Manual PPC Bid Management is Dead

By jameszol
Published on July 21, 2010

manual ppc management is dead When I started semvironment as an agency* several years ago, I was proud of the crazy results we were able to achieve with manual pay per click management techniques.

We used massive custom spreadsheets (customized for each client! no ‘rubber stamp’ approach!) with rules that would tell us to move a bid up or down or change the ad copy or revise the ad group…it was really quite an amazing ppc management tool and I would often brag that we had tested a handful of ppc management software in the space only to outperform it manually every time!

That was before most web-based or desktop based ppc management software had extensive, customizable bid rules to the extent we had in our spreadsheets.

A Little Challenge

Recently, I was challenged to manually manage $7,000+ ad spend in one day ($200,000+/mo) while striving to maintain somewhat strict average cpc and cpa goals.

My initial thought was “piece of cake, this won’t take too much time so I can focus on other campaign and business metrics that I think will make a bigger impact on future ROI and the business itself.”

I ended up spending most of the day downloading stats into all of the Desktop Editors and utilizing the regular user interfaces at the search engines (Google, Yahoo! and Microsoft only) to strive to project what would happen 2 to 4 hours in advance because I knew that most stats reported were going to be behind by at least that much.

Here’s how it worked: Basically, you would raise a bid by 150% for an hour or two and your average will definitely be much higher for those two hours than it was prior to that bid change. Therefore, it would make sense to have to lower it before you even see the stats update for those two hours while studying past metrics and analytics for day parts that you think should help the overall volume of conversions while striving to maintain better than average costs per click for that specific day. Then you would go back to adjust to 85% of the original starting bid to continue the semi-intelligent day part based on your studies and continue your way hour by hour at a minimum to end the day with a hope that the next day proved you reached your average cpc/cpa goals the prior day! Wow that is a mouthful to…say…in your head…as you read those words…

Are you still with me? If not, don’t worry! I’m basically saying that rather than spend my time on important business metrics and letting software help me manage the tedious bid management…I spent my day barely studying historical data in time to make day part adjustments not just on a campaign level but on a keyword by keyword level too!

The Results of the Challenge

It wasn’t a waste of time because I DID hit the cpa/cpc goals (/sarcasm)…but I would have achieved a lot more for this advertiser than I did in that single day challenge if I didn’t have to spend so much time adjusting bids and making tweaks and paying minute by minute attention to where my averages were.

If you are managing any decent volume of ad spend manually…then I can almost guarantee that you are wasting your time and your employer needs a wake up call. Is it really efficient to pay an expert to try to do what a robot does for most of your competitors? Humans aren’t supposed to be robots! We’re intelligent! You’re intelligent! Should you really spend most of your time changing bids day in and day out? What value are you really bringing to a company if you do that?

Sure, your value in producing decent profits might be there…and you will know the accounts better than anybody…and you will be susceptible to lack of experimentation and unrecoverable errors…and your competitors are probably running circles around you with their fancy schmancy software…but hey, at least you’re profitable and you can grow spend and profits manually with the best of them.

Wow, manual ppc bid management is glorious!

manual ppc management is really dead

7 Reasons Why Manual PPC Bid Management is Dead

1. While you’re adjusting bids manually, your competitors are writing and testing creative ad copy.

2. While you’re adjusting bids manually, your competitors are creating new landing pages to test and driving incremental improvements in conversion rates on the website.

3. While you’re adjusting bids manually, your competitors are collaborating with their designers and programmers to improve landing page speed, usability, and solving other bottleneck problems in the conversion process…improving conversions even more!

4. While you’re adjusting bids manually, your competitors are developing a strategy and mapping out future promotions/offers with their sales and marketing teams.

5. While you’re adjusting bids manually, your competitors are utilizing ppc management software to change bids for them – and not only that…

6. While you’re still adjusting your bids, your most advanced competitors are utilizing truly automated algorithms that perform millions (and even BILLIONS) of mini-tests between keywords and ads in every ad group and every campaign at every hour of every single day…and THAT technology is learning with statistical prediction models that your brain (and my brain) could never comprehend or test fast enough to compete with…and what’s spooky is that they’re accurate most of the time!

