5 Reasons To NEVER Use AdWords Automatic Bidding

Many things that seem too good to be true actually are. Candy corn flavored Oreo’s, Pop Rocks martinis, and classifying pizza as a serving of vegetables are a few such things that could make the long list. One more to add to that list would be AdWords Automatic Bidding.

I recently shared some tips for switching from automatic bidding to manual bidding. In this post, I’ll explain why you might want to do that. Some smaller advertisers with severely limited time might find comfort and see moderate results in the “set-it-and-forget-it” characteristics of Automatic Bidding. However, if you’re looking to optimize beyond the basics, there are five specific things to consider before choosing between Automatic vs. Manual Bidding:

#1: Impression Share

Just because you’re bidding on a particular keyword doesn’t mean you’re showing up every time it’s searched. In fact, it’s possible that your ads for keywords in your accounts could be shown less than 10% of the time!

The most common reason for lost Impression Share is low Ad Rank. While Quality Score plays a significant role in ad rank, the quickest way to improve your rank is often increasing your bid. With automatic bidding, you can’t selectively choose to increase the bids on terms that are core to your product or service. Thus you can’t influence or increase Impression Share on those terms, you will continue to lose impressions for your ads, and potential conversions will pass you by.

#2: Page Position

Search can grow your business from the ground up exponentially faster than many traditional channels, yet first people have to see your ad. If it’s buried in a low position on the SERP, searchers might be skimming over it in favor of other links on the page. Think about the last time you searched for a product. Did you even bother to glance beyond the top 3-4 positions?

To ensure you are truly receiving impressions for critical keywords in your account, you would want to bid higher on those specific keywords so that your ad places in the top of page or at least position 4-5, to reach those searchers who might be the most actionable to convert. With Automatic Bidding, you again can’t selectively choose to adjust the individual bids on those critical keywords, which leave your ads at the bottom of the page.

#3: Tiered / Stacked Bidding

Tiered or Stacked Bidding, a more advanced bidding strategy, pertains to the specific match types you’re using in PPC. More specific match types can drive higher CTR’s, increase Quality Score, and even prove cheaper than clicks on more general match types. Those same specific match types and terms can often drive conversions at a higher rate and lower cost than more general variations.

Since those keywords are more valuable and a higher priority, they are bid higher than Broad Matched variations. As you get more specific with your Match Type, you bid 10-15% higher for each: Broad < Modified Broad < Phrase < Exact. Your Exact Match keyword should have the highest bid since it is the most specific, while the other match types are tiered lower than the next more specific type.

While an advertiser would prefer to receive all clicks on the most specific match type to reap the benefit of higher CTR’s and lower cost, Google tends to be more concerned with your Max CPC (when bidding manually). If you had a higher Max CPC on a Broad Matched keyword, that term is likely to pull in Exact Matches as well, even if you have a specific Exact Match keyword in the account (Impression Share also plays a role in why this occurs). To prevent this from occurring, you would typically use this Bid Stacking strategy. However, with automatic bidding, since you can’t edit your bids, you can’t tier your match types, which leaves it up to Google to decide where to attribute your clicks.

#4: Exorbitant Bids

To be honest, this isn’t as much of an unavoidable concern as it is a great insight into how Google will manage your account when you hand over this control. Expensive bids can certainly be avoided with a realistic maximum CPC setting, however one keyword without one can serve as a great example as to why you should avoid giving away control over your bidding.

The keyword below is long-tail, a fairly selective Modified Broad match type, and uses Automatic Bidding. It’s from a competitive industry, but average CPC’s range from $10-$50. It received one click. That click cost $362.63. (Click the image to enlarge.)

Again, this can be avoided by setting a lower maximum CPC bid limit, yet it seems to highlight the extremes that can occur with Automatic Bidding. Even in industries like Insurance or Law, clicks rarely go that high. While the Maximum CPC was set high to achieve a high Impression Share, most of the clicks remained around a $10 -$30 Average CPC as expected. More control over your individual bids would guarantee that such a circumstance wouldn’t occur. Google lacks your intuition and discretion for wasting spend, so don’t solely rely on their judgment to determine the value of your keywords.

#5: Manual Management of CPA

If you’re taking the initiative to read this post or educate yourself in PPC, it’s most likely you prefer to be in control of your account. For most in search, the goal of this control and education is to lower your CPA, or the cost incurred to get each conversion. Automatic Bidding can stand in stark opposition to that goal.

Consider keywords in your account that might convert at a higher rate than others. Ideally you would want to receive more impressions and invest more on the keywords that convert. That “attention” would be reflected in a higher bid price for converting keywords and a lower bid for lower converting (but still relevant) keywords. With Automatic Bidding, Google makes the decisions on how the budget and bids are prescribed for all keywords. This prevents you from making more specific preferences for your converting terms as well as lackluster keywords that just might be driving cost rather than value.

Is It Really NEVER, Ever OK to Use Automatic Bidding?

For these reasons of control and management, most advertisers prefer to use Manual Bidding as their AdWords bidding strategy. When creating a new campaign or reworking a severely underperforming one, I would recommend the same. The single exception that I would offer is if you’re a smaller advertiser whose account is currently working satisfactorily with this setting (CPA is where you’d like it), don’t feel you arbitrarily have to change it! Consider yourself fortunate, and avoid rocking the boat with Google with such a change.

Need to make the transition from Automatic to Manual Bidding? Try following the best practices outlined here.

Do you use Automatic Bidding in your own account? Are you suffering from some of the issues highlighted above? Let us know in the comments, and I might be able to shed some light on a solution!

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