Benefits of Google Ads Automated Bidding

Key Takeaways

• Manual bidding (How it was)
• Automated Google Ads bidding - (How it is)
• Technical benefits of automated bidding
• Commercial benefits of automated bidding
• Common challenges of automated bidding
• The most common automated bidding strategies used in Google Ads Campaigns
• Maximise conversions (B2B)
• Target ROAS (eCommerce)
• Target CPA (B2B)

There are a huge number of benefits to using Google Ads automated bidding.

We will look at each of the most commonly used strategies so that you can select the one most aligned with your business goals.

In case you’re new to advertising though, whilst automated bidding has been the norm for around five years now, it wasn’t always. For many years, the Google Ads platform was a very manual system.

Let’s take a deeper look at how bidding was managed previously, before we get into automated bidding and how much more effective it is at driving performance.

Manual bidding (How it was)

Before automated in Google Ads, you would set each keyword bid manually as well as manually adding % adjustments for things like location, device and other factors.

The idea was to bid more for those who were more likely to convert and less for those who weren’t.

It was a very time consuming process and a lot of it was just to keep visible in the auction as you would make a change, then a competitor would do the same. Your ads then weren’t necessarily even on page one of the Google search results until you checked and adjusted again.

It was hard to drive performance as it meant the role of the advertiser was focused on long hours of manual tasks rather than looking at new market opportunities, different auction opportunities, channels, testing creative, or improving landing page conversion rate.

The biggest flaw that I saw in this is that your decision making was always reasoned by analogy. Meaning if you saw London convert higher on average, you may choose to bid more for those in London.

This makes sense on the face of it but doesn’t take into consideration that you will then overpay for someone in London who isn’t ready to buy and you’d potentially not win an auction for someone who was ready to buy who was 2 miles outside the adjusted location.

The benefit was that the advertiser had granular visibility and control over bids and spend.

It’s unmanageable for a human to manually control this amount of factors in an effective way in an account with a lot of keywords.

Automated Google Ads bidding - (How it is)

And then.. along came Smart Bidding (the name for Google Ads automated bidding)!

It solved the pain points of the manual approach with machine learning and also brought with it a number of additional benefits.

Technical benefits of automated bidding

1. It bids in real-time so it’s bidding for that user, in that auction, based on the likelihood that they will convert for your business right now
2. It’s not using blanket rules which overpay for those who aren’t likely to convert and underpay for others who are likely to convert
3. It’s able to consider high value data points which aren’t available as manual signals such as browsing history
4. It can make calculations with millions of data points which a person wouldn’t be able to comprehend
5. Like all machine learning, the computing power continually increases over time, the data it has, the more effective it becomes

Commercial benefits of automated bidding

1. It saves the advertiser a huge amount of time which can be reinvested in more commercially valuable areas like expanding into new markets, testing new audience types, creative, working on your website experience to increase conversion rate and more
2. When setup correctly, it will be spending more on the higher intent users and less on the lower intent users which makes you get more bang for your buck
3. You can introduce target return and target cost per acquisition goals so that you can bid in-line with your product or service margins so that you can ensure you are generating profit not just sales
4. You can use broader targeting for more volume, knowing that it’s layered with millions of data points and valuable signals such as browsing history

Common challenges of automated bidding

1. It relies on conversion data to guide the bidding. If this isn’t present, it’s inaccurate or not setup to be focused on the highest value actions, it won’t work properly
2. Too many changes negatively impact performance which is the opposite approach of how ads accounts used to be managed
3. People select the wrong strategy or one which isn’t aligned to their business goals which can lead to higher wasted spend quicker
4. People add a target ROAS or CPA which isn’t aligned to current performance so the strategy stops serving ads as it can’t reach the goal and clicks dry up

The most common automated bidding strategies used in Google Ads Campaigns

Selecting the right strategy is essential in seeing performance with automated bidding.

We’ll take you through each and how they are designed to behave to help you avoid some common mistakes.