7. While you’re adjusting bids manually…your most advanced competitors who are using self-learning technology to manage theirs are scaling much faster than you can dream of it!

Seriously, all is totally lost for the manual ppc bid manager. I honestly don’t know why I was successful with reaching my goals with the advertiser described in the challenge above. Perhaps it is because I have been in the space for quite some time…instinct…I would love to believe that. Realistically, I’m inclined to think it was luck mixed with a little skill. Skill can only take you so far when you’re up against a robot that performs thousands of tests each day and you can only get in a manual dozen on a good day…

If you’re currently managing pay per click advertising manually, I recommend you start looking at software immediately. Not just any software though – you will want to look for (and encourage your company to purchase) true self-learning ppc management technology.

What do I mean by ‘true self-learning ppc management technology’?

I would love to tell you right now…but I’m going to have to ask you to tune in next week for the answer to that question so DO NOT purchase ppc technology until then!

(Update: Here is the follow up post that answers the question “What is Truly Automated, Adaptive PPC Bid Management Technology?“)

*semvironment is not an agency any more, it is simply a search engine marketing blog now. :)

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24 Responses to “Manual PPC Bid Management is Dead”

  1. Bradd Libby (1 comments.) says:

    James,

    Thanks for writing this piece. It takes a big man to admit that some problems are too complex to be solved efficiently by a human alone, regardless of how smart/experienced/talented/etc. that person is.

    The SEM world is quickly learning that the “first-generation” bidding tools: spreadsheets, rules-based bidding, and portfolio-based bidding are falling by the wayside and being supplanted by probability-based systems based on rare-event physics and by hybrid approaches.

    The Search Agency will soon be publishing a white paper on this very subject, which will be available at: http://www.thesearchagency.com/whitepapers/ and called ‘Bid Optimization in Paid Search’, or similar. I hope you get a chance to check it out before posting your follow-up article.

  2. Stuart Draper (2 comments.) says:

    First things first, glad to see you back blogging James! You write great stuff.

    Our company has found that bid management tools are spendy, and while they provide amazing reports (acquisio and clickable), we have found that Google’s conversion optimizer gives us the best results.

  3. jameszol says:

    @Bradd Thanks, I’ll check it out.

    @Stu You’re right, the tools are spendy – and I have some solutions that will at least get you part way there…Google’s Conversion optimizer (GCO) does do a fantastic job…to a certain degree. GCO has it’s downsides while it is definitely better than not using any technology at all!

  4. searchengineman (1 comments.) says:

    Unfortunately automated tools are not an option when these companies demand 5% to 10% margins on spend, (Don’t forget API costs!), yes in a perfect world we should all be developing and optimizing every page – assuming you can convince the HIPPO’s. Guess what. That means you are effectively handing your profits to these 3rd party companies, not to mention you are giving them the keys to your clients and data, if the solution runs on an outside server.

    You need lots of clients and scale before this even makes sense. It’s kinda becomes a chicken and an egg scenario. You hand you PPC profits to another company in the hopes you can make greater margins doing the other stuff.

    Searchengineman

  5. jameszol says:

    @searchengineman You might be surprised with the cost efficiency even when they are priced like an agency is normally priced…and you might be surprised at how many niches/industries are riddled with competitors using expensive automated technology. The problem is that if you choose to do manual bid management, you might be profitable but you won’t scale or prove nearly as profitable as those that scale profitably.

    Automated technology really should never replace a person or an agency at all despite the costs…if it does, then the HiPPOs don’t understand the real role of a ppc manager or what a ppc manager should really be doing. This type of technology by itself can certainly lose a company hundreds of thousands of dollars w/out a pro inside or agency-side at the helm. Why take that risk?

