Google Ads: Manual Bidding Vs. Automated Bidding

19 August 2021

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Many businesses use Google Ads to promote their products and services. However, since it can be a costly exercise, the goal is always to reach the most potential customers without wasting your ad budget. It’s more common for companies to throw their money at many keywords and automated bid strategies they can afford, and hope for the best. While this approach may deliver some results, you’ll never get the most out of your ad budget if you don’t select strategies that align with your goals.
In this article, we’re going to take an in-depth look at:

  • Manual bidding and its pros and cons.
  • The Google Ads auction process.
  • Automated bidding strategies and its pros and cons.
  • How to choose the right option for your campaigns.

If you’re new to PPC advertising, this article will give you helpful tips and information on how to structure campaigns. For more experienced advertisers, we’ll explain how you can maximize your campaign performance while getting the most out of your budget.

A Few Key Terms Before We Get Started

When talking about Google Ads, it’s easy to get lost amongst technical terms and industry jargon. To help you, we’ve put together this short introductory glossary to explain some of the key terms you’ll encounter in this post.

  • PPC: Pay-per-click refers to any type of paid advertising where you pay for clicks.
  • Bidding: The auction process where you compete against other advertisers for an ad spot.
  • CPC: Cost-per-click refers to how much you pay for every click your ad receives.
  • CTR: Click-through rate refers to how many users click on your ads vs. the number of impressions the ad earns.
  • Impressions: The number of people who are shown the ad, regardless of whether they click on it.
  • CPA: Average cost-per-acquisition divides the total cost of conversions by the total number of conversions. For example, if you paid $100 for 40 conversions, your CPA would be $2.5.
  • ROAS: Return-on-ad-spend measures how much revenue your business earns for each dollar spent on advertising. Essentially, it’s like ROI (return on investment).
  • Conversion: The action that’s counted when someone interacts with your ad or takes an action defined as “valuable.”

Knowing these terms will help you on your way to building more successful campaigns. However, it’s just as vital to understand the Google Ads auction process, and how you can improve your chances of landing the coveted top spot.

Understanding the Google Ads Auction

Several different factors affect the outcome of a Google Ads auction, and your bid amount is just one. It’s crucial to understand the difference between smart bidding vs manual bidding if you plan on running a successful campaign.

Bid Amounts

The easiest thing to understand is how bid amounts work. Essentially, regardless of your bid amount, you’ll only pay what the advertiser below you bid. For example:

  • You bid $5, but you’ll only pay $4 as this was the bid directly below yours.
  • Advertiser Two bids $4, but only pays $2 if this was the bid directly below Advertiser Two.
  • Advertiser Three bids $2.

In short, while you need to outbid your competitors, you won’t need to pay the full amount of your bid. Instead, you’ll automatically “match” their bid if you win the auction.

Quality Score

Quality Score (QS) is how Google rates the quality of your ad, the relevance of your keywords, and how users experience your landing pages. Your ad can earn a score between one and 10, with one being the lowest. Essentially, the QS is how Google determines whether your ad is useful to searchers and if it’s worth showing for certain keywords.
Some of the factors that can influence your Quality Score include:

  • Expected Click-Through Rate (CTR): If Google shows your ad for a keyword, how likely are searchers to click on it?
  • Relevance: Is your ad relevant to the keywords you’re bidding on? Does it make sense for Google to show your ad when someone searches for those keywords?
  • Landing Page Experience: It’s not uncommon for advertisers to try and trick Google and users by creating an ad focused on certain keywords, but with an irrelevant landing page. The content on the page must correlate with the information included in the ad.

There are a few ways you can improve your Quality Score. For example, you can improve your expected CTR by including the specific keyword or phrase in the ad title. You can also create unique landing pages for your ads to ensure that the content is always relevant.

Ad Rank

Ad Rank is probably the most complex part of the bidding process. It’s calculated using:

  • Your bid amount
  • The ad’s Quality Score
  • Ad Rank thresholds
  • Auction competitiveness
  • Search context (user location, device, time of search, etc.)
  • Search terms
  • The use of ad formats and extensions

Many of these factors aren’t ones we can quantify, explain, or understand since Google keeps the algorithm under lock and key. That makes it critical that you optimize everything you can to get the best possible results.

Correct Campaign and Ad Creation Is Critical for a Good CPC

Google will always evaluate your ad against these criteria, regardless of whether you’re running a manual or automated campaign. If you want your ads to perform well, it’s critical to:

  • Set them up correctly.
  • Define an audience and search context.
  • Use relevant extensions.
  • Create relevant ad copy and landing page content.
  • Improve your Quality Score.

The goals you define, targets you set, and ads you create can make or break your campaign. Before you start choosing a bidding strategy, ensure that you know how to create an ad that’ll outperform your competitors, or you’re just going to waste your budget.
A few other ways you can improve your CPC is by:

  • Finding and bidding on long-tail keywords.
  • Using negative keywords to filter out irrelevant searches.
  • Using techniques like ad scheduling and geo-targeting.
  • Making bid adjustments depending on the targeted devices.
  • Using different keyword match types (such as broad and exact matches).

