Manual vs Smart Bidding: Which Google Ads Strategy Works Best?

Which bidding strategy works best for your Google Ads? The challenge in choosing a bidding strategy lies in understanding its pros and cons. While manual bidding provides total control, an automated process assures real-time optimization. On the other hand, the manual process consumes time, and the automated process spends time learning, during which performance can fluctuate.

Evolution of Automated Bidding

Smart bidding is the future of Google Ads. It all started around 2010 with the introduction of Enhanced Cost-Per-Click (eCPC). However, formal automated bidding started in 2016. Since then, Google has been evolving the smart bidding process. It helps users with both automated and manual bidding, leaving the selection of a process to them.

Factors Behind Automated Bidding Evolution

• Manual bidding seems impractical considering the sheer volume of data needed for digital marketing.
• Google wants to increase its revenue by keeping its platform simple, affordable, and attractive for advertisers.
• Automated bidding shifts focus from bid management to goal setting.

In this blog….

We’ll discuss both manual and automated bidding processes and conduct a detailed comparison of their pros and cons. We’ll also create a detailed checklist for choosing a bidding strategy and highlight the common mistakes to avoid. The objective is to help you find the right bidding strategy for your Google Ads.

Let’s Start

Manual Bidding vs Smart Bidding: Overview

It is difficult to choose a bidding strategy without understanding. We’ll start with the manual process, which is the traditional process, before moving to the automated bidding that was introduced at a later stage.

Manual Bidding: Each keyword comes at a price, but advertisers set their bids manually after studying the data.

How it works:

• Max CPC: The amount you can spend on CPC
• Default Max CPC: A default amount set for an entire ad group
• Keyword-Level Bids: Maximum bids for individual keywords
• Ad Group Bids: Maximum bid for an entire ad group
• Adjust Bids: Adjust your default bid for maximum exposure and clicks
• Pay-Per-Click: An amount deducted when a click happens

It is a detailed process that requires in-depth knowledge of data and the ability to make assumptions. If you don’t have both, you can switch to automated bidding.

Smart Bidding: Google’s automated bidding feature uses Artificial Intelligence (AI) to analyze key signals, such as location, time, and device, to optimize bids. The optimization takes place in real-time to maximize conversions.

How it works:

• AI-Powered Optimization: Google’s machine learning process adjusts bids for each ad
• Auction-Time Signals: The process relies on a deep data analysis at auction time to choose the most profitable bids
• Conversion-Focused: Automated bidding is focused on achieving goals, like leads or purchases.

It is a smart process of bidding. It has many advantages, but you should also consider its cons before opting for it.

Google's goals with Smart Bidding

Increase Conversion Value: Automated bidding is aimed at achieving PPC goals, like generating leads or sales.

Ad Spend Optimization: Smart bidding gives maximum value for money by choosing the most profitable bids.

Machine Learning Process: Google’s AI constantly analyses data to make complex decisions at the auction time.

Personalize Bidding: The system studies hundreds of signals to understand the real needs of advertisers and customize bids for each ad.

Simplify Campaign Management: Smart bidding frees advertisers from the complex and time-consuming process of bidding.

Improve Overall Performance: The data-based decision-making helps earn a profit even in the most challenging scenarios.

Allows Flexible Control: Advertisers can exercise some control over automated bidding by setting performance targets.

When each method was most popular and why?

Manual Bidding:

When:

• Bidding for low-volume keywords that lack the data needed for an automated bidding system
• The focus is on maintaining a strong brand presence rather than saving CPC
• Micromanaging the campaigns to achieve specific goals
• You have time, resources, and expertise for effective campaign management

Why:

• Total control for improved cost management
• Targeting specific keywords with high conversion potential
• Running campaigns with a limited budget or insufficient data

Smart Bidding:

When:

• You set high conversion goals that require a deep data analysis
• You want real-time bid adjustment based on the location, time, and device of targeted users
• You want to free up your time for more important jobs

Why:

• Implement goal-oriented PPC strategies
• Utilize an advanced Machine Learning process
• Improve overall performance and ROI

Pros & Cons of Each Strategy

Manual Bidding Pros:

• Greater control: It allows setting a limit to the maximum CPC or default CPC. You can even set separate bids for different keywords. If you want to focus on specific keywords, you can assign maximum budget to them. Manual bidding also helps keep a tab on spending by setting limits on maximum spending.