  6. Alan Mitchell (2 comments.) says:

    Hi James,

    Some nice arguments you put forward there, and I agree with most of your conclusions.

    However, it seems there are a few issues you may have overlooked when you ask, ‘Should you really spend most of your time changing bids day in and day out? What value are you really bringing to a company if you do that?’.

    Although I agree that bid management should not take up the large proportion of a PPC manager’s day, there are subtle but clear advantages to manually changing bids.

    Benefits include increased connectedness and understanding of the account, increased tendency to spot trends, and a better knowledge of keyword opportunities.

    Although I agree bid management can help remove a large amount of the donkey work, when I manually find myself changing bids it is very rare that it doesn’t prompt me to improve other aspects of the campaign. I don’t see myself as a luddite, but I don’t think manual PPC bid management is as dead as you make out.

    Cheers for a interesting read,
    Alan

  7. jameszol says:

    @Alan Thanks for your thoughts!

    I agree that one will always want to stay connected to their account and one could choose how they connect…but I would respectfully disagree that manually adjusting bids increases one’s tendency to spot trends. Reviewing keywords/analytics regularly will certainly provide a vast amount of insight for spotting keyword opportunities.

    I find myself much more connected reviewing analytics, reports, statistics, etc than when I am changing bids. Sure, it pays to pay attention to keywords and their KPIs but that doesn’t mean one should go change the bid to fix any potential problems. I would much rather tweak the automated software (or bring it up w/ an agency/consultant/ppc manager) to address the problem because it could be that the problem is associated with more than that single keyword.

    I’d be willing to bet that a statistically predictive tool could spot and adapt to trends faster than one who changes bids manually. Would you have time/energy to day part hour by hour each day of the year compared to the same date last year/day last week/day 1 month ago/date 1 month ago? That’s a 24/7 proposition! ;)

    I would stand by my position even on an account or campaign with a handful of keywords…

    Thoughts?

    I really appreciate the dialog!!

  8. Alan Mitchell (2 comments.) says:

    Hi James,

    You make a good argument. I guess any automated tool is only as good as the user who sets the rules, so as long as they are reviewed frequently, there is no reason why bid management tools can’t work effectively.

    My only problem is that having an automated tool can easily create a false sense of security – that the account is now ‘under control’ – but is measures are taken to keep in touch with the account, such as the reporting you outlined above, again I don’t see this being a problem.

    Although I see the value of automation, I don’t think it is for small accounts with minimal click volume. There are costs and time associated with the implementation of a new tool, so these will need to be considered. I also rarely find myself optimising keywords where clicks are less that 200 (as conversion data will largely be insignificant at this low volume), so if only a small number of keywords frequently exceed 200 clicks, automated bid management may be overkill.

    Cheers,
    Alan

  9. jameszol says:

    @Alan You’re right, small accounts typically don’t have enough data for truly automated technology…but there are some good alternatives for those accounts. In fact, the technology I keep referring to as ‘truly automated self-learning’ is probably not for advertisers spending under $50k/month or even under $100k/month in a lot of cases…and these are the accounts that should at least be taking some steps in the automated direction so they can eventually meet or exceed those spend levels and be prepared to more fully embrace advanced bid management technology as soon as they reach the right volume in clicks & spend.

  10. Tobit (1 comments.) says:

    Hey James,

    Very interesting piece. I would suggest that it’s probably a bit premature to call manual bidding dead, though the end may be in sight. The human element though is absolutely crucial, not in managing the bids necessarily but certainly in understanding why certain areas are performing as they are and using this information to spot opportunity or hazards.
    Put simply, to get the best out of automated systems it’s vital that you re-invest the time gained into analysis, planning and campaign development. It has always been these areas which separate a decent analyst from a great campaign manager.

    Tobit

  11. jameszol says:

    @Tobit You’re spot on regarding the reallocation of time. People become much more vital to a business when they can spend more time studying, planning and developing/executing campaigns vs spending that time manually adjusting bids.

