Automated Bid Management in Google Adwords

Using cross-matching in your AdWords campaigns to improve ROI

I recently had a conversation with a Marketing Manager who was extremely hostile towards employing automated bidding, either within their Adwords account or via a third party tool. “It doesn’t work” they said “we were stuck into a spiral of diminishing results, and when we switched to an Agency that uses only manual bidding, our results improved significantly”.

It’s not the first time I’ve heard this type of story!

Many people have issues with utilising any sort of automated bid management technology because they’ve been burn't in the past. However, I’ve never encountered a reasonably sized account that a bid management tool couldn’t squeeze a little more profit out of.

The thing to remember is that the technology is only as good as the data it uses.

In this case, I took a quick a look at the account in question and it was very obvious why the automated tool had failed to make a difference: the search query matching in the account was, frankly, a mess.

What went wrong? Unfortunately I’m not at liberty to use real examples, but imagine a high volume product term and it's close misspelling. In this account both these keywords had been thrown together into the same adgroup on both broad and exact match. The exact match head term itself had obviously not performed, so the bid management tool had lowered the bid on this term.

As a result, Google had decided to match to the broad match misspelt keyword when someone entered the head term as a search query, because historical CTR combined with a higher bid give it a better adrank.

So this keyword, which historically was low volume but actually converted quite nicely, now takes on a lot more volume which, of course, doesn’t perform. As a result, the bid gets lowered by the tool and you reduce the chance of acquiring the handful of misspelling conversions you were picking up before too. When the Adrank of this keyword in an auction drops below the Adrank of the broad match head term, you guessed it, the volume switches to that keyword and the cycle begins again.

I call this cross-matching and it’s discussed in more detail in the update to the Smart Insights Google AdWords guide that I co-authored.

The end result in this instance was that the brand was never getting to choose their position for poor performing traffic (in terms of direct conversion). Google was always dictating what keyword that traffic was being matched to, in order to try and maximise their ad spend, and this meant their ROI was decreasing as their bids were lowered. It was a continuing spiral of diminishing return, and it wasn’t the fault of the bid management tool.

The technology was simply making good decisions (to reduce bids) based on the performance data it received.

The in house marketers, and the new Agency, had seen the bid management platform wasn’t helping, switched it off and started manually optimising. The addition of some human intuition (we know that, in most cases, misspellings will not outperform the correct spelling in volume of conversions) led to some search query optimisation. This  helped steady the ship and some other solid improvements improved overall results.

But they still hadn’t solved the real problem. What’s the solution? A better, more granular, account structure that anticipates how Google will behave and prevents this occurring through tight matching and the deployment of negative keywords.

Key points about Automated Bid Management

Remember, it isn’t a magic bullet!

• It does make the calculations smarter, faster and more accurately than human managers ever could.
• It drives efficiency, both directly and by freeing up your in house or Agency team to make improvements to other elements of the account.
• Without accurate data on which to make decisions you’ll never get the most out of it.
• Don’t make the mistake of assuming that using or not using bid management is in itself a 'strategy'.

Thanks to Matt Whelan for sharing his advice and opinions in this post.  Matt is Head of Search and Technology at The Digital House. He has over 8 years experience working on paid search campaigns of all sizes, from the biggest global brands to small and local businesses. You can follow him on Twitter or connect on LinkedIn.