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PMG Digital Made for Humans

Automated Bidding Systems… Friend or Foe?

5 MINUTE READ | May 26, 2015

Automated Bidding Systems… Friend or Foe?

As anyone who works in PPC can tell you, the struggle to pull performance data every day, analyze it, and enact the necessary bidding updates based on a variety of performance metrics, lookback windows, and forecasted performance can take a huge chunk of your day and leave little time for testing, reporting, and strategizing… You know, the fun stuff. This is where an automated bidding system comes in.

Google, Kenshoo, Marin, they all offer a solution that promises to reduce some of the heavy lifting involved with bidding and allow account managers to focus on other aspects of the job, and some of them do a pretty decent job of it. That being said there are always some potential downsides to letting an algorithm make decisions for you.

Every client is different and has different needs, so, unfortunately, there is not a one size fits all plug-n-play type bidding system. Determining how to setup and maintain the system can require a lot of time and effort depending on the platform being utilized and the complexity of the account and client’s needs. Sometimes it’s a simple as plugging in your ROI and saying “go” and other’s it takes month of calculations, categorizations, and testing before an agreed upon system can be put in place. It’s completely variable.

Additionally, sometimes the system in place simply does not work for the client. Then it’s back to the drawing board and the whole process starts over again.

As previously mentioned, one of the main reasons we love bidding systems (once you have them set up properly) is because they free up our time to focus on new and innovative ways to drive results for our clients. If I’m not spending eight hours a week manually bidding keywords then that’s eight hours I can spend running ad copy tests, launching new campaigns, or testing out a cool new beta.

PMG has some of the best and brightest people in the industry working for our clients, and when they have the time and freedom to grow their own skillset the individual, the client, and the agency wins.

By the very nature of these bidding systems, they analyze performance for a set look back window and then apply bids across a keyword set based on past performance. Granted, this is how the majority of manual bidding occurs as well, but an algorithm that only looks at past performance doesn’t know if performance only saw a temporary boost due to a sale, or if traffic skyrocketed simply due to some scandal, or if seasonality is coming into effect.

An automated bidding system bidding on firework related keywords will still be boosting bids on July 5th because it’s seen two weeks of fantastic performance. A human will know to pause those keywords.

When you’re manually bidding an account you know everything that is going on with performance from overall revenue to how many keywords had to have bids reduced yesterday due to lower than desired performance. The thing about automated bidding is that one of the consequences of not having to be in the accounts every day checking out which keywords are performing and which ones aren’t is that you risk overlooking issues that are masked when performance data is only viewed in the aggregate. It is important to remember that, even if performance is looking fantastic and everyone’s happy, there is still a lot of knowledge and insight to be gained by performing checks similar to how you would manually bid.

When you work on a large (or even just a two person) team, there is always the possibility that the division of work can lead to team members using their own unique methodology for determining manual bidding decisions. Automated bidding systems remove this issue by allowing a single algorithm to bid a defined keyword set a single way. No longer do you have to worry that one of you is using a two week lookback and the other a four, or one of you is looking at ROI while the other is more concerned with publisher costs. Automated systems are like having a giant team all working together from a single frame of reference in order to achieve a goal.

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In short, bidding systems are awesome because they free up time for account teams to focus on other things and can sometimes drive fantastic performance because of the very logical and methodical way of bidding, but teams have to be careful to avoid using them as a crutch. No matter how great a system is it has to be updated, managers still have to proactively make changes to the system in order to account for things an algorithm can’t know, and you shouldn’t let overall performance metrics mask the nitty gritty details of what’s going on in your account.


Posted by Karly Denkhaus

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