  12. Jason (1 comments.) says:

    James – Echoing most of the responses here in saying that you’re spot on…in certain cases (as you point out in one of your follow up comments). I too have found that replacing algorithmic, automated, bid management with a more manual approach has proven to consistently yield better performance results. Again though, these were accounts that hovered around $100k/month and were highly geo-centric (lots of keywords – all with low levels of traffic individually). For accounts with a smaller keyword set and the same or more spend attributed to those keywords, the results may be different.

    Also – to your points on time allocation and how manual bid management takes away from creative/landing page testing, etc. What I’ve also found is that automated systems – again for lower volumes terms in my experience – simply overdo it with bid changes. We’d always hear stats from our rep on how many bid changes they made on a daily basis. Our manual plan of attack called for changes every 2 – 4 weeks, allowing plenty of time to rigorously test other elements of the campaign.

    Anyway, thanks for the article. Always great to read the perspective of others in the space!

  13. SEM Dude says:

    Automated PPC = wasting impressions and clicks. Every automation needs a human interaction. I have over 10 years experience in SEM and at an agency. Every automated tool we have created or used via 3rd party has resulted in mediocre results.

    Automation does not account for seasonality. Additionally, it does not account for high priority & converting but lower efficient keywords because it wants to optimize that towards your goal.

    Optimal results require a manual PPC strategy. While you may have time to work on other parts of a campaign, I’m sure manual approaches to bidding will result in more REVENUE not just a KPI goal.

  14. billy says:

    this article sounds very much like you are trying to sell something….

    Every company I have worked for, we did things manually…and I’ve worked at places that spent $20k/daily on ppc.

    it seems like you spend too much time making bid changes.

  15. jameszol says:

    @Jason Thank you for your comment! I must say I agree that some automated software sales reps and managers alike put too much weight on the sheer number/volume of bid changes per day their software makes…when, as you suggest, some lower volume terms may/may not merit that rigorous approach. Real automated software is so mathematically advanced w/ multiple stats doctors/geniuses behind the algorithms/predictive models that it really doesn’t take very many clicks to produce or predict a pattern that is eerily accurate to a 99% or more Confidence level…I think there is quite a bit of confusion in the software marketplace in regards to automation – and I’ll touch on that in this week’s post.

    @SEM Dude Hmm…I think the end of my thoughts to @Jason are worth repeating here. I believe statisticians and real automated bid management solutions DO take into account seasonality and they are quite amazing with their ability to adapt to sales, seasons, etc. There appears to be a lot of confusion between what I consider ‘true’ or ‘real’ automation and what is marketed in the marketplace as ‘automated’…I hope you, SEM Dude (aka Anonymous?) care to come back and comment on my next post. I also wish you would own your comments. Why hide from your opinion? Everybody is entitled to their own opinion – own it. ;-)

    @billy Haha! I thought it sounded a little salesy too while editing the post…but I can assure you, I have nothing to sell except for the concept that manual ppc bid management is dead.

  16. Mark says:

    Can someone tell him that beyond the first link to a given page, all further links are useless? Linking 5 times to the same page doesn’t work dude. Stick to SEM :)

  17. jameszol says:

    @Mark rofl – yeah, plugin issues w/ those internal links. although i am in the crowd that does not believe the alleged ’1 internal link to a given page per page’ rule that has allegedly been proven w/ a non-significant number of sites…i do believe, however, that there is some sort of significant decay in value for each subsequent link on a page that points toward the given page. also…your comment is irrelevant on this blog post…which is entirely about ppc… :P

  18. Dan Perach (1 comments.) says:

    Excellent article and insightful comments.

    As most… ALL of my accounts are “small”… I’m stuck with manual bid optimization, although using Editor… its not such a big deal, if you know what your doing… http://blog.ppcproz.com/2009/11/keyword-bid-management-method.html

    That being said, I really savor the day when my small accounts can “graduate” to Google Conversion Optimizer bidding.

