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What Marketers Need to Understand About Automated Bid Algorithms

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In conversations with clients, I find myself using a phrase like, “We can do that, but we need to make sure we grease the wheels of the machine first.” What my Industrial-age jargon actually means is, we need to make sure that we’re not forcing the algorithms to have to relearn in a way that will be detrimental to our performance. I’m going to spare you arguments as to why you should be turning to machine learning in your work in digital advertising, if you don’t know already – plenty of folx out there can help you. If you’re finding the move towards automation difficult, take some advice from Lauren Rosner’s blog, Relinquishing Control Or: How I learned to Stop Worrying and Love PPC Automation.

Below are the most useful elements to understand about how algorithms work in your PPC campaigns.

Target Strategies

Target ROAS as a smart bidding strategy is best deployed across campaigns that are NOT budget constrained and have had at least 15 conversions  in the past 30 days. The strategy drives the highest conversion value possible while maintaining a consistent return on ad spend.  This strategy does not work well in a hyper-sgemented account structure. Target CPA functions very similarly, except it optimizes toward a CPA value and does not have a minimum conversion volume.

When using target strategies, it’s important to understand what you’re asking the strategy to do:

If you have an aggressive CPA or ROAS target for your industry, let’s say a 20X ROAS, you are asking the algorithm to limit your risk by heavily limiting the number of auctions you’re willing to participate in. Effectively you’re saying: Don’t bid in an auction, unless you’re pretty darn certain you can get me a 20X return. This will cause the algorithm to become very selective and enter into auctions very cautiously. This can result in a drop in impression share, an increase in CPCs, and a general drop in volume. Ironically, in order for automation to work optimally, it needs to have a lot of data to make decisions. So, it’s important to be REALISTIC when setting your targets.  Here are a few rules to abide by:

  1. If you’re switching to one of these automated bid strategies for the first time. Set the initial targets based on your last 30 days CPA or ROAS.
  2. It takes 7-14 days for the algorithm to recalibrate – so give it time to “settle” and don’t make changes. It will not start to “perform” until it’s learning phase has ended.
  3. Shift your CPA or ROAS targets in 15%-20% increments at a time. For example, if your last 30 Days ROAS was 5X and you want to move toward a 10X goal, first shift to 6X – let it run for a few weeks, Then shift 20% again.. Avoid aggressive shifts in either CPA or ROAS to not rock the boat.
  4. Feed your algorithm by layering in audiences. Set these to “Observation” and make bid adjustments accordingly.
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If you’re struggling to scale campaign volume, the limiting factor could be your targets. Try increasing CPA or decreasing ROAS targets in 15-20% increments. This will not necessarily result in worse performance. By lowering your bar, you’re effectively telling the algorithm that you’re not as risk averse, and you’re willing to take some chances while trying to achieve your goal. If your accounts experience seasonality, I highly recommend lowering your ROAS and increasing your CPAs at least 1 week in advance to allow the account to scale during times of high seasonality.

Maximize Strategies

Maximize Conversion Value or Maximize Conversions are budget based strategies and should be utilized on campaigns that are regularly limited by budget or spending most of their daily budgets. The minimum criteria for these strategies is 20 clicks/day. In order for Max conversions to operate effectively, ensure that you’re only tracking important conversion actions or set up conversion action sets (linked to PPC hero article). These strategies perform best with broad match type keywords, which allows for more traffic and gives the strategy more data to learn from.

When you’re asking for the maximum,  you’re asking the strategy to run out into the auction, and capture as many valuable conversions it can based on the budget provided. It gives no effs about any of your other campaign inputs and does what it wants. For example, these strategies will NOT CONSIDER the following when participating in auctions:

  • Device bid adjustments
  • Location bid adjustments
  • Ad Schedule
  • Audience
  • Age Rage
  • Gender
  • HH Income
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These strategies also do not care about CPCs. If you have keywords that have set CPC goals, move these to a different campaign, this is not the strategy for these terms. A common misconception when using these strategies is that you have to start with eCPC, then ramp up to Max Conversions. You DO NOT need to do this. In fact, if you do you will cause the algorithm to have to learn twice and recalibrate. You can start fresh campaigns with Maximize conversion or Maximize conversion value bid strategies.

