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4 Things That May Surprise You About Automated PPC Bidding

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It’s no surprise that Google, with its massive capabilities in machine learning, is pushing hard to take as much control over PPC bid management as possible.

They believe that by letting the machines handle number-crunching and pattern recognition, advertisers will get better results.

And having more happy advertisers obviously helps the bottom line and makes Google and their investors happy, too.

But when bids are automated, it does not mean that PPC is automated. Good news indeed for those of us worried about our future prospects as PPC rockstars.

There are important things to know about automated bid management and I’m going to share a few here based on conversations with advertisers who expressed surprise when our tools and scripts uncovered some aspect of bid automation they were unaware of.

1. You Can Lose a Huge Impression Share (IS) with Automated Bids

I’m not sure I can explain why, but some advertisers I speak with believe that once they turn on automated bidding from Google, the things they used to worry about in the past will all of a sudden take care of themselves.

Impression Share is a good example.

Advertisers on manual bidding monitor this metric as an indicator of missed opportunity.

After they enable automated bidding, they stop monitoring it, and when their account later goes through a PPC audit, they are surprised to find there is a lot of lost IS.

There can be many reasons for lost IS, but the key point is that automated bidding only works to try and set the appropriate bids based on what it knows about the person doing the query (probability of conversion rate), and the value the advertiser may get from the conversion (predicted value of a click).

Bids may be increased when a competitor’s actions lead to changes in expected conversion rate and value per click, but the bid automation will also try to stay within the bounds determined by the advertiser’s targets for CPA or ROAS.

So if a competitor raises bids there is no guarantee the automation will be able to respond and more impression share may be lost.

Bid Automations Are Bad at Sharing Insights with Advertisers

If conversion rate drops after the launch of a new landing page, bid automation will dial back bids so it can continue to deliver conversions at the desired target, but it will not tell the advertiser that their new landing pages are terrible, and so more impression share may be lost.

But until an alert is triggered, for example using a tool like Optmyzr, or until the advertiser notices a drop in volume, they may have become so disconnected from what’s happening in their account that they find themselves shocked to see that they have lots of lost impression share even when they assumed that bid automation was handling things.

The bottom line is that advertisers should continue to care about details.

They should monitor metrics like conversion rate, IS, etc because these are INPUTS and OUTPUTS of automated bidding but they are not the things that are automated.

2. Bad Targets Are Just as Bad as Bad Bids

The previous point covered how externalities like changes to a landing page, changes in consumer behavior, or changes by competitors can cause problems with automated bidding.

But the reason can also be related to the bids themselves.

Issues arise when targets are set badly. Think about the first campaign you ever managed and how you set the CPC bids for that.

It probably wasn’t scientific or based on expected conversion rates because you were so new to PPC that you’d simply be guessing (or relying on third-party data).

So most of us, when we set our first bid, we probably used the Goldilocks principle and we picked a number that felt good… not too high, but also not too low.

This was OK because the day after, we’d log back into Google Ads to check results. If we saw that we were getting a ton of clicks but very few conversions, we lowered our bid.

Of course, bid automation handles increases and decreases to CPCs, but we are still asked a number at the beginning: what is your target from which the system will then calculate the CPC?

Despite Google’s best efforts to suggest a target based on recent history that is likely to provide continuity in the campaign, many advertisers see automated bidding as a magical system that will help them achieve the results they never could achieve manually before.

They set a target that is too low and then walk away since it’s now automated.

That is a mistake.

Remember that bid automation is fundamentally just about:

  • Predicting conversion rates and value per click.
  • Using those predictions from a machine learning (ML) system to set the CPC bid that the engine uses to rank ads in the auction.

Knowing this, it should be clear that if you set a bad target, it may lead to bids that are suboptimal:

  • If the target is too conservative, you may lose volume.
  • if the target is too aggressive, you may reduce profitability.

As with manual bidding, it actually makes sense to monitor the performance and change the target based on what you see.

For accounts managed in Optmyzr (my company), we use an automation layering methodology to identify when automated bidding is losing impression share for parts of the account that drive conversions.

By simply letting advertisers know that there is upside potential if they are willing to get more aggressive with their targets, they can take the right action, or even simply automate this process.

3. Changing Bid Aggressiveness Works Differently for tCPA & tROAS

At the risk of offending many of my readers who are PPC rockstars, the reality is that most of us aren’t that good at math.

I have an engineering degree but I myself have to think quite hard to get PPC math right. And let’s admit it, you probably use a calculator to do the occasional PPC calculation, right?

As we become accustomed to bid automation, we find ourselves more and more removed from the simple math behind the process.