    Instead of needing to adjust bids religiously, at least 2x/week, with CO you can adjust adgroup CPA bids, and/or adjust campaign budgets… as well as pause underperforming kws (but not before finding new kws from the sqr)… CPA bidding allows the best of all worlds for small/medium accounts… keeping an eye on the ball, and performing.

    I’ll post to my Blog the workflow I use for CPA bidding; that’s not a promise though ;)

  19. Andrew Nattan (1 comments.) says:

    Well, if that’s the standard experience of manual PPC, it’s probably better off dead. I can’t think of a more tedious and less efficient way to spend a marketing budget!

  20. jameszol says:

    @Dan Perach Thank you for your thoughts – and I agree, very insightful comments. Editor is certainly a fantastic tool to use, even if one leaves bid management up to the bots. It makes ad editing/writing a breeze too! I sent out over 4000 ads yesterday for testing via Desktop Editors. Granted, they were all similar – but it made scaling the ad test side that much easier. Conversion optimizer is a decent tool too.

    @Andrew Nattan Haha! Very well said – I couldn’t agree more!

  21. SEM Dude says:

    @Jameszol. While the automation may account for seasonality WHEN it comes, it does not effectively prepare your positions and bids BEFORE it arrives. As you mentioned, automation can ADAPT but not PREPARE! Manual approach gives you valuable time to capitalize on revenue that the automation would miss.

    Automation, additionally, does not allow less efficient but high converting terms, to maintain their higher position when setting KPIs in the tool. It would see these terms as “underperforming” and bid them down when in reality, you may want to capture those conversions and use the efficiency of the rest of your portfolio to allow for that higher positioning.

    It may just be my experience but any automated tool we have used has resulted in higher costs and lower efficiency. At a new position I was in, my company was using automated tools through a well known search agency. While we were meeting the goals we asked our agency to set, there was thousands of dollars being lost in getaway bidding, self competition (a whole new discussion!), match types and overall being careless when relying on tools.

    We’ve performed many tests with “human vs. computer” and human has almost always won.

  22. Mary O'Brien says:

    Hey James,

    Great article and right on the money. We have found that folks get really confused when selecting a bid management solution and too many end up continuing to bid manually when there is no need for it.

    We have just written a very large objective research report on the merits/drawbacks of using a bid management solution. We interviewed a ton of folks (vendors, bid management users, advertisers, agencies etc.) and the conclusions were quite surprising. You can download a free synopsis of our findings here: http://ppcsummit.com/landingpage/lp1.html and if you’d like some insight on the information we learned, feel free to ping me before you write your next article.

    In most cases (not all) your time is much more productively spent with keywords, messaging and landing page optimization, than in poring over your bids all day.

    That said, a human still has to be involved in the bid management process, and be an informed user. These tools are only as good as the information you put into them, and many users don’t set up their goals or bids correctly and then wonder why the tool doesn’t give them the returns they expected.

    A tool is a tool, not an alternative to human intervention and analysis but many marketers have a set it and forget it mentality and that’s what gets them into trouble. You can’t manage a pay per click campaign like you would a standard media buy, although many agencies would like to think you can.

    To @Dan Perach’s point, we found there are a couple of tools that are now cost effective for managing small business accounts, so he might want to check them out again.

    Cheers, Mary

  23. jameszol says:

    @SEM Dude – I would love to chat with you about your experiences and about which tools you have tested. I think next week’s post would benefit by having your voice involved a little bit if you don’t mind. Did you get a chance to read the latest post – regarding what I think is a big disconnect in our industry between what real automation is vs what is being advertised as automation? I think you would like it – and I would like to hear your opinion…

    @Mary Thanks so much for stopping by to share your thoughts with us. Your contributions to the industry as a whole are amazing! I just submitted my email address to get that report and will read it soon!! It sounds like your findings will fit nicely with what I have planned for next week’s post.

    @everyone Sorry I didn’t update this post yesterday with the latest post in the series. Looking forward to your thoughts on what I think is an industry-wide misunderstanding regarding bid automation.

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