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

adwords automatic bidding

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.)

never use automatic bidding

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.

Flexible Bid Strategies in Adwords

Flexible bid strategies automatically set bids to optimize for certain goals across set campaigns, ad groups and keywords.

Once you have created a strategy, it will be shared in your Shared Library in Google AdWords, making it accessible from one spot and making performance tracking easier. You can apply the strategy on the campaign, ad group or keyword level from each respective tab.

flexible bid strategy guide

Measuring success will depend on which of the flexible bid strategies you employ, but ultimately, are you getting what you signed up for? Are you getting more conversions within your target CPA? Are your CPC’s within your goals and budget? Reviewing the data will tell you if something is working or not. Since these strategies can be applied at different levels and you will be adding them with different goals in mind, be sure to go over the data thoroughly and make sure the numbers reflect your goals. Also check whether the leads and sales you are receiving are of the same caliber you were receiving (or better) than before you started using flexible bid strategies. This will help you define success.

The chart above is a quick overview of what the various flexible bid strategies are and when to use them. Now we’re going to take a deeper dive into how each of them work, where to apply them, and what you still have control over.

Maximize Clicks

This strategy is something that many of you are probably familiar with, as it is essentially automatic bidding. This strategy will focus on increasing clicks while spending a target amount. The target spend amount is essentially the budget you are setting for any campaign/ad group/keyword that is utilizing this strategy. This is separate from the daily budget you will set on the campaign level for a campaign using manual bidding or another bid strategy.

This is different than automatic bidding as you can set this to specific ad groups or keywords instead of just at the campaign level, but you can still set this up at the campaign level as well. You can still control ad scheduling, but you can no longer set day or time of day bid adjustments. A note about the target spend: this is an amount that you set that is applied to any campaign, ad group or keyword using this strategy. This is separate from your campaigns’ daily budgets, as it is applied to those campaigns and ad groups that are using this flexible bidding strategy. With Maximize Clicks, you are giving Google control to change your bids in order for the areas using this strategy to work to gain you the most clicks. You can set a CPC bid limit to ensure that Google isn’t setting your bids higher than you would like to spend per click.

This strategy will allow for you to set up custom ad scheduling for day and time of day (not bid adjustments, but scheduling) where you can use the Maximize Clicks strategy. You can set a cap on bids for any keyword, ad group or campaign that is using this strategy, but if you do not set one AdWords will adjust your bids to an amount that will earn you the most clicks.

You should apply this strategy when you want to get the most clicks to your site for your target spend amount. A time you wouldn’t want to use this is when you have strict ROI or CPA goals.


Target Search Page Location

Want Google to change your bids so you will be on the first page of results, or even the top of the page? The Target Search Page Location option will automatically raise or lower your bids to show your ad at the top of the page or on the first page of the Google search results. This strategy only works for the Google Search Network. Once applied, it will only take a few minutes for your bids to start being changed by Google and can (and will) be updated several times a day. To set the initial bid amount you can do one of two things: you can opt for the automated approach and have Google set the bid and adjust for you, or set the bid yourself and then have Google adjust the bid for you.

Keep in mind – this doesn’t guarantee placement on the top of page or ad position on the first page of results. This strategy will attempt to achieve your target location, but final placement is going to be decided by the results of the ad auction.

This strategy gives you the option to show on the top of the first search results page or anywhere on the first search results page. If you are using the top of first page search results, Google will raise your bid to fit the top-of-page bid estimate. If you utilize the option to show anywhere on the first page, it will use the first page bid adjustment. To gain more insight into how Google will raise your bids, you can check to see what your first page and top-of-page bid estimates are in AdWords.

When using Target Search Page Location, you can set bid adjustments, in addition to mobile, location, day and time of day. You can also adjust your top-of-page or first page bids. This means you can actually bid a percentage of your first page or top-of-page bid estimate. You also have the ability to set a Max CPC bid limit and cap your bids. Setting these limits is important to ensure that you’re not spending more per click than you want to (from a cost or CPA goal standpoint). You’re also going to want to make sure that you are not going to exhaust your budget too quickly by the increasing bid adjustments.