And as a result, when the boss says that we should be more aggressive with our PPC campaigns, we have to actually stop and think how we’d communicate this simple request to Google Ads.

When bids were manual, being more aggressive simply meant increasing the CPC bids.

Then target CPA came along and being more aggressive meant increasing the tCPA.

And then tROAS comes along and being more aggressive meant… decreasing the tROAS!

Ugh, so much for making things easy and consistent, right?

And if you have some clients doing lead gen and others doing ecommerce, you work with both tROAS and tCPA and you better get the direction of your change right.

And to further complicate things, ecommerce companies can also advertise on Amazon where they use ACOS (advertising cost of sales) and may be setting a target for that.

Since ACOS is the inverse of ROAS, it actually moves in the opposite direction, i.e. to get more aggressive, you increase the target ACOS.

How ACOS and ROAS are calculated

Google uses ROAS and Amazon uses ACOS to help advertisers target profitability for their PPC ads.

4. Having One Target ROAS Is Not Enough

And now the next surprise:

One bid doesn’t work for everything.

Do you remember the last time you did manual bid management and used the same bid for every ad group?

Neither do I, because that most likely would have been a pretty dumb thing to do.

In the days of manual bidding, we set different bids because:

  • Ad groups converted at different rates.
  • Ad groups sold different things with different values to the business.

When setting a bid, we considered both of these factors so we could set sensible bids.

Then automated bidding comes along and we set one target and walk away.

Did business all of a sudden change and somehow all your services and products became equally valuable?

Of course, they didn’t!

This is why Google allows targets to be set at the ad group level. At the very least, you need different targets at the campaign level.

Take Smart Shopping campaigns for example. You should have multiple smart shopping campaigns, each with their own target ROAS so you can set the right bids based on the typical difference in product margin among the many things you sell.

How is the correct tROAS determined?

Well, that depends on your profit margin for each product and the profit you want to make from buying ads on Amazon, Google, and Microsoft.

what level of ACOS or ROAS equates to PPC profits

By setting the right ACOS or ROAS target for your PPC campaign, you can ensure a profitable campaign.

Amazon, as I said before, uses ACOS. And while that’s a new concept for those who’ve been nose down in Google Ads for the better part of the last two decades, it’s actually a really nice and simple concept.

To break even on your ad buy on Amazon, your ACOS should equal the profit margin.

Said another way, if you sell a weighted blanket for $30 and it costs you $20 to buy from the factory, your margin is 33% and you will go from profitability to losing money once you go above a 33% ACOS.

Google and Microsoft Ads use ROAS, the inverse of ACOS. And that makes it much harder to know the right target. The break-even point is when ROAS is equal to the inverse of the margin (that is 1 / margin).

In the example we just used, that means break-even happens at approximately 300% ROAS. But counterintuitively, increasing the tROAS, say to 400% means we’re becoming less aggressive by trying to make more profit.

Conclusion

I’m a big believer in automated bidding. But to use it successfully, you need to do a few things:

  • Understand how it works and what it’s trying to do.
  • Use automation layering to monitor that it is in fact doing what you expect of it.
  • Think of targets as fluid goals that need to evolve as your business changes and use automation layering to vary goals automatically based on business data.

More Resources:


Image Credits

In-Post Images: Created by author, September 2019



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Google on building a better holiday omnichannel strategy

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NEW YORK – Today’s customers alternate between shopping online and offline, searching for the products and services they need at the exact moment they need them, said Zack Bailey, head of omnichannel solutions at Google. Bailey opened up a keynote session at SMX East on Thursday alongside his colleague Irem Erkaya, global product lead at Google.

Three-quarters (76%) of holiday shoppers will search on three or more channels (think retailer websites, social, and marketplaces) when making purchase decisions, according to Google. To drive toward success for the holidays, Bailey and Erkaya offered up several tips and best practices for advertisers managing omnichannel campaigns this season.

Google’s presentation touched on three areas that advertisers will want to keep in mind for holiday campaign activations. These include: expanded inventory for Showcase Shopping ads, tips for maximizing online and offline ROI across all touchpoints of the customer journey, and a discussion on driving holiday shoppers to physical storefronts.

Image search as a shopping channel. Google introduced Shopping ads to Image search a couple of years ago. Now, Showcase Shopping Ads are rolling out in Google Images. Bailey said that U.S. shoppers are increasingly using Google Images to discover new brands and products, with 50% of shoppers saying images of products inspired them to make a purchase.