• Useful for small budgets and A/B testing: Manual bidding suits when every dollar counts. Unlike an automated process, it doesn’t spend the budget too quickly or on lower-performing keywords. Similarly, it easily isolates variables for A/B testing. Manual bids remain constant throughout testing. They give quick insights. With manual bidding, you have the flexibility to test different ads in a single campaign.

Manual Bidding Cons:

• Time-consuming: Placing bids manually requires time and patience. There is no way to speed up the process in manual bidding. You gather relevant data, draw insights, and make decisions based on your findings. However, the process suits the campaigns that lack data insights. You can place bids on your assumptions.

• Doesn’t leverage real-time signals: When you bid manually, you rely on the past performance of your ads. For real-time data analysis, you need Machine Learning tools. If you want to exercise total control, you need to invest more time and effort in campaign management. For this reason, manual bidders rely on past data.

Smart Bidding Pros:

• Automation saves time: The automated bidding system gives freedom from the complicated and tedious task of placing bids. Google’s Machine Learning process takes control of bidding and ensures maximum performance. It leaves little room for manual monitoring or control. You can only set targets to achieve.

• Uses real-time data signals (location, time, device, etc.): It is crucial data for quick decision-making. These signals come from reliable sources, like IoT devices, mobile devices, website activity, and external data feeds. They tell about individual buying habits and preferences. The data helps personalize ad campaigns, real-time bidding, and cart abandonment recovery.

• Scales well: Smart bidding is Machine Learning and it scales well in all environments. It can process massive datasets in seconds and optimize campaigns at auction time. It utilizes real-time data to simplify campaign management. However, its biggest advantage is it easily adopts to evolving trends.

Smart Bidding Cons:

• Less transparency: One of the drawbacks of the smart bidding process is a lack of transparency. Machine Learning does everything from processing data to adjusting bids during auction times. It gives little insight into the system. You can only see the performance results.

• Needs volume and data to work effectively: The automated bidding system requires a load of data and sufficient time. It works well, but only for the campaigns that are supported by data. The learning period is also a drawback as bids fluctuate without control during this period. It isn’t suitable for campaigns with little data.

Checklist: Which Bidding Strategy is Right for You?

Here’s a detailed checklist for choosing the right strategy for your PPC campaigns. It will help find reasons to choose a specific bidding strategy.

1. Budget Size

• For small to medium budgets: Manual bidding works well, especially when you are working with a limited budget or want to prevent overspending. It allows setting a maximum CPC for better control.

• For large budgets: If you have sufficient budget and data to increase your conversions, you should opt for automated bidding. It saves time, boosts performance, and maximizes efficiency.

2. Conversion Tracking Setup

• Manual Conversion Tracking: Setting up a tracking pixel or event code manually allows greater control and assures accuracy in tracking complex, online conversions. However, it is a time-intensive job and requires technical expertise.

• Automated Conversion Tracking: Google offers pre-built solutions for tracking conversions. You set up the process using built-in features and relax. The tracking is directly linked to automated bidding for making real-time bid adjustments.

3. Campaign goals

Manual Bidding:

• Maximum clicks within your budget
• Increase brand awareness and visibility
• Control overspending

Automated Bidding:

• Maximize conversions
• Increase conversion value
• Target CPA
• Target ROAS
• Increase visibility

#Choose manual bidding when launching a new campaign or running campaigns with little data.

#Choose automated bidding to manage multiple accounts, campaigns with large datasets, and chase specific targets.