Maximise conversions (B2B)

This is designed for businesses where each conversion is worth the same value i.e in lead gen where the enquiry is the enquiry. This is an aggressive growth strategy which means it will try to spend your daily budget everyday, regardless of results or your cost per acquisition targets.

It works particularly well for low budget campaigns where you need to squeeze as much as you can out of what you have. It will get data faster so can help you kickstart and get through the learning phase, with a view to then move to tCPA or tROAS.

Use case: this is for you if your conversion action is a lead or any other goal that doesn’t have a value like an ecommerce sale does.

Tips: Start with a low budget and scale spend incrementally. You will find a tipping point where you add more budget and results don’t increase; this is expected. At this point, you are just paying more for the same clicks and need to move to tCPA or tROAS bidding to achieve a profitable ROAS.

Maximise conversion value (eCommerce)

This is the same strategy as maximise conversion but takes into account the actual value of the conversion not just the volume of conversions.

In short, if you're an ecommerce business, use this strategy not maximise conversions.

As this strategy is able to consider value, you may find an auction where the strategy bids more because it can tell with a high degree (based on predictive modelling) that the click is not only likely to turn into a customer but one with an average order value that’s going to get you more revenue than another click and sale.

Use case: this is for you if you are an ecommerce business and are launching a new campaign or have a low budget.

Tips: Again, start with a low budget and scale spend incrementally. You will find a tipping point where you add more budget and results don’t increase, this is expected, at this point you are just paying more for the same clicks and need to move to tROAS bidding where you can work towards a profitability goal. Avoid large budget increases even if performance looks good initially.

If you're new to the concept of ROAS and want a clearer understanding of what makes a good return on ad spend, then read here.

Target ROAS (eCommerce)

This is max conversion value + a consideration for achieving your return goal.

If you know that you need to see a 3:1 return on your average order value, with the gross margin that you have to generate profit, the automated bidding strategy can take that into consideration.

This is very effective when you’re seeing 30+ conversions per week and an amazing way to safely uncap budgets whilst seeing a return.

Ultimately, this should be the long term aim for most businesses. Generating sales is good but as the old saying goes ‘revenue is for vanity, profit is for sanity.’

Use case: this is for you if you are an ecommerce business and have seen steady sales coming from your Google Ads campaign

Tips: Start by adding a ROAS target that’s what the campaign is already achieving. Allow 7-14 days before looking to increase this. It’s not a magic wand. If you set a high target, the strategy will duck out of auctions and clicks/sales will dry up as it’s a conservative growth strategy.

Knowing it’s unlikely to achieve the desired target based on current performance, it will opt to not bid.

Increase targets gradually and support by ensuring your website experience is optimal for a high conversion rate. Once you’re on your target return over a 7-14 period consistently, it’s safe to open up budgets (generally).

Target CPA (B2B)

If you’re a B2B business, this is long-term where you want to be.

Start by generating leads and then overtime, work back from your cost-per-customer to calculate a modelled acceptable cost-per-acquisition (lead).

This has the same benefits as target ROAS. You will be able to up spend and maintain your lead cost, if you are seeing consistent performance.

If you’re seeing a solid volume of qualified leads in your core market, over time it’s worth incrementally working on decreasing your lead cost.

Use case: this is for you if you are a business that needs lead gen and have seen steady leads coming from your Google Ad campaigns on max conversions

Tips: Set a realistic target in-line with current performance. If your current CPA is £30, setting a target of £10 will cause the campaign to stop entering auctions and bidding altogether. If you have any revenue associated with lead or if you’re optimising for sales then use target ROAS to focus on maximising revenue at your target return with smart bidding strategies.

Summary

As you’ve hopefully seen there are so many benefits of google ads bidding process.

I’ve literally seen countless times, just correcting this part of an account leads to six figure growth for a client.

It’s commercial ✅

It’s time saving ✅

It’s more scalable ✅

Select the right automated bid strategies for your budgets, where you are in your advertising journey and your requirements as a business.

Make gradual, considered changes to avoid restarting the learning phase and unlock the awesome power of Google Ads automated bidding feature.