“That’s why we’ve expanded Showcase Shopping ads [SSA] to Google Images,” Bailey said. “Based on insights gleaned about how consumers use the Images page to research and shop, expanding SSA to Google Images was a natural next step.”

Showcase Shopping Ads show a group of related products when shoppers search for broader terms, like “holiday makeup.”

The sponsored images highlight products that, when moused over, reveal brand, price and other details.

Until now, Showcase Shopping ads have only been available for apparel and furniture-related searches. It is expanding to new categories like beauty and electronics.

Shopping ads coming to YouTube. To tap into shopping intent for video audiences, Bailey said Google will expand Shopping ads to the YouTube home feed and YouTube search results. The initial announcement was made earlier this month.

“This offers another great way to show up where shoppers already are –exploring relevant content in news feeds,” Bailey explained.

Maximizing online and offline ROI

Local inventory ads to drive online-offline conversions. Irem Erkaya explained that Local Inventory Ads can help give customers visibility into the products currently in-stock both online and at a nearby physical store. Plus, a new expanded store pickup feature will give customers more options to retrieve their purchased items from the local retailer.

Store visits in smart bidding. Google first launched Store Visits four years ago to help Advertisers measure full value of the customer’s lifecycle. In the past year, Erkaya said that Google has “nearly doubled the number of businesses that can see Store Visits reporting in Google Ads.” While many advertisers are familiar with Store Visits measurements, the feature can now be integrated into smart bidding to help take foot traffic and online conversion actions into account. Soon advertisers will be able to incorporate Store Visits in select Shopping campaigns.

Driving shoppers to local stores

“While omnichannel is important to meet overall business goals, sometimes your objective is simple: get people into your stores,” Bailey said. When looking at store-specific strategies that only drive customers to physical locations, Google’s research found that 78% of holiday shoppers turn to online search before going in-store.

Local actions optimization. For brands, Local campaigns (introduced last year) offer the ability to reach customers across Search, Maps, Display, and YouTube through a streamlined, cross-channel campaign. Soon, Bailey explained, advertisers will be able to optimize towards a wider range of conversion types – such as location directions or calls. Local actions optimization is currently in beta testing.

Direction planning ads. Local businesses can now feature their store’s location to help users get directions and plan their route. “In just a few taps, [customers] can add your location as a convenient stop on a Christmas shopping route. You can also add logos that are easily recognizable and legible in a small format to help shoppers spot your brand,” Bailey explained.

For example, businesses can include creative elements like color, symbols, and logos to create a more identifiable visual for customers.

Location groups. For local businesses that offer different inventory at different locations – or for franchises with business goals that vary by location – Bailey suggests using Location groups to promote a specific subset location.

As an example, Bailey said, “This makes it easier for auto dealership groups to focus advertising on lower-performing dealerships that need to move out 2019 inventory. Retailers featuring doorbusters in select cities might want to drive extra foot traffic to specific locations.”

Richer creative reporting. Local campaigns can help businesses reach shoppers across a range of Google properties (like Search, YouTube and Google Maps), but compelling ad creative can be the key factor in standing out against the competition.

Bailey recommended building Local campaigns with a wide array of creative assets (headlines, descriptions, CTAs) to enable Google Ads to assemble the best-performing combinations. To help advertisers fine-tune creative assets, Google has added a performance column to the asset report which ranks creative assets against other assets of the same type.

Bailey explained that the column can show which text, images, and videos perform best, and which ones are worth swapping out. This new level of visibility, he added, can help marketers find insights that may inform other marketing campaigns and channels for the holidays.


About The Author

Taylor Peterson is Third Door Media’s Deputy Editor, managing industry-leading coverage that informs and inspires marketers. Based in New York, Taylor brings marketing expertise grounded in creative production and agency advertising for global brands. Taylor’s editorial focus blends digital marketing and creative strategy with topics like campaign management, emerging formats, and display advertising.



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WSJ report about Google search manipulation gets a lot wrong

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No one would argue that Google is a pure, shining force for good in the world. But neither do we agree that it’s the corrupt entity portrayed in a highly charged Wall Street Journal (WSJ) article that appeared Friday.

Search Engine Land will offer more perspective on the WSJ article in separate pieces next week. However, upon initial review of the assertions, and discussion with members of the SEO community including several people interviewed for the story, we believe that many of the claims are inaccurate or misunderstand what’s going on behind the scenes.

The WSJ accuses Google of manipulating search results to appease advertisers and favor big business in results over smaller ones, while suppressing controversial auto-complete suggestions and engaging in capricious blacklisting of sites. The WSJ says it conducted “more than 100 interviews” and its own comparative analysis of search results.

