Is Smart Bidding Too Good To Be True?

Posted In: Hidden by Dan Howard,
June 29, 2018

The world of PPC is rampant at the moment with talks of automation and smart bidding is an extension of this. It’s an automated bidding strategy developed by AdWords that uses machine learning to optimise your bids.

AdWords claims that smart bidding will save you time and improve your ROI. They say it can do this because it uses:
– advanced machine learning;
– wide range of contextual signs;
– flexible performance controls;
– and transparent performance reporting.

Many people, such as Search Engine Journal and PPC Hero, have looked into it and offered their opinion as to how and when to use it, mostly coming to the conclusion that it can improve your whole PPC game.

We however, say that this is too good to be true.

Here at We Are Boutique, we have a healthy cynicism to automation. We believe it can do a lot of good, but only if done the right way. However, the gains that smart bidding could make on efficiency and account improvement meant we had to give it a try.

What We Did

For three months we utilised AdWords’ Experiments feature to test target CPA bidding on a few select campaigns within a large account. Some of the campaigns were naturally strong performing with low CPAs, and others tended to be weaker, generating few conversions at high CPAs. This, combined with the Experiments feature, allowed us to run campaigns normally whilst simultaneously trialling smart bidding, therefore giving us a comparison free of seasonal trends and most other biases.

So, How Was It?

Overall, smart bidding is good for some accounts and bad for others. It sounds like a cop out answer I know, forgive me. But, there is truth in this.

The smart bidding campaigns did generate more conversions at a higher conversion rate than our normal campaigns. But, it did so at a higher CPA. So, an account that can afford to spend a little bit more and be more flexible with its targets can benefit. But, those accounts where every penny matters are left without the right amount of love and attention to keep them performing well.

Digging Deeper

It is interesting what smart bidding did. You see, it had a higher CPA and you would think – like many of the PPC team here – that well it’s obviously just spending more. It didn’t.

Instead it mostly spent less. But it’s CPCs were significantly higher. The system paid more for a click if it thought it was going to convert, and did not bid if it didn’t think it was going to convert. Hence, the stronger conversion rate.

But, is this really what you want from an account? Is this not just only valuing converting clicks? What about all the other stages of a customer’s journey? What if you want to have a brand presence amongst competitors? What if you want to stay forefront of the customers’ mind at all times?

Well, smart bidding isn’t for you.

So, is smart bidding too good to be true? Well, yes. Unless you have a large account with enough data behind it and can be flexible on your budgets it just won’t work.

Accounts can be made more efficient, money and time can be saved by letting a machine do what it can. However, the experience and valuable insights that we as humans bring to a PPC account can not (and never will) be replaced.