← The Paid Search Podcast | A Weekly Podcast About Google Ads and Online Marketing
The Paid Search Podcast | A Weekly Podcast About Google Ads and Online Marketing
Smart Bidding Fails Against Manual Bidding (Episode 463)
00:37:35
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- [00:00]
Chris
Foreign hello and welcome to the paid search podcast. My name is Chris and today I am going to take you through a few questions from listeners. I'm also going to talk about how smart bidding failed against manual bidding. Again, I'm going to give you a specific instance where I tested smart bidding against my manual bidding and I'm going to talk about the results. Obviously you know what the results were because it failed. But I'm going to go through the details about what that looks like, why I think it failed, some of the things I'm highly disappointed in that it did. And we'll jump into that towards the end of the show. Before I jump into the questions, I'm going to talk to you. I'm going to talk to you about optio.com PSP so I am sponsored by the greatest Google Ads management software out there, period. This software helps you to get more done faster. From bids to, to keywords, to ad copy, to creating campaigns, to breaking out critical decisions in your Google Ads account. This tool is designed to help you do it faster and smarter. There's no tool out there like this. This the designed in such a compact, fast moving way. And the great thing about it is it prioritizes all of these decisions based on what's gonna be the biggest impact. You know, you might have a few negative keywords that are slowing you down. But did you realize there's this whole other section that is creating a massive impact in the performance? You know, that's what you're gonna need to take care of first and it brings your attention to the critical aspects that are hurting your campaigns the most. So if you'd like to try this for free for 28 days, it's opteo.com PSP to get a 28 day free trial. That's O P T E O. Use the chat box in the bottom half of the screen and you can tell them, hey, Chris sent me here. Can I get that special offer? And they'll hook you up. So thanks so much for their sponsorship and let's move in. Now I'm going to bring back something I haven't done in a while. Joey's going to join me for a section that I called for a long time called the metric of the week where I went through and talked about all kinds of stuff. Joey's going to bring that back and talk about a metric of the week. Joey, take it away.
- [02:52]
Joey
Hey, what's up Chris? So it is metric of the week. I have a new metric I want to bring up that relates to demand Gen. It's a demand gen only metric. And if you recall, in episode 457, just a few episodes ago, we covered the big shift that's happening in Google Ads around YouTube. A certain type of YouTube campaign is no longer available in the YouTube area and it's now rolled into demand gen. But as I cover in the episode, it's not all bad news. Demand gen is not the enemy. It's actually pretty good. But there is a new metric that I want to bring up because I fear that there is going to be a lot of, you know, shady agencies and ads managers out there that are going to leverage this to their advantage to make their data look good. And it's a metric that I want to make everybody aware of that there is a way to use this metric effectively, but it could very easily be misinterpreted and used to bloat up the numbers. So what I'm talking about is this metric called conversions platform comparable. Okay, now conversions platform comparable, what it does is it essentially takes view through attribution to a new level, a new height. Where, you know, the way view through attribution worked is if somebody viewed your ad and then, you know, converted elsewhere, you would get a portion of that conversion through the view through. It's never really clear how it was recorded, but as you know, usually they weren't huge. Right. It was a bit of a leading indicator. Now this metric, what it does is it will take 100% of conversion attribution if at any point in somebody's journey an impression was recorded. Now this could be somebody that converted not even through Google Ads. It could be somebody that converted organically through Facebook, whatever. But it's saying we were part of that conversion. Good news is this is not used for optimization. So this is not steering the ship in terms of how the bidding strategies work. So I want to get that out of the way. Your conversion column, which we talked about in the episode 457, because it also is a little bit different in demand gen with something called engaged view conversions. But we won't get that. Now, that column is still what's being used for optimization. This column is just for observation, right? So, and the numbers can be drastically different. Like I'm just reading from one of my accounts right now. I've got a demand gen video remarketing campaign. It's got eight conversions. It's got 38 platform comparable conversions. Now the reason why Google is doing this is to apparently kind of combat Facebook. Apparently Facebook kind of has a similar model than this I don't, I can't verify that because I don't look at Facebook, I don't think about Facebook, I'm not a Facebook guy. But apparently Facebook's conversion model is similar to this where it takes 100% of attribution if it's on, if it's on a conversion path, whatever. And this is Google's version to say, okay, if you do that, we can do this. So you can compare platforms. That's why they call it platform comparable. So you can find this. If you're on your demand gen campaigns, it's cool. Is that when you hit the columns button, obviously you can bring these into your column list, but they even have a, an already filtered version, a predetermined filtered version of conversions by platform comparable. If you filter