Should You Use Automated Bid Rules?

In the world of paid search marketing, keyword bidding is one of the most vital parts of account management. Live auction bidding is based on numerous factors both internal (account management) and external (competitors) and takes a lot of time, energy, and knowledge to get it right.

Bid management tools support marketers and agencies to manage large and complex biddable accounts on paid media platform such as Google AdWords. Google, for example, has its own bid management software via DoubleClick Search and more basic rules within AdWords.

Type of Bid Management Tools

  1. Rule-based system – makes bid changes based on rules
    • Very strict and basic
    • Lacks transparency
  2. Portfolio-based systems – makes bid changes using a complex algorithm that combines the overall performance of a given keyword as well as analysing user behaviour
    • Most vendors track limited exposure of up to 10
    • Few vendors consider all tracked exposures during the attribution process (tracked exposures include Search, Social, and Other Media)

Bid Management Providers

Exciting and powerful bid management technologies are being developed to considerably improve the effectiveness of biddable campaigns. Below are the main bid management software providers;

  1. Google (AdWords)
    • Rule-based
  2. DoubleClick Search
    • Rule-based
    • Portfolio-based
  3. IgnitionOne (Digital Marketing Suite)
    • Rule-based
    • Portfolio-based
  4. Adobe Systems (Adobe AdLens)
    • Rule-based
    • Portfolio-based
  5. Kenshoo (Kenshoo Enterprise)
    • Rule-based
    • Portfolio-based
  6. Marin Software (Marin Professional Edition & Marin Enterprise Edition)
    • Rule-based

It’s difficult to say which bid management tool will be appropriate for each advertiser. Most advertisers have a preference however, Forrester Research has evaluated the core players in the market below.

 Image courtesy of the Forrester Research, Inc.

Pros & Cons

Pros

  1. Saves time
  2. More transparency
  3. 24/7 optimisation
  4. Gaining credibility within the wider industry

Cons

  1. Downward spiral on previously good performing term
    • This can occur after a bad week of performance
  2. Offline data yet to be included
  3. Most tools don’t take into consideration:
    • Seasonality
    • Promotions
    • Weather
  4. Match Type Bidding
    • The system can skew match type bidding in particular broad & broad match modifier

Conclusions

It’s difficult to say how much the technology has improved in recent years. However bid management softwares are now capable of automating not just for paid search ads, but across all biddable media, including display and social. Mobile is yet to be incorporated into the wider data set, we expect this to change sooner rather than later.

The portfolio-based system is not only going to tell you what your current rank is. It will also give you what the suggested bid is, what the predicted rank is going to be as well as the predicted incremental data. This will be available for you to see and analyse in a more transparent way than rule-based systems. Small Medium Enterprises (SME) lacking both the time and resources to effectively monitor their keyword bids will be enticed to use this software in an attempt to alleviate pressure.

Human input is essential to ensure optimisation is done correctly, as bid management tools can only save you time. Our stance is to only use technology to flag areas that are under or over performing against target. But it’s crucial we control changes, and to be able to consider all external and internal factors that the system may not take into account.

Contact us if you would like to discuss your bid strategy in more detail.