Automated Bidding: Deriving Smart Insights

1. A U T O M A T E D B I D D I N G :
D E R I V I N G S M A R T I N S I G H T S
PRESENTED BY: SERG IO CA NO
AC COUNT D I REC TOR O F PAID SEARCH & CRO, WPROMOTE

2. A B O U T 2
SERGIO CANO
ACCOUN T D IR EC TOR | WPR O MOTE
LOS ANGE L ES NATI V E
Hollywood, CA
MATH PER SON TU RNE D MA R KE TER
Aspired to be an actuary
CONNEC T WI TH ME:
Linkedin: /secant
Email: sergio@wpromote.com
Reddit: @marketing_inquisitor
Paid Search & Conversion Rate Optimization

3. XA G E N D A
2
3
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1 WHAT I S AU TO M AT E D BIDDING?
AUTO MAT IO N I S THE FUTURE
BID DING OP P ORTUNITIE S
LIM ITATI O NS &
CO NST R AINTS
CASE ST UD I ES
Q&A
WHAT’S ON DECK

4. W H A T I S A U T O M A T E D
B I D D I N G ?

5. W H A T I S A U T O M A T E D B I D D I N G ? 5
WHAT IS AUTOMATED BIDDING?
ˈÔ D Ə ˌMĀT - ˈBIDING
“
”
Precise auction-time level bid optimization tailored to each user’s unique search and
web context. It does this by leveraging algorithms by evaluating relevant contextual
signals present at auction-time such as time of day, the specific ad, or the user’s
device, location, browser, operation system, and much more.

6. W H A T I S A U T O M A T E D B I D D I N G ? 6
WHY AUTOMATED BIDDING?
B I D D I N G I M P A C T S P E R F O R M A N C E A D A U C T I O N I S V E R Y D Y N A M I C A T T R I B U T E I S M O R E C O M P L I C A T E D
Bids influence how often ads show
up for each search query. If we are
not bidding correctly, there is a lot of
wasted budget and missed
opportunities.
Most users are different, and it’s
crucial to show up at the right
moment in the ad auction. However,
the dynamics of the auction are
always changing.
Advertisers gather more data points
of user behavior and touch points
than before. Taking into account all
these signals to tailor bids is nearly
impossible.

7. W H A T I S A U T O M A T E D B I D D I N G ? 7
WHY AUTOMATED BIDDING?KEYWORDBID
DEVICE
LOCATION
TIME
GENDER
AGE
HOUSEHOLD INCOME
INTERESTS
SITE VISITOR
IN-MARKET
SIMILAR AUDIENCE
SEARCH PART NE R
LIFE EVEN T
CONVERSION PATH
AD E XT ENSIONS
SEARCH QUERIE S
OPERATING SYSTEM
LAN GUAGE
AD CHAR ACTERIST ICS
DEVICE TYPE
WEB BROWSERS
}And Much More…
Available Bidding Options
Automated Bidding
Options

8. W H A T I S A U T O M A T E D B I D D I N G ? 8
BIDDING POSSIBILITIES
1 5 , 5 5 8 , 4 8 0
B I D S F O R
E A C H K E Y W O R D
E X C L U D E S
A U D I E N C E S & I N T E R E S T S
1
2
3
4
5
6
7
210 DMAS
7 DAYS IN A WEEK
24 HOURS IN A DAY
3 DEVICE TYPES
7 INCOME BRACKET GROUPS
3 GENDERS
7 AGE COHORTS

9. A U T O M A T I O N I S T H E
F U T U R E

10. A U T O M A T I O N I S T H E F U T U R E 10
DISRUPTING THE INDUSTRY
N E E D S M A R T E R
I N S I G H T S
R E P O R T I N G & D A T A I S
M O R E D A T A R I C H
O U R R O L E S A N D
R E S P O N S I B I L I T I E S

11. A U T O M A T I O N I S T H E F U T U R E 11
WIN LOSS COUNTER
72 WINS 26 LOSSES
Win Loss Status
Win Loss
2016 2018

12. A U T O M A T I O N I S T H E F U T U R E 12
RESULTS VS EFFORT
Automated bidding still relies on marketers to build
out campaigns, choose keywords, set budget, write
ad copy, and design landing page strategy.
Automated bidding frees up a lot of time on the
keyword rebidding by tailoring dynamic bids at the
search query and placement level in the ad
auction.
There are a lot more signals than ever before
which adds more complexity into keyword and
placement optimizations.
MANUAL BIDD ING
AUTO MATED BID DING
TIM E
RESULTS

