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In the SEM industry, there are two main bidding methodologies: automated bidding (through third party bid tools/Google’s Conversion Optimizer) and manual bidding (through the AdWords Interface/AdWords Editor). Each professional PPC Manager will each have a unique stance regarding which method of bidding and toolset they prefer to optimize their search accounts. In many cases, the best bidding methodology is determined by the type of account in question and specific advertising goals.

Let’s dig into this. We’ll go over their subtle differences and the pros and cons of manual and automatic bidding, and then we’ll break down the Google Conversion Optimizer vs. third-party bidding platforms.

Manual bidding

Manual bidding involves managing your bids straight through AdWords or Bing, which means making bid increases or decreases based on a number of factors such as past keyword performance or ad position and not relying on automated solutions. It is a manual process that requires human intuition, and it can be compared to being in the day-to-day trenches where you are completely involved in every change and nuance of your account. The type of marketers who prefer this type of bidding value the highest level of control and the ability to make swift changes, be they small or large.

Manual

Pros:

  • Quick reactions – say that while monitoring your account, you notice that performance has suddenly dropped today. You run an Auction Insights report and come to the conclusion that new competitors have been pushing CPCs to increase, so you quickly push bid changes for the keywords that have been performing poorly to combat the situation at hand. The ability to react to the always-changing online environment right away is a huge advantage.
  • Control – with this type of bidding, you are able to bid on the individual keyword level and determine how aggressive you want to be with your bids at the most specific level. It is power and granularity at its finest.
  • No delay in changes – Manual bidding ensures that your changes are in effect without delay. Hooray!

Cons:

  • The larger the account, the larger the challenge – big spending accounts that house thousands of keywords (especially those in E-commerce) get more and more difficult to effectively manage on a granular level.
  • Chance for inefficiencies – having a day-to-day view of the account can potentially prevent a marketer from seeing the “bigger” picture. Also, there is the risk of human error because of the human component within manual bidding.
  • Bidding can eat up your time – for PPC managers who don’t use bid management software, adjusting bids manually can easily turn into a full-time job, so the question lies in weighing the opportunity costs and benefits for both bidding options and figuring out which suits you and your accounts best.
  • Limited segmentation options – if you want to bid certain campaigns or ad groups similarly, you are limited to a certain account structure. With automated bidding, you have the flexibility to structure your account any way and bucket different campaigns and ad groups in any combination you desire for bidding purposes.

Automated Bidding

Automated bidding is all about – you guessed it! – automation. It gives control to an algorithm to selectively choose the most optimal bids, with the option to adjust targets within bidding folders, by campaign, or by ad group. Along with Google’s Conversion Optimizer tool, there are a plethora of excellent third-party bid tools currently on the market such as Marin, SearchForce, and Kenshoo. While we could open up a debate on which one is the “best” out of the bunch, for our purposes we will forgo that discussion and simply focus on all of these tools as one type of bidding.

Automatic

Pros:

  • Versatile segmentation – the underrated ability to segment your campaigns and ad groups based on similarity and categorize them into custom folders which you can then bid separately.
  • Efficiency – automation can give you the freedom in bandwidth to manage your big accounts on a macro level and focus instead on growth opportunities or account strategy while also keeping tabs on everyday performance.
  • Ability to handle large or complex accounts – it can be challenging to manage all of the thousands of keywords within large or complex accounts, so automation can help in efficiency gains.

Cons:

  • Traffic and conversion suggestions – it is advised that switching over to automated bidding is best when your account has decent traffic and conversion volume…but not before.
  • Automation does not mean hands off – by using these platforms(s), you still have to actively keep tabs on your account and pull levers on a regular basis to make sure these tools are effectively performing the way you intend them to. You also don’t want the tool to do your job for you but instead complement your existing search initiatives.
  • Potential delay in changes – since you make changes in the platform and not directly in the UI, there is an extra step of syncing your changes to the channel. Most platforms will automatically sync once or a few times a day, with the option to manually sync your campaigns, so if you forget to sync your changes immediately, they won’t be in effect until the platform’s next scheduled sync.
  • Be wary of aggressive changes – when optimizing with a bid management tool, it is wise not to be overly aggressive when adjusting targets because algorithms require time to develop and build history to determine optimal bidding so sudden big changes might negatively affect performance.

Conversion Optimizer Versus Third-Party Bid Tools

A plus for utilizing Google as opposed to third-party bid tools is that Google takes into account a lot of backend data (which includes but is not limited to performance trends, targeting, demographics, time of day, hour of day, geography, etc.) to determine bids, partly due to the introduction of Enhanced Campaigns. A downside to this is that in order to really shine, Conversion Optimizer needs a sizable amount of conversion volume to make appropriate bid decisions.

Third-party bid tools have their merits as well.  Being able to manage bids across multiple search engines is a plus, especially in accounts where Yahoo/Bing provides significant volume.  Another huge perk is that many of the automated solutions allow you to roll up ad group performance data and set minimum and maximum CPC costs and average positions. Until recently they were the only method for bidding directly to an ROAS goal.  In many ways they offer flexibility beyond Conversion Optimizer (which is completely black box) and AdWords rule-based bidding (which lacks some of the advanced features found in third party bid tools).

When it comes down to it, there is no bidding philosophy that is the “best” because it is a matter of preference according to the needs/goals of every account. It’s also good to note also that the online advertising landscape is continually evolving with each product release and update so the debate between automated versus manual bidding will continue; the pros and cons will undoubtedly look different in the months and years to come. Ultimately, whichever you choose, the tools are only as good as the person controlling them.

Got any additional pros and cons to the discussion of the best bidding strategies? Which bidding philosophy do you utilize to optimize your search accounts?