Is Your Agency Asleep at The Wheel?

By Dan Pietrucha

5 Warning Signs Your Agency Doesn’t Have An Automation Strategy

Since its launch in 2016, Google’s Smart Bidding technology has proven its value. Companies of every size are using the machine learning tool to automate bids and maximize conversions—including within specific targets such as ROAS or CPA.

But bid automation is not without risks. Optimizing the process depends on strategic account set-up, as well as routine oversight, testing and adjustments. We’ve also learned from experience that extreme variations in conversion rates signal a need for increased intervention.

Not surprisingly, Google Ads auctions are highly volatile in the time of COVID-19. Though challenging, this is an opportune time to review your accounts for common automation red flags. These warning signs may indicate missed revenue opportunities and wasted ad spend—something few companies can afford with the widespread budget cuts of the moment.

Lack Of Bid Changes, Especially When Conversion Rates Are Volatile

Your conversion rates rise and fall in response to 1) expected patterns, such as seasonal shopping, and 2) unexpected factors, such as COVID-19. Your accounts should reflect those changes with coinciding adjustments to your Smart Bidding targets. A lack of bid adjustments over a month, business quarter, or even an entire year suggests a lack of attentiveness. Modern ship navigation is automated, but you need someone at the helm to ensure ideal outcomes.

Active bid management is especially crucial during periods like Cyber Weekend, when conversion rates spike 100 percent and more above average. Other events that significantly impact consumer behavior, such as COVID-19, also call for active, hands-on management.

Minimal Or Haphazard Shopping-Campaign Segmentation

Less segmentation in shopping campaigns means fewer buttons to push and levers to pull for those engaged in active bid management. Unfortunately, it also means persistent and sizable inefficiencies. The reason? Google’s automation manages to a given ROAS or CPA target at the ad-group level. Minimal segmentation inevitably means bundling products with materially different performance levels (and differing product margins for certain advertisers). A granular approach requires monitoring more targets, but it also means hitting closer to your return goals.

Additionally, low segmentation makes it challenging to adapt swiftly to market trends. As an example, consider hand lotion products currently seeing elevated conversion rates. When grouped with other products not subject to the same spike in consumer demand, it is difficult to aggressively seize the opportunity in the former without over-investing in the latter.

Use Of A Single, ‘All Products’ Smart Shopping Campaign

Smart Shopping is Google’s newest, fully-automated shopping solution. As in traditional shopping campaigns utilizing Smart Bidding, Smart Shopping is subject to segmentation issues. One common problem is marketers taking a one-size-fits-all approach and running their entire catalog in a single Smart Shopping campaign.

Google bears some responsibility for this implementation miscue, as running a single campaign was their initial guidance for testing. But for a lot of experienced advertisers, this didn’t pass muster, and indeed Google’s thinking about their Smart Shopping product has changed; they now recommend multiple campaigns, especially for larger accounts, though the range varies considerably depending on the advertiser.

No Automation And No Testing Of Smart Bidding

There are valid reasons to avoid Smart Bidding, such as minimal conversion volume, which may inhibit automation. But at this point in its development, completely bypassing Smart Bidding is questionable, whether in favor of exclusive use of an agency’s proprietary bid management software or that of a third-party vendor, account management inertia, or simple reluctance to leave the era of manual bid adjustments behind.

Agencies and martech companies heavily invested in their own automated bidding solutions would naturally advise against Smart Bidding. But any advertiser paying a premium for proprietary tech owes it to themselves to test these tools against Google’s Smart Bidding solutions—particularly as budgets tighten in the second quarter of 2020.

Flagging Campaign Performance

Widespread adoption of Smart Bidding in the last three years has made for an increasingly challenging bid landscape. Automation – even when deployed sub-optimally – may provide a substantial boost to competitors previously relying on manual bidding (especially if their approach to manual bid adjustments was similarly unsophisticated.) Advertisers failing to adapt their bid strategies to these new circumstances may see their performance suffer as they lose out to more enterprising competitors.

Google’s Smart Bidding solution is one of the most important paid search developments in the last five years, having sparked the widespread adoption of bid automation. But as a relatively new tool with a rapid rate of adoption, there’s also persistent confusion about best practices.