Manual Bidding vs Automatic Bidding: Which is Better?

Pay per click campaigns have many options to choose from. These can include Google Ads for Search, Display, Google Shopping or Facebook Ads. If you’re asking yourself which bid strategy you should use, you’re in the right place. Today, we will be looking at manual bidding vs automatic bidding and which is better.

First, let’s cover some basics in Google Ads.

Session: A user search on Google, which may or may not result in a click on your ad

Auction: Google Ads runs an auction for every search, in real-time

Conversion: e.g. a completion of your lead form, a sale on an eCommerce store.

How to Manually Bid in Google Ads

Historically, the model was simply pay per click. For every keyword, you’d set a maximum bid you were prepared to pay for a click. Combined with the quality score for the search term, the two multiply to determine your ad rank – the position your ad shows for that specific search, for in that auction.

As Google Ads evolved, Google added bid adjustment options. For example, audiences, locations, times of day, devices, genders, ages and a whole heap of others. This is pretty useful but it is very time-consuming to manage and optimise manually.

Examples:

  • Performance data shows that female visitors might convert higher on an eCommerce store. Bids increased by 20%
  • Or that mobile devices convert at a lower rate – decrease bids by 15%
  • Or that visitors from Yorkshire convert at a lower rate than average – decrease bids by 30%

Google later introduced eCPC – enhanced CPC bidding. This allowed its system to bid up to 100% more per click than your bid if it determined that a session was more likely to convert.

Manual Bidding Example

In addition, there are Smart Campaigns. This means that Google’s machine learning determines what search terms your ads should show for and how much to bid. These are based on location, device and other factors – all designed to maximise the conversions of your campaign.

Lastly, there are automated bidding strategies or smart bidding strategies.

How does Automatic Bidding Work?

Automatic Bidding Example

Maximise Clicks Bidding Strategy

Simply put, “get me as many clicks for my budget as possible”. In theory, this sounds great. But, it can greatly compromise the quality of the traffic from your campaign.

Note that this is specifically NOT focused on conversions or traffic quality. Instead, it is focused on getting as many clicks as possible for your budget.

In many cases, Google Ads advertisers choose this option as it feels like it’s the most profitable option.

It rarely is.

What happens, in reality, is that Google buys the cheapest clicks. These clicks are often those your competitors already know won’t convert. They don’t bid much for them, but the “cheap clicks” strategy does.

Basically, the Maximise Clicks bidding strategy buys the cheap, junk traffic. This is detrimental if you’re not ultra careful with your bidding strategy.

When creating a new Google Ads campaign, eCPC or Maximise Clicks bidding might be the only two realistic options to get some performance data and conversions. This will then enable you to move to an automated bidding strategy based on conversions.

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Maximise Conversions Bidding Strategy
(or, Maximise Conversions at a Target CPA)

For lead generation campaigns, the ‘Maximise Conversions Bidding’ strategy typically produces the best results. However, there’s work you’ll need to do to make sure this works effectively for you.

Maximise Conversions does precisely that – “get me as many conversions for my budget”.

This is great! Rather than focusing on as many clicks as possible (Maximise Clicks), we’re now focused on what every advertiser wants. More conversions.

There’s a secondary option here too – adding a Target CPA (Cost per Action / Cost per Acquisition).

The Target CPA (tCPA) automated bidding strategy has produced some of our greatest achievements in scaling Google Ads campaigns. But, you absolutely can’t “set and forget” if you’re going to get as many leads as possible from your campaign.

Target CPA bidding means that Google will adjust bids in every auction, for every location, device, gender, time of day, and day of the week. This happens all in real-time, which is pretty amazing.

The bid is dependent on your earlier conversion and CPA data for similar auctions. That means that the more conversion data Google has to learn from, the more accurate the bidding will be.

However, here’s when Target CPA Automated Bidding doesn’t work.

Remember, tCPA bidding is based on your target CPA. If that target CPA is unrealistic, the bids will get lower and lower as the machine learns that it isn’t possible. Eventually, you’ll be back to buying the cheap clicks, or possibly no clicks at all.

Let’s look at the maths of target CPA bidding:

CPA bidding table

*assuming there is enough search volume to support the volume of clicks

To make the Maximise Conversions / Target CPA Automated Bidding Strategy work for your campaign, you absolutely must invest in Conversion Rate Optimisation (CRO).

As the table above shows, when your conversion rate is higher, Google learns that it can bid more in every auction, pay more per click and still achieve the same CPA.

IMPORTANT: The conversion rate your campaign achieves is the product of;

  • keyword intent (how likely is this search term to convert on any website
  • ad rank (the first and second click typically convert higher than the third, fourth or fifth click – lower ranked ads convert at a lower rate)
  • landing page page speed
  • the layout of your page and your sales proposition

It is your website’s job to convert the click. If your web page/offer does not convert high intent traffic well, you have a CRO problem, not a campaign problem.

When Google is able to bid more, ads show in higher positions, more often. Simply, your campaign wins the auction more often with a higher bid. This dramatically increases the visibility of your ads, and dramatically increases the CTR and the number of clicks. Although, you must have a budget available to spend to buy those clicks and conversions, of course.

Maximise Conversion Value Automated Bidding Strategy

As the name suggests, Maximise Conversion Value focuses on maximising the value of the conversions. This bidding strategy is aimed specifically at eCommerce stores running Google Shopping campaigns. Although, this bidding strategy could equally be used for Google Search and/or Google Display campaigns.

In essence, this is“get me as much revenue for my budget as possible”. Whereas, the tCPA Bidding Strategy is “get me as many transactions (or leads) as possible”.