The WSJ “tested 17 words and phrases that covered a range of political issues and candidates, cultural phrases and names in the news . . . during [a] 17-day cycle” and compared them to results on Bing and DuckDuckGo. Here are some of the claims made in the article:  

  • Google made algorithmic changes to its search results that favor big businesses over smaller ones.
  • Google engineers regularly make behind-the-scenes adjustments to other information the company is increasingly layering on top of its basic search results.
  • Despite publicly denying doing so, Google keeps blacklists to remove certain sites or prevent others from surfacing in certain types of results.
  • In auto-complete . . . Google’s engineers have created algorithms and blacklists to weed out more-incendiary suggestions for controversial subjects

Asked to comment on the story, a Google spokesperson said, “We have been very public and transparent around the topics covered in this article, such as our Search rater guidelines, our policies for special features in Search like Autocomplete and valid legal removals, our work to combat misinformation through Project Owl, and the fact that the changes we make to Search are aimed at benefiting users, not commercial relationships. This article contains a number of old, incomplete anecdotes, many of which not only predated our current processes and policies but also give a very inaccurate impression of how we approach building and improving Search. We take a responsible and principled approach to making changes, including a rigorous evaluation process before launching any change — something we started implementing more than a decade ago. Listening to feedback from the public is a critical part of making Search better, and we continue to welcome the feedback.”

In one example of Google’s alleged manipulation of search results, the WSJ reports that Google made ranking concessions “on behalf of a major advertiser, eBay” following a fraught negotiation between the companies after an algorithm change demoted eBay pages. The implication is Google was willing to change the SERP to get eBay’s money back. There’s likely a lot more to this than presented in the WSJ piece, but eBay has in the past pulled ad spending on Google and the latter hasn’t made ranking concessions.

The WSJ piece is clearly informed by considerable reporting. But in at least one case an individual said he was misquoted in the article and another person who was extensively interviewed, but who disagreed with the thesis of the article, was not quoted.

This is not to say that the WSJ went in with a bias and ignored contrary evidence or that everything the WSJ says or claims is inaccurate. But the larger media narrative, in the context of a highly charged political climate, has turned against big tech companies. And while much of the criticism of big technology companies is justified, we believe WSJ has not provided an entirely accurate discussion of what goes on behind the scenes.

We’ll dive deeper into that next week.


About The Author

Greg Sterling is a Contributing Editor at Search Engine Land. He writes about the connections between digital and offline commerce. He previously held leadership roles at LSA, The Kelsey Group and TechTV. Follow him Twitter or find him on LinkedIn.



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Microsoft Advertising talks intelligence, UI updates, audience solutions in SMX keynote

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NEW YORK – As brands look to compete in today’s market, identifying ways to connect with audiences is critical. Growth relies heavily on the marketer’s ability to find better ways to meet the needs of customers, said Christi Olson, head of evangelism at Microsoft Advertising and Bing, during a keynote session at SMX West on Wednesday.

“Consumers want brands to help them, anticipating their needs and making their buying experience frictionless,” Olson said. “Our [Microsoft’s] goal is to help retailers become more competitive and deliver more engaging customer experiences that unlock new revenue and fuel future growth,” she added.

The growing complexity of the consumer’s digital footprint means advertisers need to understand the advanced technologies and innovations that drive meaningful brand engagement.

Delivering value with AI

According to Olson, Microsoft Advertising is gearing up to build better experiences for customers using artificial intelligence and machine learning. One example, an app called Seeing AI, has helped more than one million people with vision impairments complete tasks like reading a menu in restaurant or counting money to make a purchase.

Microsoft AI has added value to organizations as well, Olson explained, such as helping to quickly identify and resolve equipment issues remotely, or helping HR teams to recruit top candidates. 

In terms of the future, it’s evident that Microsoft has set out to build more advanced solutions that can connect the customer journey through intelligent learning.

(See Also: Get the just-released Periodic Tables of PPC)

“Creating better experiences for your customers, people you engage with is not about handing off your advertising to machines. At a time of advancing automation, creativity remains the essential differentiator of greater value than at any other point in human history,” Olson said.

To help organizations adopt AI-driven capabilities quickly and easily, Microsoft is working to bring intelligence to the products and services consumers already use daily. Olson said that Microsoft will be launching a new class of purpose-built Dynamics 365 AI solutions aimed at delivering out-of-the-box insights from unified data. That data can then be infused with advanced intelligence to support integrated actions across sales, customer service, and marketing teams.

Personalization at scale

User devices provide context. And context helps marketers better understand what matters to a consumer in a particular location and at a particular time. The right message at the right moment is the next level in customer service and can turn intent into action.

