"Hello and welcome back to the Collective Clicks podcast. This is your host Brandon Baitman, and today I'm going to be joined by our Director of Paid Media, Garrett Kraan. We're going to talk all about bid strategies. How are you doing today, Garrett?"
"Good, how are you?"
"Hey, doing fantastic. Thank you. Excited for another podcast. This is number five out of seven in our series of the... what do we call them? The PPC Essentials?"
"Yeah, PPC Essentials."
"The seven PPC Essentials that make campaigns butter. That's right. So, super excited for this. As is my number one passion, my favorite channel, and so much of that comes down to bid strategies and auctions and how all that works. So that's what we're talking about today: bid strategies. And if you don't know what that is, then don't worry about it. We're going to talk all about that and how it works. But I think before we dive fully into that, we have to understand why bid strategies are even important and what they are. Because we've been in this changing world. If you think of advertising a long time ago, then what did you do? You buy like a billboard, and that billboard's in this place. And then comes TV, and then TV ads run on this certain channel, and whoever's watching that channel gets that. But then things have changed over time to where now, like, you open up Facebook for example, and you see one ad, I see a different ad because it's not like there's just an ad that's on Facebook, right?"
"And a lot of this has Google kind of pioneered a long time ago. So I think a great way to start, Garrett, would be if you could jump into the foundation of this, which is the Google Ads auction and what exactly is happening there. Why does it matter? Just so we can set the stage for what bid strategies are and why they matter."
"Yeah, for sure. This can get pretty in the weeds, and so I'll try to keep it as high level as possible just so people don't get bored. But it basically comes down to: every time a person makes a search on Google, it fires like an instant auction where everyone, like all of the advertisers, rush to the auction and they give their bid and say, 'This is how much I'll pay to appear on this person's search.' And Google takes into account the bid and also the experience that your ad and landing page gives to the user, and it takes those two data points, merges them, and then picks the best combination of bid and experience and gives that person... makes them the auction winner."
"And the reason why they take into account the experience is because they want people to get relevant and easy to understand information that answers your question. So if you give your searchers what they're looking for and it's relevant and people seem to get what they're looking for, then going forward, Google is going to reward you with auction wins at a lower bid than someone that gives a bad experience and might bid higher than you."
"Yeah, absolutely. I mean, it really comes down to... have you ever had that experience where you click on an ad and then what you get on the other side is not at all what you were expecting to get? So you click back, and when you do that, if that just always happens when you use Google, then you're not going to really use Google anymore, right? Or at least you're not going to click on the paid ads. I think some of us have already been conditioned to do that, right? On paid ads very much anymore because I always do it's just to get those paid ads people just to..."
"Yeah, just lower their conversion rates. Just one more bit and I'll read them and stuff like... I can pick out something that'll have a good experience behind it from something that won't based on the ad copy. But the point is, Google wants people to click on paid ads forever and always be getting the information they need there."
"So, but as it relates to quality, we're not going to touch on that too much today just because all this other stuff that we talked about, like basically all of the other pillars, relate really heavily to the ad quality, to the Quality Score as the technical term, or more simply as you said it, the experience that you provide someone. So really, that's just about making your landing page relevant like we talked about, and making the ad copywriting good, and targeting the right keywords."
"If you do all that stuff, then your Quality Score shouldn't be bad. But then the bids, how do you know what bid to put into the auction and all that kind of stuff is a tough thing to figure out. And it really comes down to bid... I think a foundation for this is just understanding some of the different bid strategies that existed, what they base their information on, and then from there we could talk more in-depth about when might it be more appropriate to use one bid strategy or another. But could you give an overview of like different ways that you can go about bidding?"
"Yes, so this is kind of like a history of Google episode, but when Google first started, all bidding was basically only dictated by the search being made. So like, and let's say in our industry, if someone searches 'sell house fast near me,' I bid this. If someone searches 'companies that buy houses,' I bid this. And that was based on a bidding approach called manual CPC, right? And so it was just purely, I think that this keyword gives me this quality, and so I can bid here and still see a profit."
"But over time, Google has rolled out what they call automated bidding, and that takes into account all of the thousands of data points that Google has on each person. And when we use an automated bidding approach in our account, we not only factor in the search but the searcher and what they have, like who they are, what they've been searching. And we have Google take that into account as it sets bids for us."
"And so those are kind of the two categories of bidding strategies. There's manual that only looks at the search, there's automated that looks at the search and the searcher and just basically a lot more information because they even roll down manual... like some stuff, right? Where you could target based on... actually in this industry, practically nothing because of all the Equal Opportunity housing regulations."
"I think there's some things that you can do it based on though, like you could change your bid by device or by household income, but it's so limited compared to the tens of thousands of data points that Google has that if they were to publish would probably scare everybody into never using Google again."
"Yeah, but we have on good authority that there's a lot of stuff there. Things like income data, demographic data that could be tied to someone's online history. Like maybe they just searched 'sell my house' in Google now, but two days ago they searched 'we buy houses.' That tells you something about what it could mean when they're searching for 'sell my house' right now. What websites they visit... if you just knew everybody in the world's internet browsing history, you would know a lot about those people. And Google knows that."
"Add on to that that they can connect that to like third-party data providers that have, for example, credit card data and what kind of things people are purchasing. And all of this stuff, it really helps you understand because what's most predictive of future behavior? It's past behavior. If you have a lot of the data about that past behavior, you can relatively simply predict the future behavior of somebody."
"So there's... I don't know if 'holy war' is the right word around bidding strategies, specifically automated versus manual, and I'll brief kind of the high level. I'm curious to hear your specific thoughts on it."
"Yeah, people who are hardcore manual basically are like... have this idea that like automated bidding is giving the reins to Google. You can't trust Google, they just want your money, and I know better than Google. It's like the consensus there. And automated bidding is lazy. People that are really pro-automated bidding might reference a lot of this data that could be used, they might reference better results, they might have different circumstances they worked on in different... that have caused them to like automated bidding."
"And this has been like a shifting game. I think everybody agrees pretty much that automated bidding is a lot better now than it's ever been before. It's been on that growth trajectory over the past several years. But still, many people fall on either side. What's your opinion on which bid strategy is best or which category of bid strategies? If we're speaking to like just this industry, just REI?"
"There's... I think one of the hardest parts of PPC in the industry is that there's not a lot of conversion volume and there aren't a lot of clicks in a given time period given the cost per click and the cost per lead that's common in the industry. And so given that manual is going to work better on low data volume accounts and worse as there's higher data volume, what I would argue is that if an account is only operating on its own data and it doesn't have a huge budget, I think it makes sense to run on manual."
"Like I think there's a point where you probably know more about your audience than Google does if you're getting four or five leads a month, right? Or even beyond that, like I still think that you probably know more than Google given that data size. But as there's higher spend and higher volume in an account, that balance shifts towards being in favor of automated because as Google has better volume, more data points that it can see like who your ideal audience is, then all of a sudden it can better make that like ideal searcher that best like responds to your ads."
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