The Paid Search Podcast: Bidding, ROAS, & AI (Episode 448) – Detailed Summary

Podcast Information:

• Title: The Paid Search Podcast | A Weekly Podcast About Google Ads and Online Marketing
• Host: Chris Schaeffer, Certified Google Ads Specialist
• Episode: Bidding, ROAS, & AI (Episode 448)
• Release Date: February 3, 2025

Introduction to the Episode

In Episode 448 of The Paid Search Podcast, host Chris Schaeffer delves into three critical topics that are shaping the landscape of Google Ads and online marketing: bidding strategies, Return on Ad Spend (ROAS), and the burgeoning role of Artificial Intelligence (AI). This episode centers around a Q&A session where Chris addresses insightful questions submitted by listeners, providing expert advice and actionable insights.

Listener Questions and Expert Insights

1. Navigating Manual Bidding and Unexpected CPC Increases (Question from Aaron)

Aaron's Concern: Aaron, a long-time listener and Optio user, reached out with concerns about his manual bidding strategy. After reverting to manual bidding to achieve higher ad rank percentages, Aaron observed that his Cost Per Click (CPC) nearly doubled, sometimes increasing by up to 100%. Despite zeroing all bid adjustments, the CPC remained significantly higher than his set bid amounts. Aaron suspects that Enhanced CPC might be active without his knowledge and seeks clarification.

Chris's Response: Chris acknowledges the complexity Aaron is facing and outlines several potential areas where bid adjustments might be inadvertently affecting his CPC. He emphasizes the importance of thoroughly reviewing all possible bid settings to identify hidden adjustments.

Key Points Discussed:

• Ad Group vs. Keyword-Level Bidding: Chris explains that keyword-level bids can override ad group bids, potentially causing unexpected CPC increases. He advises Aaron to clear all keyword-level bids to ensure they inherit the ad group bid settings.

  “If you're using manual bidding, you absolutely have something turned on somewhere.” [02:15]

• Bid Adjustments Across Different Dimensions: Chris highlights that bid adjustments can exist for devices, locations, ad schedules, demographics, and audiences. These adjustments can cumulatively inflate CPCs significantly.

  “Location, ad schedule, demographics, audiences, even the rarely used ad interactions... could have some kind of increased bid that's causing things.” [15:45]

• Active Bid Adjustments Column: To identify hidden bid adjustments, Chris recommends adding the "Active Bid Adjustments" column in the ad group view. This column reveals any active adjustments, allowing for precise troubleshooting.

  “Add a new column called Active Bid Adjustments. This is only available at the ad group level... it will tell you if there's something there.” [25:30]

Conclusion: Chris provides a structured approach for Aaron to diagnose and rectify the unexpected CPC increases, emphasizing meticulous review of all bid settings and adjustments.

2. The Impact of AI on Google Ads and Future of Paid Search (Question from Roman)

Roman's Concern: Roman, a loyal listener since 2017, raises an intriguing question about the rise of AI and its potential to disrupt Google Ads. Observing a shift in his own search behavior towards AI-generated responses, Roman wonders if AI could eventually render Google Ads obsolete within the next five to ten years.

Chris's Response: Chris acknowledges the transformative role of AI in search behaviors but remains optimistic about the enduring relevance of Google Ads. He delineates the distinction between informational searches and intent-driven searches that are crucial for advertisers.

Key Points Discussed:

• Shift in Search Behavior: Chris notes that while AI is increasingly providing direct answers for informational queries, this trend primarily affects searches that are not typically valuable for paid advertisers.

  “Most of the time when I build campaigns... the kind of AI answerable traffic is not the kind of traffic that I want to get for my clients.” [35:20]

• Google's Data Superiority: He emphasizes that Google leverages vast amounts of data to understand search intent better than individual users, allowing it to maintain effective ad placements where it matters most.

  “Google's got way more data than we could possibly imagine... so I'm absolutely sure that Google knows that there are some things that land in one bucket of very unlikely to interact with paid ads.” [42:10]

• Sustained Value for Commercial Searches: Chris argues that transactional and local searches—such as finding a service provider or shopping for products—still rely heavily on Google Ads. These are areas where AI-generated answers do not replace the need for paid ads.

