, get your campaigns working fairly well and then switch over to automated bidding. It’s not quite as easy as flipping a switch and hoping for the best, but it’s a more reliable way to get the results you need.

 

3. “Automated Bidding” is Not Always “Smart Bidding”

These days, we often use the word “smart” to describe integrated technology solutions like smart TVs, smart phones, smart microwaves or almost anything else you can hook up to a circuit board and a Wi-Fi network.

Since automated bidding integrates paid search marketing and algorithmic decision-making, many advertisers mistakenly assume that “smart bidding” and “automated bidding” are synonyms. This is a problem, because while the two are related, if you don’t understand how Google uses these terms, it can create a lot of confusion and potential mistakes.

Personally, I blame whatever naming committee over at Google that decided to call a subset of their automated bidding strategies “smart bidding” for all the confusion, but I digress…

As mentioned above, smart bidding is a part of automated bidding, but not all automated bidding strategies are “smart bidding” strategies. Instead, “smart bidding” refers to a specific subset of automated bidding strategies—ones that use machine learning to optimize campaign performance.

Here are Google’s smart bidding strategies:

  • Target ROAS
  • Maximize Conversions
  • Enhanced CPC
  • Target CPA
  • Maximize Conversion Value

Unlike the rest of Google’s automated bidding strategies, smart bidding strategies adapt to your business and market. They’re focused on driving conversions for your business, so they are less focused on overall search trends like cost-per-click and more focused on predicted customer behavior.

Other automated bidding strategies try to optimize your bids to get your ads to a certain page rank or keep your cost-per-click under a certain threshold. Smart bidding strategies, however, are much more complex. They take the behavior of a user, compare it to the behavior of other users who have converted on your page, and then use that data to increase or decrease your bids.

It’s all very complex, which is probably why the folks over on the Google naming committee decided to call it “smart bidding”. Smart bidding takes bidding to a level advertisers could never hope to match manually, but it operates off of very different criteria and data sets than other types of automated bidding. As long as you understand the difference and what it means to your business, though, you’ll be fine.

 

4. Individual Bids Still Matter

One of the most common mistakes advertisers make with automated bidding is assuming that they no longer need to think about individual bids. It’s all automated, so all you have to do is choose an overall budget, right?

Wrong.

While you should absolutely set an overall budget for your campaigns, if you don’t think about your individual bids, Google may use your budget in ways that don’t really work for your business.

This is particularly important if you’re running stupid…ahem, non-smart bidding campaigns. Remember, these campaigns don’t optimize for a profitable cost-per-conversion. They just optimize for whatever ad metric you choose during the setup process.

For example, let’s say that you’re running a target impression share campaign with an overall ad budget of $200. Google will get you the impression share you’re after, but those clicks might cost you $10 a piece. It won’t matter if that cost-per-click isn’t profitable for your business. If you haven’t set individual bids, Google’s algorithm won’t know that it’s overpaying for clicks.

Fortunately, these types of campaigns will usually allow you to set a maximum CPC limit, as shown below:

ad bidding limits

Depending on what automated bidding strategy you’re using, you may want to pick an individual bid that’s a little higher than you would normally use with manual bidding. That way, the algorithm has the flexibility to bid higher when needed. Remember, your maximum CPC is a bid cap, not your actual bid, so you have a little more wiggle room to play around with.

The important thing is to make sure that you set the appropriate limits on your campaigns. If you can’t afford to pay more than $3.21 on a click, set an individual bid limit at that level. Otherwise, you can end up spending a lot to get very little from your automated bidding campaigns.

 

Conclusion

While it’s not right for every business, automated bidding can be a great option for a lot of businesses—as long as you steer clear of the “gotchas” above.

As you give automated bidding a try, just remember that these algorithms are not a replacement for human intuition and oversight. They’ll also take some time to get dialed in, especially if you opt to use the more advanced “smart bidding” strategies. If you don’t, make sure you’re using individual bids to keep your return-on-ad-spend profitable and you should be good to go!

Jake Baadsgaard
[email protected]

Jacob is a passionate entrepreneur on a mission to help businesses achieve online marketing success. As the Founder & CEO of Disruptive Advertising, Jacob has created an award-winning, world-class organization that has helped over 2,000 businesses grow using pay-per-click advertising and website optimization.