The Pros and Cons of Google Ads’ Automated Bidding Feature

The Pros and Cons of Google Ads’ Automated Bidding Feature

Online advertising has never been easier – but at the same time, it’s never been scarier. There’s so much competition, and there are so many routes to take. It’s pretty easy to worry about taking the wrong steps and getting irretrievably lost.

It’s one thing to be able to get your ads running but it’s a whole new ball game to be able to do it efficiently and effectively and in a way that gives you a return on investment.

The good news is that there are some tried-and-true options that can take you speedily down the right path. Google Ads, for example, can help you get your e-commerce store in front of the right people quickly, and for not that much money. Plus, it offers features that can save you a lot of time – and who doesn’t want more time?

In this post, I’m going to talk about online advertising, and Google Ads in particular. Then I’ll dig into the ‘automated bidding’ feature, which can be a real lifesaver or a way to chew money quickly. Let’s get to it!

Why Online Advertising Is Worth Your Time

These days, there are a lot of powerful, free ways to market your online store. You can use Search Engine Optimization (SEO) to bring traffic your way, for instance. Social media platforms are also key places to find new customers, which won’t cost you a cent.

Unfortunately, it’s rare that you can rely completely on these techniques. There are a few reasons for this:

• No matter how well you do SEO and social media, the market is so crowded that it’s still really hard to stand out. There are always going to be lots of other stores doing exactly the same thing. That’s not to say you shouldn’t put some effort into these areas – just that they’re often not enough.
• Properly using ‘free’ channels like these takes a lot of time. It’s a long process to optimise all of your content for search engines, and success on social media requires constant research and updates. That makes these methods a whole lot less budget-friendly than they first appear.
• It also takes a long while for your time spent on social media and SEO to pay off. Attracting attention this way is a slow, gradual process – not ideal for bringing in sales to newer stores.

My point is that along with SEO, social media, and the like, it’s worth your time to invest into some traditional paid advertising. This is the only thing that can guarantee your message in front of eyeballs. Plus, it works a lot more quickly than sitting around waiting for people to notice your blog and social posts.

When you have paid advertising providing consistent and predictable leads and sales every month, at a profitable return on ad spend, then you really are in full control of the growth of your business.

Google Ads: Paid Advertising on Steroids

So you’ve decided to invest in some paid advertising for your e-commerce shop – where do you start? There are plenty of options to pick from, all with their unique sets of strengths and weaknesses.

For most people, though, Google Ads is the perfect place to get started. These are ads you pay to have placed in relevant search results, like so:

Brand doesn’t always matter, but here it absolutely does. The “Google” name is a huge part of why this advertising platform is so effective:

• 81% of consumers use online search to shop for products and services
• Google commands over two-thirds of the search market

When you combine those two facts, there are a massive amount of people shopping through Google. With Google Ads, you can get your products at the top of the list.

Even better, this means your items will only be shown to highly-relevant potential customers. Google isn’t going to bother showing your ad for ping-pong balls to someone searching for a new boat (unless there’s a huge market of people looking for both products at the same time, somehow).

As a result, you can get a fantastic Return on Investment (ROI) through Google Ads. Every dollar spent introduces your online store to more people who might actually want to shop there. You can even advertise directly on Google’s own shopping network which in my opinion is one of the most profitable channels for ecommerce right now.

Best of all, Google Ads is inexpensive to get started with, and you have total control over your budget. You can decide exactly how much you’ll spend in advance. This makes it a great place to start small, and grow your efforts over time as you become more confident.

An Introduction to ‘Automated Bidding’

I’ve written before about how Google Ads works in a practical sense, so I won’t cover too much of the same ground here. In a nutshell:

• You open up an AdWords account.
• You set up your first campaign, making some decisions about what keywords you want to target, how much you want to spend, and so on.
• Google starts showing your ads in relevant searches.
• You’ll pay for each click on one of your ads (or something else, depending on what choices you make).

You’re always going to have to do some research, in order to set up an effective campaign. Google Ads does require some time investment. However, one of its most powerful aspects is how much it automates the entire pipeline, saving you as much time as possible.

For example, consider the ‘bidding’ process. This is where you customise exactly how you want your budget to be used. You can choose a goal, like focusing on generating clicks, impressions, conversions, or views. Then you can decide how much you’re willing to bid to achieve that goal. Are you only willing to pay $1 per click, or will you go up to (but not over) $2 per click?

You can set individualized bids for each ad and keyword, which gives you a lot of control. However, this also assumes that you both a) Know what a good bid is, and b) Have a lot of time on your hands.

Enter automated bidding – where you give Google a more general idea of what you want to achieve, and it makes the fine-grained decisions for you. It will still stay within your overall budget, of course, but it’ll use its fancy algorithms to try and make the best possible use of that budget all on its own.

The 6 Types of Automated Bidding

The big step when setting up automated bidding is to choose a strategy. This is what tells Google about your goals, and gives it some guidelines to follow when deciding how to bid on your behalf.

