Approach to Bidding on Paid Search

12 July 2017

Approach to Bidding on Paid Search

Paid search bidding, as its name implies, is essentially an auction for your chosen keywords and has all the challenges and potential pitfalls inherent in the auction format.

Companies, therefore, have to develop a strategic approach to pay-per-click advertising and the first step in developing a strategy is to decide on manual or automated bidding.

Manual bidding

The basic case for manual bidding can be summarised in one word – control.

In practical terms, that means responsiveness. Cyberspace is a fast-moving world and the danger of automated bidding strategies is that they can easily be overtaken by developments to which a human would have adapted.

One basic example of this is increased competition for keywords. In line with the laws of supply and demand, increased competition will generally push up prices and could quite feasibly take them out of your bidding range. A human would quickly take a decision on whether to increase the budget for the bids or whether to change the target keywords, but automated bidding software will just carry on regardless.

On that note, manual bidding ensures that changes are effective immediately, whereas with automated bidding you either need to remember to update your changes straight after implementing them or wait until the platform is scheduled to synchronise again.

Automated bidding

Before you dismiss automated bidding, however, it’s worth remembering just how useful automation can be. Even SMEs can quickly build up large numbers of keywords on which they wish to bid, particularly if they operate in an ecommerce environment.

That’s a lot for a human to manage but, for a computer algorithm, it’s all in a day’s work.

The other big plus about automated bidding is that it allows for a far greater degree of segmentation. With manual bidding, there are limits on the account structure. With automated bidding, by contrast, you can pretty much do whatever you like in terms of segmenting your campaigns and ad groups according to their similarity.

One final point in favour of automated bidding is that the fact that computers lack emotion removes the risk of them getting caught up in the excitement of bidding and paying more than is reasonable.

So which is better?

In an ideal world, most companies should look to use both. Even though automation is becoming increasingly sophisticated, computers are still a long way from managing complex tasks as well as humans.

What they are good at, though, is crunching lots of data very accurately and far more quickly than any human could.

With that in mind, the most effective use of automated bidding is to keep mature accounts ticking over at an acceptable level. Accounts that are still in the growth stage would probably be best managed by manual bidding until there is a decent level of traffic and an acceptable conversion rate, at which point they can then be switched over to automated bidding.

Meanwhile, humans can oversee the automated bids and, in particular, devote their time to managing the key accounts, i.e. the accounts with the greatest opportunities for growth and/or the highest level of strategic importance.