  “I don't feel like AI will be able to answer those questions. So people still will continue to use Google and... that's still going to remain largely what Google is used for.” [50:05]

• Personal Anecdote on AI Usage: Sharing his personal experience, Chris illustrates how AI assists him in activities like book discussions, showcasing AI's complementary role rather than a competitive one against paid search.

  “I find AI to be a really fun book club partner... suddenly these things that would have passed me suddenly become very engaging.” [55:40]

Conclusion: Chris contends that while AI is changing certain aspects of search behavior, Google Ads will continue to thrive by focusing on high-intent, commercial queries that drive meaningful engagement and conversions for advertisers.

3. Transitioning from Target CPA to Target ROAS with Accurate Offline Tracking (Question from Eric)

Eric's Concern: Eric, benefitting from insights shared on the podcast and leveraging Optio for campaign management, has successfully transitioned his Google Ads campaigns from Max Clicks to Target CPA. With 99% accurate offline tracking and dynamic revenue values in place, Eric is now poised to advance to Target ROAS. He seeks advice on the best practices and potential pitfalls in this transition.

Chris's Response: Chris congratulates Eric on his progress and provides a comprehensive strategy for moving from Target CPA to Target ROAS. He emphasizes the importance of experimentation, proper campaign structuring, and cautious bid adjustments to balance volume and value effectively.

Key Points Discussed:

• Understanding Target CPA vs. Target ROAS: Chris clarifies that while Target CPA focuses on the cost per conversion, Target ROAS centers on the revenue generated relative to ad spend.

  “Target ROAS goes much deeper and it just talks about profitability, revenue, actual money.” [60:15]

• Starting with Google’s Recommendations: He advises Eric to begin with the Target ROAS suggested by Google Ads when setting up experiments, rather than adjusting it prematurely based on assumptions.

  “Use whatever Target ROAS Google gives you and then go from there.” [62:40]

• Importance of Well-Segmented Ad Groups: Chris underscores the necessity of having multiple, well-segmented ad groups within campaigns to maintain control and adaptability when applying Target ROAS strategies.

  “I hope that you have a campaign with a lot of well segmented ad groups... because you will lose the ability to control specific topics.” [65:55]

• Ad Group Level Adjustments: He recommends making ROAS adjustments at the ad group level rather than the campaign level to allow for nuanced control over different segments.

  “I highly recommend adjusting these Target ROAS bids at the ad group level, not at the campaign level.” [70:20]

• Balancing Volume and Value: Chris cautions that optimizing for ROAS can sometimes reduce the volume of conversions. He emphasizes the need to monitor and adjust bids to maintain a balance between volume and profitability.

  “Target ROAS is not always better than Target CPA because there is a balance between volume and value.” [75:30]

• Embracing Algorithmic Bidding's Mysteries: Acknowledging the opaque nature of Google’s algorithmic bidding, Chris encourages advertisers to stay adaptable and vigilant, understanding that not all bid adjustments are transparent.

  “Google will choose based on these factors. You can't see them.” [80:05]

Conclusion: Chris provides Eric with a strategic roadmap for transitioning to Target ROAS, highlighting the importance of structured experimentation, segmented campaign management, and continuous optimization to harness the full potential of ROAS-driven bidding.

Final Thoughts and Takeaways

In this episode, Chris Schaeffer offers valuable insights into optimizing Google Ads through meticulous bidding strategies and leveraging accurate tracking for enhanced ROAS. Additionally, he thoughtfully addresses the evolving role of AI in search behavior, reassuring advertisers of the sustained relevance of Google Ads in high-intent, commercial searches.

Notable Quotes:

• “If you're using manual bidding, you absolutely have something turned on somewhere.” — Chris Schaeffer [00:45]
• “AI is wonderful in its ability to answer these questions and give us information.” — Chris Schaeffer [45:00]
• “Target ROAS is a graduation, but it is an even further step away from CPC bid control.” — Chris Schaeffer [78:20]

Resources Mentioned:

• Optio: A Google Ads management tool praised by listeners, offering a 28-day free trial at Optio.com PSP.

Connect with Chris Schaeffer:

• Website: chrishaefer.com
• Email: contact@chrishaefer.com

This comprehensive summary encapsulates the core discussions of Episode 448, providing listeners and non-listeners alike with a clear understanding of advanced bidding strategies, the impact of AI on search behaviors, and strategies for maximizing ROAS in Google Ads campaigns.