Target CPA

Target CPA may sound familiar as it is similar to optimize for conversions. This option allows you to set bids to achieve an average CPA across all ad groups and campaigns using this strategy. With this approach, some conversions may cost more than the target and some may cost less, but overall AdWords will try to keep your cost-per-conversion equal to the target.

Keep in mind – this strategy sets bid adjustments to reach your target CPA, superseding other bid adjustments you’ve set (except where you’ve set a mobile bid adjustment of -100%).

While Google may recommend not setting a minimum or maximum CPC bid limit, it may be in your best interest to do so, as you do want to make sure that your CPC bids aren’t going to be too high. Yes, Google will set your bids within your target CPA, but if you set a bid limit you can also help ensure that you are not going to be having high CPC bids and that you are instead getting the most out of your budget. Setting a minimum bid limit will help make sure that your bids aren’t too low and that you will stay competitive.

Bid limits give you more control and restrict how AdWords automates your bids.

There are two requirements to apply this strategy:

You need at least 15 conversions in the last 30 days (the more data you have, the better Google can help to set bid adjustments)
Your ad group or campaign has received conversions at a similar rate for at least a few days
Flexible Bid Strategies Target CPA

Enhanced CPC

Enhanced CPC helps you bid more effectively to maximize conversions. You can set your own max CPC bids for each keyword, and from here, AdWords will adjust your bids depending on what it believes is the likelihood of the click leading to a conversion. ECPC will only raise your bid up to 30% and can lower it as much as 100%. Google looks at real-time data to make your bids more effective, such as device, browser, location, and time of day when adjusting your bids during each ad auction.

Target Return on Ad Spend

Target Return on Ad Spend uses the conversion value you set when you set up your conversion tracking. If you haven’t set up your conversion value, you can do so in the Tools tab under Conversions.

AdWords Conversion Value

Once this is done, AdWords will set the max CPC bid to maximize your conversion value. At the same time, AdWords will be trying to achieve an average return on Ad Spend that is equal to your target.

Target ROAS in AdWords

So, these are the AdWords flexible bid strategies that Google has to offer. If you’re a WordStream customer and you think that one might be right for you, contract your CS rep – we’ll be more than happy to give you more details and help you get up and running.

One thing I’ve learned from clients I’ve spoken to who are using different flexible bidding strategies is that you have be careful and really know what you’re doing. I’ve seen quite a few clients who have enabled a strategy and seen more spend in AdWords, yet the amount of conversions has stayed the same and the quality of the conversions had not changed.

Flexible bidding strategies will work differently than bidding rules, but with similar outcomes – Google will have more control over your PPC bid management (in some cases all control), so it pays to tread carefully.

AdWords Bidding Strategies

While bidding strategies have evolved over time, there are several core bidding types available in Google AdWords. Now with Flexible Bidding Strategies it may be a bit confusing as to what type of bidding is available and how it works. Cost-per-click (CPC) bidding has never been so advanced – and so complicated.

Manual CPC

This is the classic setting for having total control over bids with a focus on driving click traffic. AdWords will take the ad group default bid first, unless a different bid is manually specified at the keyword level.

Select “I’ll manually set my bids for clicks”.

Manual CPC

Automatic CPC

In this setting, advertisers focus on driving click traffic but give AdWords control over individual CPC bids. Set a daily budget and AdWords automatically adjusts your bids with the goal of getting the most clicks for the budget. With automatic bidding, AdWords does all the work to get the most clicks.

There is also the option to set a CPC bid limit. Setting a limit can help control costs, but might also potentially limit clicks.

Select “AdWords will set my bids to help maximize clicks within my target budget”.