13. B I D D I N G O P P O R T U N I T I E S

14. B I D D I N G O P P O R T U N I T I E S 14
DELAYING GRATIFICATION
More than 40 years ago, Walter Mischel, PhD, a
psychologist now at Columbia University,
explored self-control in children with a simple but
effective test. His experiments used
“marshmallows” which later was known as the
marshmallow test.
SET UP
Preschoolers were given a plate of treats such as
marshmallows. The children were told that the
researcher had to leave the room but were given
simple instructions before leaving:
CHOICES
1.) If the child waited until the researcher
returned, the child would receive two
marshmallows.
2.) If the child simply couldn’t wait, the child could
ring a bell and the researcher would come back
immediately, but the child would only be allowed
one marshmallow.
WHAT
SET UP
CHOICES

15. B I D D I N G O P P O R T U N I T I E S 15
THE DOUBLE-SIDED BLADE OF BIDDING
A D V E R T I S I N G
B U D G E T
P E R F O R M A N C E

16. B I D D I N G O P P O R T U N I T I E S 16
THE DOUBLE-SIDED BLADE OF BIDDING
Automated bidding aims
to maximize daily
budgets held to bidding
strategies’ performance
constraints such as
target CPA or ROAS.

17. B I D D I N G O P P O R T U N I T I E S 17
PUTTING THE BAIT OUT
S M A R T B I D D I N G B A I T

18. B I D D I N G O P P O R T U N I T I E S 18
PAY PER CONVERSION (DISPLAY)
DISPLAY ONLY W O R K S W I T H S M A R T D I S P L AY A N D T R A D I T I O N A L D I S P L AY
C A M PA I G N S

19. B I D D I N G O P P O R T U N I T I E S 19
PUTTING THE BAIT OUT
$3,129 15 129
$2,418 39 383
*Date Range: ~60 days Pre & Post Change.
PROBLEM:
Better return on display campaigns
overall from a click point of view
WHAT HAPPENED?
Dynamic Remarketing campaign drove a
lot of view through conversions but did
not drive a ton of click through
conversions. Pay Per Conversion (risk
free) fixed that.
BEFORE PAY PER CONVERSIONS (AVG)
Spend CTC VTC
AFTER PAY PER CONVERSIONS (AVG)
Spend CTC VTC
-22.7% +160% +196.9%

20. B I D D I N G O P P O R T U N I T I E S 20
PUTTING THE BAIT OUT (CONT.)
REMEMBER
P R O V I D E A S M U C H I N F O R M AT I O N A S P O S S I B L E . I N T H I S C A S E , I
C R E AT E D A S M A N Y R E M A R K E T I N G L I S T S A N D L AY E R E D T H E M
O N T O A D Y N A M I C D I S P L AY C A M PA I G N .
“U NCAP PED” DAILY BUDGETS
Only paid whenever a conversion happened. Happily, increased
daily budgets from $100/day gradually to $10,000/day
SWITCHED FROM MANUAL C PC TO TARGET CPA
A condition to do pay per conversion is to switch over to target CPA.
Unfortunately, portfolio bidding isn’t available for this pay model.
VE RY LOOSE TARGET CPA (3X OF SEARCH)
Gave it the best effort for the algorithm to have a lot of wiggle room
for it to learn, in an effort to let the algorithm try to maximize the
spend on how the campaign was configured.

21. L I M I T A T I O N S &
C O N S T R A I N T S

22. L I M I T A T I O N S & C O N S T R A I N T S 22
CONVERSION TIME LAG?
TIME LAG
Time lag, also known as conversion
cycles are “days it takes to get a
conversion”
Google often refers to this as conversion
cycles on their end, but can see this
under search attribution reports or
segment report in UI
MEASUREMENT
Most conversions take place within the
first week however every industry is
different. When reading the time lag
report under search attribution. ALWAYS
ROUND UP. In this case, we want to
measure performance from 4 days ago in
the bid strategy report.

23. L I M I T A T I O N S & C O N S T R A I N T S 23
HOLDING CONVERSIONS EQUAL
Shouldn’t be a problem for many advertisers but keep this in mind because the algorithm tries to optimize towards “conversions”
and treats them all equally. So only add meaningful actions in your “include in ‘conversions’” column.
Beware of the Checked box “Include in conversions” under each conversion action.