If you’re uncertain if a bid strategy is working for a particular campaign, look to the Bid Strategy Report. This can be found here:

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Hover over the Bid Strategy type in the Bid Strategy Type Column and click on it:

target cpa in the bid strategy column

The Bid Strategy Report will look something like this and will provide info on how to optimize your strategy. For example, recently actual CPAs have been climbing, so I may want to adjust my target to make sure I can capture more volume.

bid strategy report google ads

Even though it’s hard, you have to pad in learning periods for your smart bidding strategies. The general recommendation is 7-14 days with no changes before you start to get meaningful shifts in performance. One of the biggest pitfalls for marketers is pre-emptively calling a strategy ineffective prior to the end of the learning phase. Plan ahead, ensure the expectations are understood up front and when in doubt, turn to your Bid Strategy Report to see how you should adjust.

PPChero.com

MARKETING

Marketing operations talent is suffering burnout and turnover

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Marketing operations talent is suffering burnout and turnover

“It’s hard to hire; it’s hard to train; it’s hard to keep people from burning out. To make matters worse, these challenges have intensified so swiftly that leaders have hardly had time to digest them, let alone mount a defense.”

That’s the main takeaway from “The State of Marketing Operations: 2022,” a new report from junior marketing ops training platform Highway Education and ABM leader Demandbase. The findings were based primarily on a survey of 800 marketing operations professionals from organizations of all sizes, more than half from mid-sized companies.

The demand for talent. The vastly accelerated shift to digital marketing — not to mention sales and service — has led inflated demand for MOps talent, a demand the market can’t keep up with. Two results: burnout as too much is demanded of MOps professionals; and turnover, as it’s easy to find alternative opportunities. The outcome for companies is the growing burden of hiring and training replacements.

Use of marketing software has grown two and a half times in less than ten years, according to the report, and the number of marketing operations professionals, across organizations of all sizes, has increased by two-thirds. Use of marketing automation alone has grown 228% since 2016, and there has been a 66% growth in the size of MOps teams just since 2020.

Perhaps most remarkable, 93% of MOps professionals learned on the job.


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Why we care. Providing beginner MOps training services, Highway Education clearly has an interest in this data. At the same time, there can be little doubt that the demand for MOps talent is real and growing. If there’s a surprising figure here, it’s that use of marketing software has grown only two and a half times in the last decade.

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AWS MOps leader Darrell Alfonso, quoted in the report, says: “There’s a disconnect between marketing strategy and the actual execution — what it takes to actually operationalize and bring a strategy to life. Leadership, especially the ‘old guard,’ will be more familiar with traditional methods like field marketing and commercials. But now, during the pandemic and post, there’s an entire digital world that needs to be
managed by people who know what they’re doing.”

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Read next: More on marketing ops from Darrell Alfonso


About The Author

Kim Davis is the Editorial Director of MarTech. Born in London, but a New Yorker for over two decades, Kim started covering enterprise software ten years ago. His experience encompasses SaaS for the enterprise, digital- ad data-driven urban planning, and applications of SaaS, digital technology, and data in the marketing space. He first wrote about marketing technology as editor of Haymarket’s The Hub, a dedicated marketing tech website, which subsequently became a channel on the established direct marketing brand DMN. Kim joined DMN proper in 2016, as a senior editor, becoming Executive Editor, then Editor-in-Chief a position he held until January 2020. Prior to working in tech journalism, Kim was Associate Editor at a New York Times hyper-local news site, The Local: East Village, and has previously worked as an editor of an academic publication, and as a music journalist. He has written hundreds of New York restaurant reviews for a personal blog, and has been an occasional guest contributor to Eater.

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