Auto CPC

Enhanced CPC

This bidding option is for the conversion-focused advertiser. Conversion tracking must be enabled, so that based on conversion tracking data, AdWords will automatically increase or decrease CPC bids to drive most conversions.

Bids can be raised up to 30 percent for clicks that are more likely to lead to conversions. Bids are lowered for clicks less likely to convert.

Enhanced CPC

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CPA Bidding

With a focus on conversions at a specific cost-per-acquisition, use CPA bidding. This is also known as Conversion Optimizer.

Advertisers who want to target a specific cost per acquisition/conversion must have at least 15 conversions in 30 days to use this. The conversions history allows AdWords to predict future conversions.

Because Conversion Optimizer automatically applies its own bid adjustments, it isn’t compatible with the new enhanced campaigns bid adjustments across days, times, locations, and devices (except for mobile opt-out at -100 percent.). Display bids also don’t work. If you turn on Conversion Optimizer with existing bid adjustments, they will simply be ignored.

There are two advanced options for this bid type: Max CPA and Target CPA. The Target CPA is the average CPA you are willing to pay, and Max is the maximum per conversion. The Maximum CPA is scheduled to be discontinued in 2014.

Google recommends a CPA, based on history, which can be used or advertisers can set their own.

CPA Bidding

Flexible Bid Strategies

Allows automated bidding strategies to be more customized and flexible. Automated bid optimizations can be applied to campaigns, ad groups, and keywords.

More options compared to enhanced CPC and Conversion Optimizer options that were previously available and also allow you to mix and match bid rules across campaign and ad groups.

There are five types of flexible bid strategies:

Maximize clicks: This is a flexible version of the Automatic CPC bidding strategy.
CPA bidding: This is a flexible version of Conversion Optimizer used in the target CPA (average CPA) capacity.
Enhanced CPC: Flexible version of the existing enhanced CPC capability.
Search page location: AdWords will increase or decrease bids to target a top-of-page or first page position with ads. This bid strategy works with keywords, ad groups, and campaigns targeting the Search Network only. This doesn’t specify a position on the page (e.g., an advertiser can’t choose to be in third position on the page).
Return on ad spend (ROAS): AdWords predicts future conversions and values based on conversion values advertisers set up. To target ROAS 30 conversions in 30 days is required. Used for Search Network only or the Search and Display Networks. AdWords will try to reach the ROAS targets across all keywords, ad groups, and campaigns.

How to get a 60-character headline in AdWords text ad ?

Google is experimenting with new text ad formats. This means you have more options when testing and improving your PPC text ads.

One change to the AdWords text ad format: 60-character headlines (instead of the old 25-character limit).

The new headlines are a combination – your normal 25-character headline, with Description Line 1 added onto the end.

That big, whopping headline in blue text could make your ad really stand out.  Look at these examples – old format and new format:

An old-style adwords text adThe new AdWords text ad format, with extended headline

Which one will work best?  Don’t leave it to intuition – only testing will prove it.  Always test your ads.

How to get a 60-character headline in AdWords: Just two criteria…

Your ad must be in one of the main-column (not sidebar) top-3 positions,
Description Line 1 must end with a period, question mark or exclamation point.
Note: In some cases, the new format could be bad for your ads.  Sometimes your ad takes on a new meaning…

An example where the new 60-character AdWords ad does not work so well.

Check all of your ads to make sure there won’t be any nasty surprises.

Have fun writing your new ads! If you have a lot of ads to re-write, try this AdWords text ad writing tool – it can save a lot of time & help you write better ads.

What is Google AdWords?

What is AdWords? Google AdWords is Google's advertising system in which advertisers bid on certain keywords in order for their clickable ads to appear in Google's search results. Since advertisers have to pay for these clicks, this is how Google makes money from search. This info-graphic will help you understand how AdWords works, detailing the AdWords auction, bidding process and explaining important factors like Quality Score and cost-per-click. If you're asking "How does AdWords Work?" this info-graphic is for you!