24. L I M I T A T I O N S & C O N S T R A I N T S 24
THINGS TO LOOK OUT FOR
CONVERSION TYPES
The algorithm treats CONVERSIONS equally. So if you
have a phone call to your business to “count in conv”
column, it will weigh that the same as someone
purchasing (Ecommerce) if using tCPA.
If you have multiple conversions that are technically equal
(call extensions, on-site on call, or form submissions), the
algorithm gets excited and doesn’t know which one to
pick in the real-time auction.
MEASUREMENT
Most conversions take place within the first week
however every industry is different. When reading the
time lag report under search attribution. ALWAYS
ROUND UP. In this case, we want to measure
performance from 4 days ago in the bid strategy report.

25. L I M I T A T I O N S & C O N S T R A I N T S 25
SETTING IT UP
Under campaign settings
Navigate to bidding
Click on “Change bid strategy”
It will auto suggest a target CPA or
target ROAS goal. If this looks right,
then accept change.
Recommended but not required:
Create a bid portfolio so you can
always reference the bid strategy
report even if you revert back later.

26. L I M I T A T I O N S & C O N S T R A I N T S 26
THE DOUBLE-SIDED BLADE OF BIDDING
L E A R N I N G P E R I O D
( W E E K S 1 & 2 )
O P T I M I Z AT I O N S
( W E E K 3 )
C O N T R A I N T S
( O N G O I N G )
EXPECTATIONS
Set Up Realistic Goals, Setting The Last 30 Days Is A
Good Starting Point.
ROAS / CPA Fluctuations
Shifts in impressions share
Having Doubt In Automation
The more conversions in a 30 day period, the better
Target ROAS campaigns require more conversions to
work effectively than target CPA
STRATEGY
Pick a bid strategy that makes sense to your business
and your campaign efforts
Try not to make any changes the first two weeks or in
first learning period
Set campaign delivery method to standard when using
smart bidding strategies
REPORTING
Checking In On Bidding Strategy Portfolio
Measure out the delta in performance for CPA and ROAS
MAKE SURE TO AVOID MAKING MAJOR CHANGES
DURING “LEARNING PERIODS”
When examining bid strategy reports, keep in mind if
there are delayed conversions we should give the
algorithm extra time to backfill those conversions to
make any call
ADJUSTMENTS
Whenever making adjustments to
target CPA or ROAS try increasing it
no more than +/- 10-15% at a time to
reduce fluctuations.
You can override campaign target
CPA by assigning ad group target
CPA. However, adjusting the target
CPA at campaign level will
automatically override the ad group
again.
You still have the ability to examine
search queries. Still add any
negative keywords that you believe
are not relevant to business or
noncompliant.

27. L I M I T A T I O N S & C O N S T R A I N T S 27
BID STRATEGY REPORTS
This is a snapshot report on performance of
the smart bidding strategy for you to
understand the status and limitations.
Found by clicking the Bid Strategy link under
campaign reporting.
This report will tell you, when the algorithm is
“learning” marked grey at the bottom of the
graph.
High level view of how performance is doing,
you can consolidate using a portfolio bidding
strategy for multiple campaigns.

28. L I M I T A T I O N S & C O N S T R A I N T S 28
BID STRATEGY STATUS
1. No campaigns associated
with the strategy.
INACTIVE NOT LIMITED LEARNING
BID STRATEGY IS NOT
ACTIVE DUE TO:
THE BID STRATEGY IS
ACTIVE.
IT’S STUDYING…
2. All keywords, ad group, or
campaigns are paused.
Everything is good ;)
After making changes to the
campaign or bid strategy, the
system will go into a “learning”
state. Don’t make too many
changes at once. Make
changes outside of “learning.”

29. L I M I T A T I O N S & C O N S T R A I N T S 29
MONITORING THE MACHINE
Spikes are normal during learning periods.
These are denoted in the bid strategy reports
and highlighted in grey.
Making too many changes to the target CPA
or ROAS can trigger learning periods.
When it’s not grey, you can make adjustments
as needed. Avoid making too many
changes. +/-10% increments.

30. L I M I T A T I O N S & C O N S T R A I N T S 30
NICE THINGS TO HAVE
Having the ability to choose which conversion
metric a smart bidding strategy can optimize
against.
Seasonality controls.
Stimulating data for Target ROAS bidding
strategies.
Actual visibility into what it’s doing.