your campaigns by demand gen, you know, if you go to the top, you know all campaigns and then you, you click on just demand gen campaign, then you go to columns, you will see a predetermined line that says conversions platform comparable. And it'll bring in all of the platform comparable columns, which there are three of this conversions, platform comparable, cost per conversion, platform comparable and conversion rate platform comparable. And I will mention what's also kind of neat is that you can segment these so you can hit that segment button, hit that segment button, go to conversions, go to add event type. And then you will see that important segmentation that we spoke about in the past to see engaged views versus clicks and you can even see impressions. So it'll show you the platform comparable impression conversions, click conversions and engage views conversions. Now the question is, how do I actually use this? Well, the first thing is if you have an ads manager or a agency that is holding this up like some success, like, oh, we are getting 38 conversions, let's pump more money into this. That's when you need to stop whoever is talking and, and, or stop listening to them. I don't know. But that is where this can get dicey because that's not how we should be looking at this. The way I think this can be looked at is by using it as a leading indicator. So obviously your conversions column, all your other metrics are your source of truth. But if you, let's say, want to measure how things, how something moves over time and you start noticing, oh, we got a big fall off in these metrics from this month, last month, it can cause you to investigate further. You know, you made a big change. And it's hard in these campaign types to really know when a change helps because we don't get a lot of conversions. You can make a creative change and then because you don't get that many conversions in demand gen campaigns, sometimes you're like, did my change work? Did it affect anything? This can kind of help you steer in the right direction. What's interesting as well is that we get to see these metrics at the ad level. That's what I like, you know, being able to see at least if certain pieces of creative are making it into somebody's purchasing journey. You don't really see much outside that, but at least we have that. So really I wanted to bring this up as a bit of a cautionary tale of don't let somebody sell you on this as some massive success, but rather use it as a leading indicator to see how things change and shift and play around with it. Like, I like seeing those clicks versus engaged view conversions and, and seeing how they shift over time, especially at the ad level. So I hope this was helpful and I'll pass back to you, Chris. See you next time.
- [09:56]
Chris
All right, thanks, Joey. All right, now we're going to move into the questions section of the show, and if you'd like to send in a question, you can do so. Paid Search podcast paid search podcastmail.com send in your question today's two questions. I have the first one here. Carlin from Texas. He says, hey Chris, just listening to your episode for this week and I always look forward to Mondays. You mentioned that you're now using ChatGPT for ad headline generation. Could you take a few minutes in a future show to describe exactly how you found to use ChatGPT effectively for Google Ads? Well, absolutely. I'll take some moments right now. First of all, for a while I completely ignored AI was not something that was really on my radar at all. I have to give credit to Joey, who often brings things to my attention. This old guy here has been doing it for a long time. Sometimes it's tough for me to develop a new trick. Right. Old dog Joey brought this up in a podcast that he joined me for. And so I have to give credit to him because it's when I first started paying attention to it. And as Carlin had mentioned, one of the things that's really important is that I use it for ad copy. But first, before I talk about how I use it for ad copy, I want to talk about what I don't use it for right now. I do not use it much at all for keyword research. I've done entire episodes about keyword research, so that is still How I do my keyword research, I do not use AI to any real capacity for that process. I still find my method to be far superior, faster and more impactful as far as using Google in best practices that way. I do use AI for instances where certain industries might be a bit complicated for me, where things confuse me, where I'm unsure about the right language to use, or, you know, certain really specific things that are really outside of my knowledge. Anytime I get a new client, if it's something I've never heard of, something really deep into the technology Sphere, or a B2B service that I've never heard of, I'm going to have to do some research. So I do use AI to help me understand a bit. Can, you know, can you explain to me real simple, like, what is this talking about? What does this mean? Who's looking for this? Just simple questions to help me get through that learning curve a little faster. Most of all, what I use AI for nowadays is writing headlines. I find myself, you know, being rather repetitive with headlines. And I find that using AI to help me write headlines is very helpful because it, it breaks outside of the creativity box that I find myself in where I'm writing headlines. And I don't really know how to say it any differently, right? Nowadays you have a lot of headlines that you can write in one responsive search ad. So I'm going to need to say things in a lot of creative ways to throw out a lot of availability for the system to find what's going to work. So what I do, and I'll give you a specific example, I was recently using it for a software development company. This is a company that focuses on AI and IT and website development, mobile app development and things like that. So I was using it to help me write headlines for this because I don't, you know, I wasn't really familiar with it. I didn't really know how to say it the right way. So I give AI the website, I tell it to write headlines and I always tell it to write me headlines that are 30 characters or less. And I tell it to be creative on, you know, a certain set of headlines that it writes. And then another, I might tell it, okay, write me more aggressive call to action version of headlines. Okay, now on this version, write me something focusing on the consulting aspect of this company. You know, focus on using the word consulting consultant. All right, now write me more headlines, focusing on the mobile app development services of this company. You see it, what helps is and anyone who follows my advice on how to build and manage Google Ads campaigns, you're going to have different ad groups that need different themes and focuses. And this is, this is incredibly important because now you need to be able to write these in such a way that, you know, conforms to that ad group's themes. So some need to have mobile app development messaging, some need to be focused on the consulting aspect, some need to be focused on the website development aspect. And it can help me come up with some creative ways of saying that without repeating the same things over and over. I really hate throwaway headlines and I find myself using a lot less throwaway headlines. What I mean by throwaway headlines, if you find yourself writing something that's like in business since 1995, you know, throwaway headline, who the frick cares? I mean, I don't care how long you've been in business, maybe you've sucked that long. Maybe, maybe you have. Your company is not necessarily good just because you've been around for a long time. I want something that convinces the person in that moment that they're offering exactly what they're looking for. That's why I need to get away from throwaway headlines, junk headlines that just fill space. You know, coming up with 15 headlines just because I have 15 to fill and just coming up with a few creative ones and filling in the rest with junk is not an efficient way to do it. So AI helps me to come up with less junk wasted headlines. So that's how I use it nowadays. And you know, I might use it for other things in the future, but right now I think AI is, is great for writing. I think it's a good system for writing, maybe answering some questions here and there. And I this old dog has been trying to do that more. So going now to a second question on today's episode, question from Matt says Matt. Well, no, no, he's Matt. I'm Chris. Let's try that again. Chris, really enjoy the podcast. Thanks for sharing all your knowledge. It is a tremendous help. As I run my solo marketing agency. I am now a optio user based on your recommendation. Hooray. Awesome. Thanks, Matt. General question about Google Ads. Are there any industries that you just won't work with? I know that some industries are harder than other industries and maybe more expensive, but have you found any industries where Google Ads just isn't effective and a business should probably use other marketing channels? Thank you, Matt. I've been asked this question a bit, something I've talked about before. Always happy to revisit. I've got a lot of episodes out there. I realize not everyone listens to all of them. So I will answer the question according to how I feel today. Might be a different answer I gave years ago when I answered this, but I'll answer it how I'm feeling this week. And here's what's on my mind. First of all, let me get this off the table or on the table. These are opinions based on my experience. There are many of you out there that may be in this industry and laugh and scoff that you must be horrible because I have X type of account and it works great, great. But I'm going to tell you based on not just one failed client, but multiple clients to the point that when someone calls me, I flat out tell them, listen, I have never succeeded in this industry. Continue. It continues to fail. It's either me or it's the industry. So I'll give you that all of these examples I'm giving you may be because I'm bad at them. Absolutely a possibility. Okay. But I'll tell you the list of failed industries is a lot shorter than the successful industries. If I listed all the successful industries, we'd be here a long time. So it's a short list and it's very specific. So here's about four or five of them that I have. Number one. First one that comes to mind is realtors, just home sales, Realtors, home for sale near me, home for sale in so and so city. Absolutely won't take that kind of client. Learned that many, many years ago in Google Ads and kept slamming my head against the wall trying to make it happen and it won't. I have seen success with realist, other types of real estate industries. You know, software, real estate software, software, trying to sell to other realtors, you know, land buyers, home buyers, you know, short sell buyers, things like that. So it's not real estate in general. It's specifically realtors who just say, hi, I'm Joe, I'm going to help you buy a home or I'm going to help you sell your home. I don't find that, that to be very successful. And I'm going to explain at the end of this list what I think is in common with all of these and why I think they fail. All right, number two, videography and photography. Okay. Those two in particular, I'll tell you, I just, I've done it a lot and I do not find that it is successful videography. And to branch beyond that, videography going into, you know, documentarians, if that's the right word, you know, People who make movies, people who do, you know, corporate videos, people who do bigger projects, you know, things like that. Videography, even on a small scale, you know, wedding videographers, which I find most wedding videographers don't advertise on Google most of the time. It's the bigger kind of stuff that, you know, bigger agency that tend to advertise on Google and photographers, local photographer, stuff like that. So I don't know what it is, but very little success. And most of the success that they get ends up being in the form of just a lead that never closes. So it's not that these don't lead to opportunity, it's just that the opportunities don't lead to sales and there's very few opportunities with that now, I will carve out this section. I have seen success in very specialized services like headshot photographers, you know, something very specific. If you're offering something very specific like headshot photography, I've seen success there. But in general photography, videography, no. Next down the line, chiropractors. Chiropractors have a lot of wasted phone calls, a lot of wasted time in my life trying to get chiropractor campaigns to work. Just, they don't, they don't seem to work. I don't even have a carve out for success or a caveat on this one. I just, I have not seen them work to any successful amount of consistency. And last, travel agents, specialized tours, vacation booking, things like that. I don't find that these do very well either. So here's all of that together. Here's why I think these fail. All right? The reason is, I think it's due to the amount of personal preference in each of these categories. Right? You're going to talk to a realtor. That realtor doesn't necessarily offer anything particularly unique. It's just, you know, you like the way they look, you like the way they talk. You know, I mean, you just have to put your trust into someone. They all are mostly equally qualified. You know, I'm sure that there's a lot of individual qualifications that would bring some higher than others. But in the end, when you're just looking at it for 15 seconds, how could you possibly draw a conclusion that, yep, this is the guy, this is the lady that I want to sell my home or buy a home from. It doesn't seem to work well, videographers, photographers, right? I mean, no, I don't really like the way their pictures look. Their pictures are too dark, their pictures are too bright. I don't like the tone of their pictures. I don't like the way they're used. Too much artistic impression. I don't think that's enough artistic impression. Right. There's a lot of thing. And then chiropractors, oh my goodness. I mean talk to two chiropractors and you'll find two people that do very different things even though they're both chiropractors. Right? No, I'm a holistic. Well, I focus more on, you know, crack and pop, you know, kind of stuff. I mean chiropractors are very different themselves and what people are looking for in chiropractors is very different. And then tours, agencies, booking for vacations, you know, I mean this is entirely preference based. So I think drawing a bigger picture and say, you know, there's other things I think that fit into this box when you, when you're met with deep personal conviction based on preferences. And that is a big aspect of the entire industry. I think that is. It's not good, it's not good for Google Ads because it just depends on the presentation. Maybe the best service, the best product out there, period. But the presentation, the person's mood, you know, the type of words you use, the images you use could absolutely make the difference between failure and winning. So Matt, I hope that's helpful but like I said, this is entirely opinion based on, based on my experience. Take it or leave it. Alright, so let's get into the meat here because I'm going to talk about smart bidding failing against manual bidding again and I'm going to talk about why before I do opteo.com PSP to try the 28 day free trial. You can use amazing things like their Ngram finder tool which helps you identify wasteful search terms and identifies negative keywords across search shopping, performance, max, Even Microsoft ads. Optio.com PSP so if you listen to the podcast a day or 10 years, not quite 10 years, maybe eight years, you've absolutely heard me talk about and praise manual bidding. It is, I think the best bidding strategy, period. There are times when smart bidding is appropriate and I test it a lot and I'm going to tell you about a little story. It's about a company in the Dallas area who sells air conditioner units, H vac, right? And if you've been in Texas in this time of year, you know it's starting to heat up. The amount of searches, the amount of AC repair calls starts to skyrocket as we approach high 90 temperatures. So now's a great time as the performance and Spend starts to accelerate and the number of calls start to boom. I took a well established Google Ads campaign and set up an experiment. And this is a formal experiment that I launched in Google Ads where the original is running and the experiment is sharing 50% of the budget and it's running alongside, so there's no cannibalization because this is a formal experiment. They run alongside each other and they don't conflict. Wonderful system that I use all the time and it's always reliable because it's a clean cut test to say give this one 50%, give this one 50% and let's see how they run. And the only change that I have is the experiment is using target cpa, which is conversion based bidding with a target CPA goal. Now, the target CPA that I gave it was the recommended CPA target CPA that Google gave me. So when you change something from manual bid to maximize conversions and then you hit that little checkbox, it'll fill in and say, oh, we think we can accomplish this acquisition goal price. So I gave it that. So I did not impose any opinion here. I just gave it over and let it run. So here's the result. The cost per click difference between the two was 2.5 times higher for the smart bidding. Okay. And I'm going to use the word smart bidding just because it's shorter. But imagine me with mocking air quotes every time I say smart bidding because I am absolutely mocking it. I've watched, listened to, and heard other people say manual bidding always fails against smart bidding. And I think that is an absolutely ridiculous statement. No one should ever say the word always when they talk about Google Ads. I don't say the same kind of ridiculous statement in my podcast and say smart bidding always fails against manual in the same way that people shouldn't say manual bidding always fails against smart bidding. There is no always. So every instance is unique. But in my mind, I always end up mocking smart bidding because smart, that is absolutely to be determined. I don't feel like smart bidding is truly smart at times because as you'll see, it's spent per click 2.5 times higher. So that's the original was $34. The experiment average cost per click was $81. Okay, that's a lot more. The spend for each one of them was about 5,500 each. So over $10 spent. $10. Over $10,000 spent during this time and it was about six weeks or so and that was split evenly. Okay. However, because the cost per click was so much more Expensive. On the smart bidding, it got a hundred less clicks than my manual campaign. So my manual campaign was enjoying almost 200 clicks while the smart bidding had what, 60, 65 clicks? I believe so already it's at a deficit here because these 65 clicks need to be better to a significant amount than the 165 clicks, 175 clicks, whatever it was, of my manual because I have 175 chances to get a conversion and it only has 66 chances to get a conversion. See how that's working? So the next metric was the breaking factor. I mean, I only need to know two things to know whether something failed or succeeded. What's the difference in the cost per click? Got it. And then number two, what's the conversion rate? Well, if the cost per click is going to be 2.5 times higher for the smart bidding, the conversion rate needs to be a lot higher. Needs to double what the manual is doing. It did not, not even close. 9.4% conversion rate for the smart bidding and a 7.5% conversion rate for the manual. So the final result was cost per conversion. $868 on the Smart. And the manual came in at a solid consistent $450 cost per conversion. Technically it was 448. So it was a no brainer, absolute failure. And I managed it the same way. And let me go through a few things that absolutely just, you know, really bother me about smart bidding. There were clicks in this smart bidding campaign that cost. And I list them out, I wrote them down so I can tell you. A $350 click, a $240 click, another $240 click, a $200 click, a $184 click, a $141 click. And it goes on. I mean, just right there, I've listed $1,000 in, in just what, six clicks. Blew out the budget in for that whole day. Not really, but close to it. You know, in just a few clicks. Certain days you just see bam, just massive clicks come through. Did these get conversions? Who cares? They cost 350 bucks. I'd rather have 166 affordable clicks than 60, 66, where I'm betting the house on these ridiculously high CPCs. And the end result, you know, it failed. It did not work. I shut it off, I put all the money back into manual. I'm back in manual 100%. Okay. And you know, you want to know something else? The average, the high CPCS that was coming from the original, the manual, CPC $59, $56, $34, $34. That's what the, that's the max CPCS I was getting on manual. You know why? Because I set the bids. I tell Google, no, no, no, I don't care how good a search looks, don't blow it up. Don't spend $350 on one click. I know that there are times when the system works, but it is absolutely mind boggling to me that the system can make those kind of bets. And you know why? It's not betting with their money, it's betting with my money, my client's money. And that makes me angry. It sure is betting heavily. It's betting the house on all just, you know, just a fraction of the clicks. And in the end it failed. And I noticed a few other things too. I'll wrap it up here with the last couple notes. I noticed that it prioritized the mobile click to call. This is probably because it's H Vac and so it, it, it would prioritize hitting first position so that the phone number would show. So the amount of traffic and the amount of CPC spike for the mobile click to call impression was crazy. It's $205 on the average CPC for main, for, for mobile click to call. So that's when the phone number shows and people click on it. So very, very high. That seems like it killed the campaign. Did I tell it to do that? No. Smart bidding did that. Also side note here, that was really interesting. My campaign happened to be doing very well with site links and for some reason it completely ignored site links, didn't show my site links and my site links converted very well. I have some, some very specific site links that do well and it completely ignored those. Got very few impressions, got no conversions because of that. Another reason it failed. So there's a list. You don't know why smart bidding gets a thumbs down for me so many times because of these unsmart decisions that I see it continually making. And I fall back to a manual system where I can make the decision and I don't rely on some arbitrary software, some algorithm in the sky, betting my money, betting someone's money on clicks that may or may not get leads doesn't make sense to me. I'm not in the business for that. If you'd like to talk with me more about automated bidding and make fun of it and laugh and mock it, I'd be happy to do that. If you'd like to talk about manual bidding, I do that as well. You can reach me chrishaefer.com you can reach joeybidtner.com or otherwise you'll find me right here on the paid search podcast next week. See you then.