Episode Summary: Smart Bidding Fails Against Manual Bidding (Episode 463)
Release Date: May 19, 2025
In Episode 463 of The Paid Search Podcast | A Weekly Podcast About Google Ads and Online Marketing, host Chris Schaefer delves deep into the ongoing debate between smart bidding and manual bidding strategies within Google Ads. Through a meticulous examination of a real-world experiment, Chris illustrates why, in certain scenarios, manual bidding outperforms its automated counterpart. The episode also features insightful segments from co-host Joey, including an in-depth look at a new Google Ads metric, followed by a Q&A session addressing listeners' pressing questions.
1. Introduction and Episode Overview
Chris kicks off the episode by setting the stage for a critical analysis of smart bidding versus manual bidding strategies. He promises to share a specific instance where smart bidding was put to the test against manual bidding, ultimately leading to unexpected results that favored the manual approach.
2. Joey's Metric of the Week: Conversions Platform Comparable [02:52]
Reintroducing his segment "Metric of the Week," co-host Joey explores a newly introduced Google Ads metric—Conversions Platform Comparable. This metric elevates view-through attribution by attributing 100% of conversions if an impression was recorded at any point in the user's journey, regardless of the actual conversion pathway.
Key Insights:
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Purpose of the Metric: Designed to offer a platform-agnostic view of conversions, allowing advertisers to compare performance across different platforms like Google Ads and Facebook.
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Potential Pitfalls: Joey warns that while this metric can be useful as a leading indicator for monitoring trends over time, it can be misinterpreted or misused by agencies to artificially inflate performance numbers. For instance, attributing conversions that didn't directly result from Google Ads efforts can mislead advertisers about the true effectiveness of their campaigns.
Notable Quote:
"Conversions platform comparable... takes 100% of conversion attribution if at any point in somebody's journey an impression was recorded." — Joey [02:52]
Joey emphasizes the importance of using this metric for observational purposes only, ensuring that it doesn't interfere with optimization strategies that rely on more direct conversion data.
3. Listener Questions and Answers
a. Utilizing ChatGPT for Ad Headline Generation
Question from Carlin (Texas):
"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?"
Chris's Response: Chris acknowledges initially being skeptical about AI tools but credits Joey for introducing him to ChatGPT. He clarifies that while he doesn't use AI for keyword research, he leverages it extensively for crafting diverse and creative ad headlines. This approach helps break free from repetitive headline patterns and reduces the reliance on "throwaway headlines."
Notable Quotes:
"I use AI to help me write headlines... it breaks outside of the creativity box that I find myself in." — Chris
"I don't really know how to say it any differently, right? I'm going to need to say things in a lot of creative ways." — Chris
Chris details his method of instructing ChatGPT to generate headlines under specific constraints, such as character limits and thematic focus, ensuring that each ad group maintains a unique and relevant messaging strategy.
b. Effectiveness of Google Ads Across Industries
Question from Matt:
"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?"
Chris's Response: Chris candidly shares his experiences with industries where Google Ads have consistently failed to deliver desired results. Although he acknowledges that outcomes can vary, he highlights a shortlist of industries that, based on his track record, are particularly challenging:
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Realtors (Home Sales):
- Chris struggles to create compelling campaigns for realtors focused on buying or selling homes, citing the difficulty in differentiating agents based on ad content alone.
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Videography and Photography:
- General videography and photography services often fail to convert leads into sales, except for highly specialized niches like headshot photography.
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Chiropractors:
- Campaigns often attract numerous inquiries that don't translate into actual conversions, leading to wasted resources.
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Travel Agents and Vacation Booking:
- Highly preference-driven services where ads struggle to influence purchasing decisions effectively.
Underlying Reason: Chris attributes the failure of Google Ads in these industries to the highly personal and preference-based nature of the services. The effectiveness of an ad in these sectors hinges more on personal connection and subjective appeal, which automated or standardized ad strategies struggle to capture.
Notable Quote:
"It's entirely preference based. So I think drawing a bigger picture and say... deep personal conviction based on preferences... is a big aspect of the entire industry." — Chris
4. Main Topic: Smart Bidding vs Manual Bidding
Chris transitions into the heart of the episode, presenting a detailed case study comparing smart bidding against manual bidding strategies.
Experiment Overview:
- Client: A Dallas-based company selling air conditioner units (HVAC services).
- Duration: Approximately six weeks.
- Methodology: Chris set up a formal experiment within Google Ads, allocating 50% of the budget to the existing manual bidding strategy and 50% to a smart bidding strategy using Target CPA (Cost Per Acquisition) as recommended by Google.
Results:
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Cost Per Click (CPC):
- Manual Bidding: $34
- Smart Bidding: $81 (2.5 times higher than manual)
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Clicks Generated:
- Manual Bidding: ~200 clicks
- Smart Bidding: ~66 clicks (significantly fewer)
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Conversion Rates:
- Manual Bidding: 7.5%
- Smart Bidding: 9.4%
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Cost Per Conversion:
- Manual Bidding: $448
- Smart Bidding: $868
Analysis: Despite a slightly higher conversion rate, the dramatically increased CPC in the smart bidding strategy led to a higher overall cost per conversion, rendering the smart strategy ineffective in this scenario. Additionally, Chris highlights several critical issues observed during the experiment:
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Exorbitant Click Costs:
- Instances of CPCs soaring to $350, $240, and even $1,000 for single clicks, leading to budget blowouts.
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Neglected Site Links:
- Smart bidding disregarded effective site link extensions that consistently drove conversions, resulting in missed opportunities.
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Overemphasis on Mobile Click-to-Call:
- The strategy prioritized mobile phone calls, inflating CPCs without corresponding increases in meaningful conversions.
Chris's Critique of Smart Bidding: Chris expresses frustration with smart bidding's lack of control and unpredictable spending, emphasizing that it jeopardizes client budgets by making unfounded high bids on potentially low-conversion clicks. He asserts a strong preference for manual bidding, where he can directly manage and optimize each aspect of the campaign without relying on automated algorithms that may not align with specific business objectives.
Notable Quotes:
"Smart bidding... is absolutely mocking it because smart, that is absolutely not smart at times because... it's spent per click 2.5 times higher." — Chris
"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." — Chris
Conclusion of Experiment: Given the unfavorable results, Chris promptly discontinued the smart bidding campaign and reinstated the manual bidding strategy, reaffirming his stance that manual control leads to more predictable and cost-effective outcomes.
5. Final Thoughts
Chris wraps up the episode by reiterating his steadfast belief in the efficacy of manual bidding strategies over smart bidding within Google Ads. He invites listeners to reach out for further discussions on automated versus manual bidding tactics and teases future episodes where he might delve deeper into optimizing Google Ads campaigns.
Contact Information:
- Chris Schaefer: chrishaefer.com
- Joey Bidtner: joeybidtner.com
- Paid Search Podcast: paidsearchpodcast.com
This episode offers a comprehensive exploration of the limitations of smart bidding in specific contexts, advocating for the nuanced and hands-on approach of manual bidding to ensure optimal campaign performance and budget management.