Why PPC Bid Management is Unavoidable

Why PPC Bid Management is Unavoidable

Ask ten different PPC professionals about the best-automated bid platforms, and you will at least get five different answers. The last few years, the changes around automated bid strategies have been substantive, with now a wide range of options for the PPC professional to choose from. Those with many years of service in this industry can attest to the abundance of choices we have now.

 

The Early Beginnings of Digital Marketing

At the very early beginnings of the digital marketing industry, advertisers would pay for exposure. In most cases, this would be following a classic out-of-home media buying model, where you would pay to have a banner placed for a specified period (tenancy cost). When the impression/view metric was introduced, the industry shifted towards payment per thousand impressions, the so-called cost-per-thousand (CPM) metric. A natural evolution of the CPM came in the form of cost-per-click models, accelerated by an affiliate and paid search advertising usage.

 

Moreover, while the media payment models shifted towards efficiency, conversion tracking matured as well, with the industry settling on the last-click wins attribution at that time.

 

PPC rising to Dominance

So while the commercials and performance measurement was figured out in the digital marketing industry, one digital channel started floating to the very top: paid search advertising, which claimed the whole PPC abbreviation for itself.

 

As advertising money came flooding in, the search engines evolved, including their advertising platforms. Targeting became more specific, and thus the way search queries could be targeted became more sophisticated. PPC professionals would have to split out campaigns and ad groups to reflect best-practice by accounting for device and match type on top of the typical grouping of keywords versus search queries/intent. This is when relatively small account builds became substantially larger. That’s not even taken into account those accounts that had a reason to split by geo-targeting. Quickly it was clear that manual tweaking of keyword bids became next to impossible, and help was needed.

 

That advertisers were demanding more accountability for their investment (and returns) accelerated the need for automated solutions.

 

Early Bid Management Days

Bid management platforms such as Marin and Kenshoo were one of the earliest successful market leaders that offered a solution at scale for PPC professionals to sensibly manage their accounts.

 

In earlier days the gold-standard model for automated bidding became cost-per-lead (CPL) based on campaign portfolios. There were some variations of the CPL (cost-per-acquisition, gross profit, margin, ROI), but they pretty much all did the same thing. Based on the overall performance, CPCs and sometimes even daily caps were altered daily while the system was making calculations each day to pick the best bids. One thing most PPC professionals would encounter quite quickly is that lowering CPA usually ended up in stifling traffic as non-performing keywords were placed on lower bids or eliminated altogether, learnings that are still valid to this day.

 

Limitations of Bid Management

Although those earlier bid management solutions played a vital role to deliver at scale, they were also limited by the possibilities of that time. For example, there was no realistic way to make logical connections between keyword A and keyword B, for example, how “child’s bike” would relate to “small kids bike.”

 

Every single keyword was treated as a separate data point. Even the same keyword, for example, “child’s bike” in separate mobile, tablet and desktop campaigns or ad groups would be treated individually. Also, one of the significant challenges was to understand how keywords that did not convert might have attributed to the actual conversion somehow.

 

The complexity of that discussion is multiplied thousand-fold when considering the other channels. It seems for a while that there wasn’t a right direction and the industry settled on different variations of portfolio bidding. Bid management was very much still a choice, with some PPC professionals preferring using rules and offline spreadsheets to do their job.

 

Today’s Bid Management Solutions

Fast forward to today, and it seems that bid management has matured. On pretty much every aspect of digital marketing, the world seems to have made significant strides ahead. In terms of tracking, also helped by Google’s dominant entry into bid management and tracking in general with the acquisition of DoubleClick in 2007, we now live in a world where we can successfully deduplicate (, or dedupe for the initiated) across channels and push information back into our bid management platforms.

 

No longer are we reliant on the out-of-the-box solutions such as last-click wins or last-paid interaction, we now can customize attribution entirely using “soft” conversions and build data-driven models. Another factor powering forward automated bid strategies is the ability to include the increasing number of available signals into bidding decisions.

 

Auction-time bidding introduced in Google Ads (and now in beta for Search Ads 360) now encapsulates a multitude of contextual signals to decide what the best bid is at the time of auction. It’s pretty clear now that no manual intervention can keep up with the complexity and frequency of automated bidding, any PPC professional who would say otherwise is in denial.

 

So that brings us to the biggest reason to embrace automated bidding: machine learning. In all newly released automated bid management there is substantial machine learning involved, that will take historic and current performance data, in the complexity of all the additional contextual signals, and plot out the best way forward within the goals it has been set. Manual interaction might lead to short term performance improvement, and AI will lead to longer-term sustained growth.

 

The Choices PPC Professionals Have

That doesn’t, however, mean that every advertiser now needs to buy into the bigger or smaller bid automation tools that are out there. Auction-time bidding is freely available in Google Ads and for many companies that is enough.

 

It’s when you need the flexibility of customizing conversion signals you will need a bespoke bid management solution. One thing is clear though; automation is here to stay.

 

Just look at the smart solutions Google is introducing within our industry (Responsive Search Ads, Smart Display, Smart Shopping) and the game plan is clear: AI will be firmly in the driver’s seat. It’s up to the PPC professional to get into the navigator’s seat or allow him or herself to be pushed in the back seat.

 

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by Albert