Google has changed a lot in its ad platform over the past 10 years—updating names (AdWords to Ads), formats, user interfaces, match type pairing, and more.
I believe the biggest fundamental change in Google’s Ad platform has come from its Public Relations team. Specifically, over the past decade Google has convinced the advertising public that they'll never figure out this all this “advertising stuff”, that it's way too complicated. Why not, Google argues, just let the big G take care of all of the advertising nuts and bolts on your behalf?
Whereas 10 years ago most advertisers were optimizing campaigns manually, now advertisers rely on a number of Google's automated strategies and bid automation software.
The shift to automated strategies, particularly in the bidding arena have most profoundly changed the way front-line, pay-per-click managers work.
There are four primary bid strategies which > 90% of advertisers use. They are (in an increasing order of automation and sophistication) Manual CPC, Enhanced CPC, Target CPA, and Target ROAS.
The scale of automation starts with Manual CPC, which has…no automation. Often I’m asked, why I still use Manual CPC and there’s plenty of valid reasons I’ll outline below.
Slightly more automated though not automated at all is Enhanced CPC. Enhanced CPC is a bid strategy where Google effectively says, “We’re going to try to honor your stated bid, but we reserve the right to change that up or down (by a lot) if we think we can get you more conversions.”
In effect, Enhanced CPC bidding gives some semblance of control and direction but ultimately empowers Google to change bids whenever it wants, to whatever it wants.
Moving along the automation curve is a bidding style called Target CPA (Cost Per Acquisition). Target CPA bidding can help drive any action a business wants a user to take such as a completed purchase, lead generated, an email captured, an app installed, or a video viewed.
Target CPA tells Google, “I want you to get me conversions and I want to pay a certain fixed cost for them.” In this setting, Google pulls every lever it has available to it and leaves the advertiser with only two levers of control—adjusting the target CPA by device and total spend via campaign budgets.
Even further along the bid automation curve is Target ROAS (Return On Ad Spend). This is a setting that many e-commerce companies with many different valued SKUs utilize.
Consider the business Foot Locker who sells hundreds of different shoes, accessories, and apparel. When they utilize a bid strategy like Target ROAS they are telling Google, “I don't care if you get me a sale on Nike shoes or Nike shoe laces, so long as that when I put in $1, I get back $2. Google, go figure that out."
Here's a full overview of the different bid strategies, how they work, typical uses, and words of caution:
Google Account Manager’s Bidding Advice
The very first email you will get from your new Google Account representative is, “I couldn't help but notice you are using manual CPC. Let’s turn on Target CPA.”
Working at Google is like being on the Gold Standard in the 19th century—it gives a halo of trust and confidence. However, it is important to understand that Google’s account managers are part of the sales department. Most have never managed an account themselves and they often have goals (and bonuses) based on how many accounts they can opt-in to Google’s automated strategies.
In their sales process, they'll tell you using Target CPA will increase conversion volume, that Target CPA helps discover new queries to advertise on, that your account will perform better than it ever has, and perhaps most importantly, Target CPA is easy to manage—just set a goal and let Google do the work!
When to Use Manual CPC
Manual CPC is an appropriate bid strategy when strong control over an account is needed. Otherwise stated, when the account needs to be managed like a speed boat rather than a cruise ship.
Control is helpful when business requirements shift frequently. For example, if management wants to push specific types of product one week but not the next, Manual CPC can be an effective bid strategy.
Also, if campaigns are often budget-constrained, it isn’t wise to give Google the opportunity to change bids upward as part of a “discovery mission”.
The tradeoff between Manual CPC and an automated bidding really is a function of control, quantity and quality of the data on hand, consistent business management, budget and strategy, and account manager’s experience.
With Manual CPC, bidding is an important factor that needs attention weekly.
Manual CPC vs Enhanced CPC
Enhanced CPC is offered as a bridge to a fully automated bidding strategy. However, it fails at giving the advertiser complete control as well as delivering on all the possibilities of a fully automated bid strategy.
When using Enhanced CPC, it is an incredibly frustrating experience to observe Average CPC > Max CPC.
Advertisers should stay away from Enhanced CPC though I expect Manual CPC going away in the next 2-3 years.
Automated Bid Strategy (Target CPA, Target ROAS) Drawbacks
There are a few drawbacks of leveraging an automated bidding strategy. They are:
Requires high quality and high quantity of data
Limits in magnitude and frequency of account changes
First, automated bidding strategies work best when there is a large amount of data to inform bidding decisions. With little data going into the machine, the machine does a poor job of making profitable decisions.
When Google first tested its automated bid strategy technology, they limited availability to campaigns with a minimum of 30 conversions in 30 days. Even though Google’s technology has improved a ton, it’s a safe bet that sticking to this ‘minimum data requirement’ from 10 years ago will suffice today.
Rely on Google’s data requirements when they first launched a product and still follow them today. If it was good enough 10 years ago, it's got to be good enough today.
The second drawback is that automated strategies work best when there are little changes.
Going back to Google’s recommendations 10 years ago, they advocated resisting to make changes more than once every three weeks. And, these infrequent adjustments, should not be greater than a magnitude of +/-15%. This can be particularly troubling for younger companies who are still learning about user values and need to make frequent, large changes to maintain profitability.
Lastly, automated strategies can often introduce “ghost keywords” in to the account. A ghost keyword is one that once drove significant volume in a manual bidding world, but when the bid strategy changes to Target CPA or Target ROAS the keyword’s volume disappears—a relic of past times.
Summary: Manual vs Automated--Which is Right For You?
The decision to use a manual or an automated strategy is not a simple one. Each strategy has a unique set of advantages and disadvantages. And, depending on non-Google factors such as how well your data team maintains conversion tracking and how consistent company goals are may dictate one strategy or another.
I leave you with this table which hopefully makes your bid strategy decision a bit easier: