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Friday, September 24, 2021

Why You Should Not Use Google Ads Automated Bidding

The internet presents a world of opportunities for businesses to reach potential customers and advertise their products or services. But it doesn’t mean that it’s easier to do so because there’s also so much competition. Google Ads should be at the top of your priority list in crafting your online marketing campaign

You can choose from two major bidding strategies—automated bidding and manual cost-per-click (CPC) bidding. The latter allows you to take control and set each bid. While with automated bidding, you let Google take the reins in choosing your bids. It’s the option that most advertisers take because it’s easier to manage. You set a daily budget, and Google’s algorithms will do the rest. However, this may not always be the best option for your business. Here are five reasons why going automated isn’t the best way to move forward.

Traffic and Conversion Requirements

Google doesn’t know your business, so your pay-per-click (PPC) account needs to gather enough traffic and conversion volume data before getting started with automated bidding. This will allow Google to make bid adjustments based on how your audience responds to search items.

Google provides a recommended list of campaigns, together with their estimated performance impact, where automated bidding is applicable. However, not all of the campaigns will be recommended because a minimum threshold of conversion volume is required. Google will use performance data from other accounts on accounts with limited volume, which may not be significant to your audience.

Building this volume can quickly consume a big chunk of your budget, depending on campaign size and conversion rates. After all, Google’s algorithm is designed to beef up conversions. But automated bids may not yield you the most profitable conversions, especially if there is not enough data from your PPC account. With no cap put in place, Google may be bidding excessively on low-value clicks.

Lack of Transparency in Bidding

Advertisers generally have no access to the complete bid history of any keyword or individual action. That means they don’t have information regarding the selection criteria, optimization signals, or decision-making systems. All of which are important in choosing a campaign that is relevant to the audience. With that being said, Google is on track in releasing an update in the form of a “bidding insights” report to allow greater transparency for advertisers.

Currently, the information available to advertisers is the CPC for a given keyword, which is the average for all unique bid auctions. Not much is reflected in the CPC since bids for search queries are often too broad in scope, even if the keyword is the same. Therefore, it’s hard for advertisers to analyze the performance of every bid because the information provided by Google is quite limited.

Automation Can Spiral Out of Control

The structure of automated bidding is quite complex, and the failure of one component may lead to unintended consequences. Think back to 2010 with the Flash Crash of the US stock markets, where an automated trading algorithm was stuck in a bad feedback loop.

The stakes may not be as high with Google’s automated bidding algorithm, but a parallel can be drawn. To illustrate, a brief breakdown of conversion tracking would be identified as a decline in conversation, leading to reduced bids. The unintended result is that your ads would be relegated to succeeding pages of search results and become less visible.

automated bidding
Photo by Lukas from Pexels

Google Bidding Increases CPCs

In Google Ads, several factors, such as competition, bidding strategy, and targeting, affect your cost-per-click, which serves as the basis of where you see your ads and how much you pay. If Google sees an opportunity to improve conversion rates or feels you’re bidding too low, the algorithm automatically increases your bids.

Before, they put a cap in place, which prevented Google from inflating the bids by more than 30 percent to prevent businesses from going over their budget. However, they removed the cap in May of 2017. Now, if Google deems that a 75 percent bid increase will help your enhanced keywords perform better, it will implement the change immediately.

This is more of a net benefit for Google than any other advertiser on the platform since the same amount of clicks would cost more. For businesses with tight budgets, going for automated bidding may not be the best course of action.

Loss of Control across Different Market Segments

The most significant disadvantage of resorting to automated bidding is losing control of your market segments since Google’s algorithm decides what it deems the most likely to convert. You won’t be able to select bids that you feel are best for your business. Furthermore, historical online conversion metrics are often too late in adapting to sudden changes.

For example, a business with a new landing page will have no immediate effect on how Google makes its bids. The algorithm will consider how the change affects conversion rates over time, meaning the work you put into improving your landing page won’t have an immediate impact on your campaign. Because of information that the system cannot readily incorporate, your website traffic can suffer. On the other hand, setting your own bids makes it easier to take stock of the success of each campaign.

At the end of the day, the success of your business and online marketing strategy is not entirely dependent on whether you choose to do manual or automated bidding in Google Ads or a combination of both.

Manual bidding gives you control over your bids and access to a dearth of information, but it is time-consuming. Automated bidding requires less supervision but often operates in a vacuum and is not very accommodating to certain changes at the moment. The best strategy is the one that is in line with your business goals and will resonate with your target market.

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Kiara Dawson
Kiara Dawson comes from an Engineering background, with a specialization in Information Technology. She has a keen interest and expertise in Web Development, Data Analytics, and Research. She trusts in the process of growth through knowledge and hard work.

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