Many of these techniques will also help improve your cost-per-acquisition (CPA). Remarketing strategies have also proved highly successful. More about remarketing you can read in our latest post.

Read Now: How to Effectively Use Retargeting Ads: Facebook and Google Ads

What Is Manual Bidding?

If you’ve done any research regarding Google Ads bidding, you’ve likely noticed how many results pit manual against automated strategies. Is manual bidding any good? Manual bidding might be an excellent strategy. Before we dive into more detail, it’s important to understand that manual bidding is just one of many Google Ads bidding strategies. It’s Manual CPC Bidding, and it’s one of the most basic strategies. Manual CPC Bidding gives you a lot of control over your bid amounts. However, it also demands a lot more attention. To use manual bidding successfully, you’ll also need time, technical knowledge, and in-depth knowledge of the bidding process, and ad optimization.

The Pros of Using Manual CPC Bidding

There are a few advantages to using manual bidding, especially if you have the time and knowledge to optimize the strategy.
+ More Basic
At their core, manual campaigns are more basic. While you can optimize them by using more complex settings as you learn, the strategy itself isn’t that complicated. That’s why it’s often recommended as a place to start for most smaller and medium-sized businesses.
+ Complete Control
Manual bidding gives you absolute control over your Google ads, and the max cost-per-click you pay on the ad group, product group, and even keyword level. That also makes it more flexible since you can make changes to the bids quickly and easily.
+ Establishing a Baseline
Manual CPC bidding is a great way to establish a bid baseline. You’ll be able to determine how much you spend per click on average, and which keywords are more profitable. Once you switch over to an automated strategy, this information will be invaluable.

The Cons of Using Manual Bidding

There are also a few key disadvantages to using manual bidding, which is why so many brands look to automated strategies when they prepare to scale up. Here are a few of the biggest cons to a manual campaign.
– Requires a Technical PPC Team
If you want to take advantage of a manual bidding strategy, you’re either going to have to learn the right skills yourself or employ a technical PPC team. Even if you have the knowledge, you won’t have the time to get great results if you’re running several campaigns with multiple ad groups and ads alone.
– Time Intensive
Manual bidding is extremely time-intensive. You’ll need to evaluate your results frequently, use your best judgment to determine if any changes are needed, and then actually make those changes. In short, you’ll be spending a lot of time trying to optimize your campaign, leaving less time for running your business.
– Lack of Data Insights
While Google gives you access to some information, the system can utilize many data points that you might not even realize exist. When you review your campaign’s performance, you’re at the mercy of the metrics Google designs to show you.

A Few Critical Manual Bidding Tips

Here are a few key tips to help you improve your manual bidding results.
• Metrics
To create a successful manual bidding campaign, you need to be able to balance the following metrics:

  • ROAS
  • Revenue
  • Top Impression Share (One of the top four ad spots)
  • Absolute Top Impression Share (Number one ad spot)

The goal should be to find a balance between your revenue and ROAS while still earning a high ad ranking without wasting your budget. For example, if you’re frequently placing second in results, it might not be worth increasing your bids. The increase in clicks may not justify the increase in CPC.
• Bid Update Frequency
Here’s the first rule: don’t update your bids several times a day. In fact, don’t even update it daily. While some campaign elements may require some daily tweaks, your bid isn’t one of them. Instead, update your bids on the same day every week. This will help you identify consistent changes and correlations in your data and performance. Ensure that you always have at least ONE week’s worth of data to analyze before you make bid adjustments.
Do not change your bids every week if you’re selling a product or service that has a longer cycle. For example, if it typically takes two to three weeks for a person to decide if they want to make a purchase, wait at least that long before you start adjusting. Keep in mind that you can make bid adjustments on various levels. Be careful that you don’t make mistakes with multi-level changes. Usually, making a campaign-level bid adjustment is enough. However, there are times where you may want to bid more or less on a specific keyword.
• Bid Update Amount
Don’t raise or lower your bid too much. Typically, a bid change between 10% and 30% seems to be the most effective. That said, you should also consider your current bids and the value of the keyword. For example, if a 30% increase means raising your bid by 0.05%, that might not make much of a difference if you’re already not getting clicks. There are times where you may need to make more aggressive changes.
• Key Things to Consider
Your performance isn’t only determined by your bid. Other factors, like CTR, Quality Score, and incorrect search terms can all affect your ad rank. If an ad is performing poorly, pause it and see if it affects your ROAS. If the CTR is being affected by incorrect search terms, add negative keywords. Change your mobile bids if you’re not performing on those devices.
In short, there’s a lot of things you can do to boost your manual campaign’s performance. Just make sure that you pay attention to the right metrics and information, and make adjustments accordingly.

Google Ads Automated Bidding

Unlike manual bidding, where you retain control, automated bidding means putting your bids in the hands of Google’s Automated or Smart Bidding system. The system allows you to pick a strategy and adjust it so that it aligns with your goals. Once you’ve done that, Google takes over.
Depending on the strategy you choose, Google will automatically pursue specific goals. For example, if you want to maximize conversions, the system will analyze your bids and user data to find more searches with high buying potential. It’s vital to choose an automated strategy that will meet your targets. While some smaller businesses can get away with manually managing their ads, automated bidding is ideal for brands and businesses with multiple campaigns.