31. C A S E S T U D I E S

32. C A S E S T U D Y X
COMPETING AGAINST GOOGLE
10
20
30
40
50
60
70
80
Conversions
Human Conv
Google Conv

33. C A S E S T U D Y X
COMPETING AGAINST GOOGLE
H U M A N V S S M A R T B I D D I N G
GROUP IMPR CLICKS CPC CONV CPA CVR
HUMAN 938,149 34,855 $3.33 2,398 $48.40 6.88%
GOOGLE 916,757 36,854 $3.98 2,694 $54.45 7.31%
$0
$15
$30
$45
$60
HUMAN GOOGLE
$54
$48
CPA
HUMAN
GOOGLE
0 675 1,350 2,025 2,700
2,694
2,398
Conversions

34. C A S E S T U D Y X
Target CPA was set to $53.21 (Google’s recommendations)
The amount of time spent on re-bidding could have been spent
elsewhere to test ad copy and perhaps landing page.
Campaign experiment took some of my control traffic away,
preventing me winning (still upset).
It is difficult to go against the Smart Bidding algorithm with
conversion rich campaigns.
While, I had a more efficient CPA, volume of conversions was
better overall.
COMPETING AGAINST GOOGLE RESULTS

35. C A S E S T U D Y X
VS
Set Up The Test Using AdWords Experiments To Split
The Campaign In Half And Allow For Proper A/B
Testing. CPA Was Set In Each Engine
Due To Different Platforms, There Are Different Tags.
In Any Case, AdWords Smart Bidding Still Ended Up
Winning Factoring In Both Conversions.
Attribution Of Tag Vary, Doubleclick Is Day Of
Conversion Vs AdWords Is Day Of Click
GOOGLE VS GOOGLE

36. C A S E S T U D Y X
COMPETING AGAINST GOOGLE
A D W O R D S TA G
GROUP IMPR CLICKS CPC CONV CPA CVR
DOUBLECLICK 117,946 4,382 $2.93 286 $44.89 6.53%
GOOGLE ADS 185,972 7,148 $3.74 485 $55.12 6.78%
$0
$15
$30
$45
$60
DOUBLECLICK GOOGLE ADS
$55
$45
CPA
F L O O D L I G H T TA G
GROUP CONV CPA CVR
DOUBLECLICK 321 $40.00 7.31%
GOOGLE ADS 374 $71.48 5.22%

37. C A S E S T U D Y X
FULLY EMBRACING SMART BIDDING
$0
$80
$160
$240
$320
0
200
400
600
800
Month 1 Month 2 Month 3 Month 4 Month 5
Conv
CPA
$185$196$192$254$307
709
338
212215
611611
215 212
338
709
C O N V E R S I O N S V S C PA
S W I T C H I N G O V E R T O
A U T O M AT I O N
M A N U A L B I D D I N G
R U L E S &
S C R I P T B A S E D
B I D D I N G

38. C A S E S T U D Y X
110%
Increase in Conversions
month over month with
automation.
36% adoption of automation
in month 4
90% adoption of automated
bidding in month 5
MAKE SURE TO CHECK THE BID
STRATEGY REPORT OFTEN TO
ENSURE EVERYTHING IS FINE.
FULLY EMBRACING SMART BIDDING

39. C A S E S T U D Y X
W E L E A R N E D …
Purposely limit campaigns using its daily budget and scale it up
from there. This ensures the algorithm wants to spend as much
money as you continue to scale up.
S O W E …
Started rolling out a bid strategy for each campaign until
we achieved better results.
FULLY EMBRACING SMART BIDDING

40. K E Y T A K E A W A Y S 40
RECIPE FOR SUCCESSFUL SETUP
P I C K A R E A L I S T I C TA R G E T G O A L ( + / - 1 5 % O F C U R R E N T )
A LW AY S C R E AT E A B I D D I N G P O R T F O L I O E V E N W I T H 1 C A M PA I G N
S E T D E L I V E R Y M E T H O D T O S TA N D A R D
M A K E S U R E T H E R E I S O N LY O N E C O N V E R S I O N A C T I O N
D O N ’ T A P P LY N O N - 1 0 0 % B I D A D J U S T M E N T S
W H E N M A K I N G A D J U S T M E N T S D O I T I N 1 0 % I N C R E M E N T S
AV O I D A D D I N G I N T O O M A N Y N E W A D C O P Y A N D K E Y W O R D S
C O N T I N U E E X A M I N I N G S E A R C H Q U E R I E S & P L A C E M E N T S
A D R O TAT I O N S E T T O O P T I M I Z E
C R E AT E A B A C K U P O F C A M PA I G N V I A E D I T O R
D O N ’ T F O R G E T T O L AY E R I N A U D I E N C E L I S T S
Y O U D O N ’ T H AV E T O L I S T E N T O G O O G L E ’ S R E C O M M E N D AT I O N S

41. Q & A