Why Smart Bidding isn’t always the answer

Over the last few years, Google’s Smart Bidding solutions have been broadly accepted as the most effective option for bid management of PPC accounts. It’s something we’ve tested extensively; Smart Bidding vs. manual bidding, with the former almost always generating a positive result.

But, does this mean you should always apply Smart Bidding strategies across an entire account? No.

Brand Search is an anomaly in comparison to other areas of PPC. It looks incredibly efficient, but testing shows that its incrementality is very low, so the key to making it work is to keep cost as low as possible whilst maximising impression share.

Smart Bidding struggles with Brand PPC as it can’t understand the high-intent, low-incrementality nature of it, so typically it over values it, as at face value it often overachieves vs the ROAS target, meaning that the algorithm bids more aggressively assuming there are more Clicks to be bought (which shouldn’t be the case if you’re maxing out your impression share).

We’ve taken over a number of accounts in the last 12 months where Brand PPC has Smart Bidding applied, either as a campaign-level bidding strategy, as part of a portfolio bidding strategy or because ‘brand’ and ‘generics’ are part of the same campaign. This isn’t a problem if targets are set correctly, but if not, it can lead to inflated brand CPCs that have a hugely negative impact on overall account efficiency.

What’s the solution?

By switching brand PPC from a smart bidding strategy to manual CPCs you can regain control of bids and reduce them, to bring down spend and boost efficiency with no loss of clicks. There are some key factors to bear in mind:

• Account structure is key for this to work. Brand keywords need to be in separate campaigns to generics and your Ad Group structure needs to be granular enough that you can set appropriate bids. Google’s recommended best practice has moved away from this towards consolidation in recent years, but this is an area of PPC where granularity of structure still pays dividends.
• Factor in competition. This strategy is most effective when competition on your brand terms is low. If there are other advertisers bidding aggressively on your brand terms – and especially if your product/service can be bought from multiple sites – then lowering your bids is likely to cost you position, clicks and revenue. If competition is minimal then you can start reducing bids with little risk to visibility.

For one of our retail clients this has reduced brand CPCs to a quarter of what they were previously, with no impact on click volume.

For a restaurant chain, moving to manual CPCs as well as restructuring the account has brought CPCs down by two thirds with a small initial loss of Clicks (that is decreasing by day as we adjust bids), reducing Spend by over 66%, allowing us to reinvest the saved budget more heavily into upper-funnel keywords with a greater degree of incrementality!

Summary

Don’t assume that Smart Bidding is always the best solution. Moving brand PPC away from Smart Bidding strategies to Manual CPC has the potential to significantly lower CPCs without losing Clicks. This generates a significant cost saving that can be reinvested elsewhere.

Whatever approach you take, ensure it has been robustly tested first, assuming that Manual CPC is the right approach carries as much risk as assuming that Smart Bidding is. Every account is different, so a different bid strategy, or better quality targets might be the key to unlocking improved efficiency from Brand Search.