What Is Smart Bidding?

While many people use automated and Smart Bidding interchangeably, they aren’t the same thing. While all Smart Bidding strategies are automated, not all automated strategies are run by the Smart Bidding system.
Smart Bidding uses machine learning to track and analyze data signals from every search and click. It uses that information to figure out how to maximize conversions and make bidding adjustments accordingly. Essentially, it learns how to identify and hunt down potential buyers. Automatic bidding helps advertisers improve different metrics.
There used to be five Smart Bidding strategies:

  • Enhanced CPC: get more bids while retaining control of your bids on keywords.
  • Target CPA: get more conversions within your target cost-per-acquisition.
  • Target ROAS: get a specific return on ad spend regardless of a single conversion’s unique value.
  • Maximize Conversions: get more conversions within your budget.
  • Impression Share: target a specific location such as the absolute top of the page, top of the page, or anywhere on the page.

As of April 2021, Google decided to change how these bidding strategies are presented. Now, they work like this:

  • Enhanced CPC: same as before.
  • Impression Share: same as before.
  • Maximize Conversions with Optional Target CPA
  • Maximize Conversion Value with Optional Target ROAS

The latter two are still similar to the previous strategies, but with the option to further refine them. For example, if you don’t use Target CPA or Target ROAS, the strategies don’t change at all.
While some advertisers may still have access to Target CPA and Target ROAS, they will eventually be switched to the new strategies automatically.

Does Using an Automated Bidding Strategy Remove the Need for Any Manual Work?

Not even close. Yes, an automated bidding strategy does take a massive chunk of work from your shoulders. That doesn’t mean you can leave the system to do its own thing without any adjustments or oversight. Instead, use the time you’ve gained to improve your campaign in other ways, like:

  • Ad testing
  • Device strategy optimization
  • Keyword research and expansion
  • Negative keyword research
  • Seasonality research

It’s also a good idea to regularly check your data. Google Ads may be smart, you’ll still need to check for problems and improve your ad quality.

Pros of Using Automated Bidding

Automated bidding is relatively popular amongst advertisers, and for a good reason. There are a few key benefits that make it such a widely used strategy.
+ Save on Time
One of the biggest benefits of automated bidding is that you don’t need to waste time manually adjusting bids and settings. The system will evaluate ad performance and data insights, and automatically make adjustments. No manual input required.
+ Access to More Data Points
Google doesn’t give you access to all its data points when you run a manual campaign. However, an automated strategy can take advantage of all the available data and variables in an attempt to get you high-value clicks.

Cons of Using Automated Bidding

As effective as it may be, automated bidding also has its cons. Here are a few key disadvantages you should be aware of before opting to use it.
– Strictly Rule-Based
There are some things that artificial intelligence can’t see or interpret. The automated system will always follow specific rules rather than being able to make decisions based on the bigger picture. If the system starts making decisions based on irrelevant or insufficient data, it can cause the campaign to waste budget.
– No Bidding Changes Allowed
Unlike manual bidding, you can’t make changes to your bid when running an automated campaign. Google Ads will be using data to make the changes on your behalf. If a campaign’s performance is where you expected it to be, look for other things that you can improve. For example, seasonality, competitive prices, search terms, and poor ads can all lower your ROAS. If you choose automated bidding, you will have to trust Google to make decisions on your behalf.
Important note: there are times when you’ll know better than the machine. If you’re confident that a change will improve your performance, disable automated bidding temporarily. You can always re-enable it later.

A Few Automated Bidding Tips

If you’re planning on switching to an automated strategy in the hopes that it’ll immediately start boosting your performance, you may want to think again. It’s not a magic switch that’ll fix every mistake with a simple flick.
• Try to Mimic Existing Performance at First
If you’ve been using manual bidding, you should have a good baseline of how your current ads and keywords are performing. When you switch to automatic bidding, don’t immediately make massive changes (unless they’re absolutely necessary). It may hurt your ROAS and overall performance.
• Improvement Takes Time
Again, automated bidding isn’t a quick solution to your advertising problems. The algorithm still needs to learn how to get you the results you want. Give your campaign a good four to eight weeks before you start making any additional changes.
• Keep Optimizing
Your ad rank is determined by multiple factors. Just because Google is now managing your ads and bids, it doesn’t mean that you can neglect them. Keep optimizing your ads, landing pages, and the rest of your account to reap the maximum benefits.

Conclusion: Automated or Manual Bids?

Is manual bidding better than automated bidding, or vice versa? The answer to that will always be subjective. It depends on your experience, knowledge, and how much time you have (or don’t have) to sit and adjust your bids every day. Manual bidding is a time-consuming process that requires a lot of technical knowledge and time. If you already have good baseline data and know what a good CPC and ROAS are for your campaigns, you’ll be in a much better position to evaluate your automated strategy’s results. If you’re still not sure which option you should choose, you’re always welcome to reach out for a strategic consultancy.

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