4. Data volume/history

• Manual Bidding: New campaigns have little data to study. Another thing to see is how fast you produce data. When you have little data to study, you don’t need a Machine Learning system for campaign optimization.

• Automated Bidding: If your campaigns generate a load of data, you should switch to automated bidding for better bid management and improved conversions.

5. Geographic or time-based targeting needs

• Manual Bidding: It requires adjustments at the campaign, ad group, and keyword level. It shows immediate impact and works well for low-volume campaigns. It is best for new campaigns and niche targeting. However, you need knowledge and experience in manual bidding.

• Automated Bidding: It is better suited for geographic and time-based targeting. It offers precise bidding based on device, location, and time of user queries. It is better suited to manage large campaigns with multiple locations and time targeting needs.

6. Willingness to test and adapt

• Manual Bidding: It supports A/B testing by isolating the important verticals. Since manual bids remain stable throughout the testing phase, you can test different strategies in a single campaign. However, manual bidding is less adaptable to changes.

• Automated Bidding: It works well when you have sufficient data to analyze. It provides real-time optimization of ads, makes data-driven decisions, and improves the overall performance. It is also adaptable to real-time changes.

Download the checklist for a perfect bidding strategy for your PPC campaigns. It is a complete checklist with which you can easily find whether to choose manual bidding or rely on an automated process.

Red Flags to Watch Out For

• Overreliance on automation without understanding it makes your PPC campaigns vulnerable to systematic failures. You also surrender your ability to think creatively and have unrealistic expectations from the system.
• Poor conversion tracking with Smart Bidding happens when the campaigns lack accurate or sufficient data for analysis. It often leads to algorithmic confusions and brings fluctuations in performance.
• Manual bidding with no time to manage it could be a disaster for your PPC campaigns. Manual process involves multiple steps that demand attention and patience. Negligence in management could lead to failure.
• When bidding strategy doesn't align with business objectives, the campaign is optimized with wrong keywords. It leads to wasted ad spend, misleading performance metrics, and missed objectives. 
• Making changes too quickly before enough data accumulates happens when you become too excited to see results or over-rely on your assumptions. However, it always leads to misguided decisions and skewed results.

Case Example

Client: A mid-sized home removal company

Goal: Choosing the right bidding strategy for PPC campaigns

Problem: The company ran a PPC campaign with manual bidding for two months. While they exercised total control over their ad spending, they had limited scalability. They also found it extremely difficult to manage the campaigns with regular work.

Results after 60 days:

• Cost-Per-Acquisition (CPA) averaged $48
• Stagnated conversion growth

Solution: The company switched to Smart Bidding after a comprehensive audit reduced their hopes of making any profit with manual bidding. The results showed hope after one month of rigorous targeting.

Results after 30 days:

• 32% increase in overall conversions
• 25% drop in CPA from $48 to $36
• 18% increase in impressions
• 12% drop in CPC
• CTR improved from 3.1% to 4.2%

Key Lessons Learned: The company had the advantage of data for which it needed Machine Learning technology. Manual bidding isn’t suitable for campaigns backed by a large volume of data. However, smart bidding removes the need for manual settings or monitoring.

Google’s Machine Learning process adjusts bids in real-time and aligns them with the performance goals. Managing multiple campaigns is easy with smart bidding. You can let Google manage your campaigns with automatic features and focus on other important tasks.

Conclusion

Smart Bidding is the clear winner in the race between manual bids and automated bids. However, there is no one-size-fits-all strategy. Testing is the key to success in PPC campaigns. Download the Free PPC Strategy Checklist (PDF) to check whether you are following the right strategy. The checklist will help improve your bidding strategy.

Why wrestle with your PPC campaigns when you can request a Free Google Ads Audit by Media Challengers and unlock the hidden opportunities? The free audit includes analyzing wasted ad spend and other important metrics that reflect the financial health of PPC campaigns. Book your free audit today to save your ad spend and drive conversions tomorrow.