To understand the Maximise Conversion Value bidding strategy, we need to introduce the term ROAS – (Return on Ad Spend). The calculation is just Conversion Value / Cost and is presented in Google Ads as “Conv Value / Cost”.

You’ll also see tROAS or target ROAS mentioned. Depending on the margin an eCommerce store makes, the target ROAS might be 3:1 (300%) or 4:1 (400%) or higher. This depends on the product being sold and the margin made to make a campaign profitable.

For example, a 400% or 4:1 Return on Ad Spend means that £400 would be created in revenue for every £100 spent on ad clicks.

The tROAS automated bidding strategy has produced some of our best results in Google Shopping eCommerce campaigns. Albeit, like the Target CPA bidding strategy, you can’t “set and forget” if you’re going to get as many sales and as much revenue as possible from your campaigns.

Popular Google Ads Videos

Maximise Revenue and/or Target ROAS bidding means that Google will adjust bids in every auction, for every location, device, gender, time of day, day of the week – all in real time. The bid is dependent on your earlier conversion and ROAS data for similar auctions.

That means that the more conversion data Google has to learn from, the more accurate the bidding will be.

However, here’s when Target ROAS Automated Bidding doesn’t work.

Remember, tROAS bidding is based on your target Return on Ad Spend. If that target ROAS is unrealistic, the bids will get lower and lower as the machine learns that it isn’t possible. Eventually, you’ll be back to buying the cheap clicks, or possibly no clicks at all.
Transactions and revenue will flatline.

Conversely, if your target ROAS can be exceeded, machine learning is able to increase bids. This will increases ad visibility, CTR and clicks, which in turn increases spend and revenue, all at the target ROAS you set.

Let’s look at the maths of target ROAS bidding:

ROAS bidding table

*assuming there is enough search volume to support the volume of clicks

To make the Maximise Revenue / Target ROAS Automated Bidding Strategy work for your campaign, you absolutely must invest in Conversion Rate Optimisation (CRO).

As the table above shows, when your conversion rate is higher, Google learns that it can bid more in every auction, pay more per click and still achieve the same CPA.

In the third column, we can see that an increase in average order value allows Google to bid even more per click, which increases the visibility of the ad, the number of clicks, the spending and in turn, the revenue.

IMPORTANT: The conversion rate your campaign achieves is the product of;

keyword intent (how likely is this search term to convert on any website

ad rank (the first and second click typically convert higher than the third, fourth or fifth click – lower ranked ads convert at a lower rate)

landing page page speed

the layout of your page, the details of the product, the price, images, video and a number of other factors

It is your website’s job to convert the click into a sale. If your web page/offer does not convert high intent traffic well, you have a CRO problem rather than a campaign problem.

When Google is able to bid more, ads show in higher positions, more often. Simply put, your campaign wins the auction more often with a higher bid. This dramatically increases the visibility of your ads, which substantially increases the CTR and the number of clicks. However, you must have a budget available to spend to buy those clicks and conversions, of course.

Target Impression Share Automated Bidding Strategy

To understand the Target Impression Share Bidding Strategy, you must first understand Impression Share.

This is the number of ad impressions your campaign is eligible to show for (how many searches) vs the number of ad impressions your campaign achieves.

This bidding strategy targets the Impression Share metric, attempting to show your ad as often as possible. As with the Maximise Clicks strategy, this bidding strategy is not focused on click quality. Nor on conversions or revenue. It is only focused on how often your ad shows.

Within this bidding strategy, you could also choose to only show your ad when it would show in Top positions (Top Impression Share or “Top IS”). We’re essentially saying, “we only want our ad to show when it will show at the top of the Google results, but otherwise don’t show the ad.

The challenge here of course, is that your bid (or Google’s automated bid), needs to be high enough to achieve that Impression Share and you’ll need a budget to match the available ad impressions and the clicks this strategy would generate.

Generally speaking, this automated bidding strategy is not recommended for advertisers focused on either conversion volume at a cost per conversion (target CPA Bidding) or for advertisers focused on transactions and revenue (target ROAS Bidding).

Recent Blog Posts

Adwords Manual Bidding vs Automatic Bidding

As we’ve hopefully shown in this article, more often than not, Automatic Bidding is a better option, but you must invest in Conversion Rate Optimisation in order to make campaigns work effectively and especially if you want to scale campaign performance. Let’s break down the pros and cons:

Automated Bidding Strategy Benefits

  1. Google learns the search terms, the devices, the genders etc. which convert and adjusts bids automatically in every auction – that saves a ton of time making manual adjustments
  2. Your campaign can run automatically, but we’d strongly recommend regular housekeeping to help the machine learning learn faster – segmenting ad groups, adding negative keywords, and updating ad copy are all essential activities to increase CTR, clicks and revenue – machine learning can’t do it all for you
  3. The machine constantly learns and adjusts, the more data it has, creating more time for you (or your agency) to focus on Conversion Rate Optimisation.

Automated Bidding Strategy Disadvantages

  1. You’re trusting machine learning to make the decision in every auction. You don’t really know what the decision it is making, when or why. There is data in your campaigns (provided they’re not Smart Campaigns) which will segment performance by audience, gender, age, location, device and others which you absolutely should review regularly, but you won’t be able to adjust bids for those segments yourself.
  2. Smart Campaigns are pretty much as above, but Google Ads doesn’t give you the data on those segments, making it very, very difficult to analyse, optimise and scale.

On balance, our Pay per Click Team has achieved far greater performance gains through the combination of Automated Bidding Strategies – we’re absolutely all for it, but never without Conversion Rate Optimisation. We hope you now understand

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