Context also allows retail businesses to more accurately anticipate what a customer might need, based on when, where, and how they arrive on a brand’s website. Consumers are always hunting for product information, deals, local availability, and local discounts online, Olson explained. Retailers who don’t make efforts to supply the right, personalized information at the right time will lose out.

“As we think about this enormous opportunity, we at Microsoft see four key areas of opportunity for retail,” she said. These include:

Know your customer. Deliver unforgettable customer experiences that make your brand stand out from the crowd.

Empower your employees. Provide your team with the tools that enable extraordinary customer service.

Deliver intelligent supply chain. Improve agility to reduce costs and drive customer satisfaction.

Reimagine your business. Stand out in today’s competitive retail environment by reinventing your business model, starting with the customers and working backward.

Uniting the Internet and the Intranet

One of the biggest challenges facing internal organizations is the inability to quickly and accurately locate company information through intranet networks. Earlier this month, Microsoft introduced the new Microsoft Edge and Microsoft Bing for business.

Olson said Microsoft’s ambition is for Bing and Edge to deliver the best search and browser experiences for businesses and consumers alike. With enhanced capabilities like deep intranet integration, improved people search, and features that support internal resources, Microsoft is setting out to help employees be more efficient and productive.

Olson said Microsoft will be introducing more features for the consumer audience in spring 2020.

Microsoft’s redesigned UI

In October, Microsoft Advertising unveiled the platform’s interface refresh, designed to better align with the update Google Ads rolled out in full a year ago.

The redesigned UI, explained Olson, enables advertisers to manage campaigns more easily with the following improvements:

Improved usability and navigation. The new online navigation includes more intuitive features for greater integration with Google Ads, saving advertisers more time when it comes to campaign management. Advertisers can use the new global menu to switch accounts, quickly access tools and settings like ad preview, shared library, conversion tracking, Google Import, and more.

Better organization of features. The new vertical page menu includes Ads & Extensions, Audiences, Experiments, and other features to deliver more streamlined access for advertisers. As advertisers navigate campaigns, page menus will adapt to only display the pages and data that are applicable to each campaign.

Modern look and feel. The new online experience is now more up to date and consistent with other Microsoft products.

Intelligent audience solutions

Currently, Microsoft Advertising offers intelligent audience solutions designed to help advertisers reach a target audience with a personalized ad experience at the right time.

These solutions include AI-driven targeting capabilities such as location, device, in-market audiences, Google Import, campaign-level associations, and more. Microsoft is currently piloting LinkedIn Profile Targeting, product audiences, similar audiences, and customer matches.

Eventually, Olson said, Microsoft plans to roll out customer combinations with “or” and “and” logic.

Amping up for new retail solutions

“For retailers to power great experiences on their website, search is critical,” Olson said.

With Intelligent Search, Microsoft aims to bring advertisers closer to understanding shopper intent with scale, intelligence, and AI. To do this, Olson pointed to Bing’s index that retailers can embed on their sites to grow visibility. Bing technology can help marketers understand consumer behavior and trends while leveraging machine learning and AI to help automatically optimize conversion actions.

Intelligent Search, part of Microsoft’s vision to offer more search solutions to retailers, will deliver personalized product recommendations using deep learning algorithms. Experimentation and custom rankings will help businesses achieve goals and drive up consumer satisfaction. Additionally, advertisers will have an improved ability to analyze transactional, behavioral, and demographic data from the sites.

Microsoft PromoteIQ, a vendor marketing solution that enables retailers to generate high-margin advertising revenue with their own advertising experiences, will become fully integrated with the Microsoft advertising platform. Currently in private preview, the PromoteIQ Network will allow retailers to scale commerce advertising revenue using an expanded integration with the Microsoft Advertising platform and sales teams, providing access to new channels that can help maximize value.

The age of digital marketing is
behind us, and our new reality—though it may at times seem daunting—is
marketing in the digital age. One in which marketers simply cannot find success
talking at
customers through single, traditional channels. Instead, brands must engage
with them on new and meaningful levels, wherever they are.

As Olson stated during her session, Microsoft is setting out “to help reimagine how [advertisers] serve customers and grow your business, deliver more engaging customer experiences that unlock new revenue and fuel future growth.”


About The Author

Taylor Peterson is Third Door Media’s Deputy Editor, managing industry-leading coverage that informs and inspires marketers. Based in New York, Taylor brings marketing expertise grounded in creative production and agency advertising for global brands. Taylor’s editorial focus blends digital marketing and creative strategy with topics like campaign management, emerging formats, and display advertising.



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