There are six primary strategies to choose from. Let’s start with the first three, which all have different goals:

1. Maximize Clicks. This is exactly what it sounds like – your money is spent to get as many click-throughs as possible. If you want to bring lots of new visitors into your store, this is the way to go. This is a potential starting strategy but after you have conversions in your campaign you likely want to switch to something more specific.
2. Target Impression Share. Maybe instead of focusing on clicks, you want your ads to be as visible as possible. This is smart when you’re first trying to build a brand and make it memorable. With this strategy, you can get your ad shown more often, and in better (read: higher) positions on search results pages.
3. Maximize Conversions. Besides clicks and visibility,the other main place you can focus is on actual conversions. Instead of simply showing your ad far and wide or trying to amass clicks, this strategy is about spending your money in a way that results in the most actual conversions (read: sales).

The following three strategies also focus on conversions, but in different ways:

1. Target CPA. This lets you set a Cost Per Action (CPA). Then the algorithms try to get you as many conversions as possible at or below that cost. This is useful if you want to control how much you’re spending for each individual conversion.
2. Target ROAS. A lot like the above strategy, you’ll start by setting a key metric – this time, Target Return On Ad Spend (ROAS). This focuses more on how much you’re spending vs. getting in return for each ad.
3. Maximize Conversion Value. Broadest of all, this strategy is designed to maximize the total conversion value for your ad campaign. For example, it uses real-time data to show your ads in the best places and at the best times.

If you don’t understand all the ins and outs of these strategies just yet, don’t worry. Google offers plenty of in-depth documentation to get you started, and it’s easy to get help deciding which options are best for you.

The point is to demonstrate just how flexible Google Ads automated bidding is. You’re not just giving Google free reign to do whatever it wants – you can give the platform clear guidelines about how you want your money to be spent.

The Pros and Cons of Automated Bidding

You don’t have to use automated bidding when creating Google Ad campaigns. So, should you?

Like most things, there’s no one right answer to that question. It will depend on your knowledge, goals, and available resources. To help you make your decision, here are the chief benefits of automated bidding:

• As seen above, you can choose a strategy that works towards your goals, whatever they may be.
• You don’t need in-depth knowledge, and you don’t have to do massive amounts of research to determine the perfect bids.
• You’ll be saving yourself some valuable time.
• You’re taking advantage of Google’s algorithms – which are not infallible but are pretty powerful – to optimize your budget.

In contrast, there’s really just one significant downside to automated bidding: a loss of control. You won’t be able to fine-tune every bid – instead, you have to trust Google and its algorithms to do so for you.

Remember at the end of the day Google is it’s own business. They aren’t afraid to spend a bit more and put it in their pocket while also attempting to give you the results that you seek.

You’ll also get less information in return. If you set your own bids, it’s easier to diagnose exactly why a particular campaign succeeded or failed. With automated bidding, on the other hand, you’re not privy to exactly how Google is setting its priorities, which makes it harder to know what you’re doing right or wrong.

Should You Use Automated Bidding?

You can use the above pros and cons to make a final decision about whether or not to try out automated bidding. In a general sense:

• If you don’t have a lot of time on your hands, lack a knowledgeable or experienced marketing team, or simply trust Google to do a better job than you can on your own, automated bidding is for you. It’s also useful if you run a lot of different campaigns.
• If you or your team is already highly-knowledgeable and confident about setting effective bids, you might enjoy the control offered by manual bidding (and get better results). This strategy can also be a better way to learn about the platform and your audience, and to make the most of a small budget.
• You’ll also find that automated bidding strategies are more effective the more conversions (sales & leads) your campaigns receive. When the algorithms receive a higher number of conversions it’s much easier for them to dial in and become laser focused on your ideal type of click.

Finally, keep in mind that this isn’t an either-or choice. You can use automated bidding for some campaigns, and not for others. In fact, I’d recommend experimenting with both, and seeing which route tends to offer you better results.

When you’re just getting started with Google Ads, it’s not a bad idea to focus more on manual bidding (if you have the time). You can start with small amounts, make tweaks, and learn what gets your audience’s attention.

Once you’ve got a bigger budget to work with and you’re running multiple campaigns, automated bidding can be a lifesaver. However, don’t be afraid to dabble in it from the very start as well. Like any type of marketing, the best way to find out what works for you is to experiment thoroughly.

You’ll also note that you can use something called “portfolio bid strategies” where you’ll be able to control the max CPC that automated bidding strategies can go to. It gives you another layer of control so that CPCs don’t blow out and become extraordinarily high.

Conclusion

Many of your potential customers are searching for products like yours using Google. SEO is useful for getting their attention, but it takes time and results are hardly guaranteed. Paid ads, on the other hand, make sure you appear right at the top of relevant search results.

Even better, Google’s automated bidding makes it easy to set a broad goal and a specific budget, then sit back and let some powerful algorithms get you strong returns for your money. While it’s not a bad idea to experiment with manual bid-setting as well, automated bidding can maximize your results with less investment of time and resources on your end.

Need help deciding what bidding strategies to use for your Google Ads? We can help! Don’t hesitate to reach out directly, or ask any questions you might have in the comments section below.