What is automatic bidding? Easy-to-understand explanation of benefits, types, and setting methods!

“What is automatic bidding?”

“What are the benefits?”

Are you wondering, “How do I set it up?”

Auto bidding is a feature that allows a machine to automatically set the bid price for web advertisements.

Since the machine adjusts the bid price on behalf of the ad operator, it is a very convenient feature when operating web advertisements.

In order to make advertising operations more efficient, this time we will explain the basics of automatic bidding in Google Ads and Yahoo! Ads.

Below is the content of the article.

Read the article to understand the basics of automatic bidding and even set it up.

If you are an operator who would like to use this as a reference for your advertising operations, please take a look.

What is automatic bidding?

Auto bidding is a feature that automatically determines the bid price for your ads.

The system will set the optimal unit price according to the goals set by the advertiser.

Since the placement position of ads constantly changes, it is important to adjust the unit price daily.

Automated bidding sets the unit price on behalf of humans by referring to data such as the user’s location, device, and attributes obtained through machine learning.

Since you can leave the unit price adjustment to the machine, this function is recommended for beginners and busy people in advertising operations.

Differences from manual bidding

Unlike automatic bidding, manual bidding requires you to set the bid for your ads yourself.

In order to make your ads effective, you need to determine the bid price for each keyword.

Therefore, setting bids for keywords one by one takes time.

However, if you want to manage it yourself, manual bidding is recommended.

If you want to make manual bids, be sure to have some knowledge about web advertising before doing so.

Types of automatic bidding

There are several types of automatic bidding for Google Ads and Yahoo! Ads.

By setting this, the machine will adjust the unit price according to the content.

Google Ads

Types of automatic bidding
name	overview
Maximize clicks	Set to increase clicks within your budget
Target CPA	Set a bid to obtain conversions without exceeding the specified cost per conversion.
Maximize conversions	Set to maximize the number of conversions while maintaining the specified target CPA
Maximize conversion value	Set bids to maximize conversion value while staying within your budget.
Target return on ad spend	Set to increase conversions with a specified target return on ad spend (ROAS)
Target impression share	Set so that ads can be delivered to the top of the search results page, at the top, or at the position you want to display.

reference: About automated bidding – Google Ads Help

Advantages of automatic bidding

This chapter explains the benefits of automatic bidding.

.

Advantage 1. You can reduce the number of times you set bids.

By using the automatic bidding function, you can reduce the number of times you decide on a bid.

In order for your ads to be effective, you need to adjust the bid price for each keyword.

Therefore, manual bidding requires a lot of time.

However, with automatic bidding, the system automatically makes adjustments, so it takes less time.

By reducing the amount of time spent on operations, advertising operators can focus on other tasks.

Advantage 2. Sets appropriate bids

Automated bidding analyzes user data and adjusts the optimal bid.

The data may include the following:

• Device (PC/smartphone/tablet)
• Location day/time
• browser
• YOU
• Keywords actually searched

Machine learning allows you to adjust your bids by taking into account not only the user’s search terms, but also the location, date and time of the search, and the device being used.

This not only reduces the time required for advertising operations, but also enables effective advertising operations.

The data analyzed differs depending on the advertising medium, so if you would like to know more, please check the reference link below.

reference: About Smart Bidding – Google Ads Help
reference: What is automatic bidding? – Help – Yahoo! Ads

Advantage 3. Improved quality of delivery

Automated bidding is adjusted based on data collected through machine learning.

The more data you collect, the more accurate machine learning becomes, allowing you to adjust your bids more effectively.

Since user behavior is fragmented, it is difficult for humans to understand and operate on all behavioral data.

However, it can be said to be a very useful function because the machine can understand all the user’s actions and utilize the data.

Disadvantages of automatic bidding

Next, we will introduce the disadvantages of automatic bidding.

Let me explain them one by one.

Disadvantage 1. Requires a learning period

Automated bidding is not highly accurate from the beginning.

For accurate operation, a certain amount of learning period is required for the machine.

Automated bidding works by gathering a lot of data and understanding user behavior patterns.

Therefore, accuracy tends to be low if data is not collected.

It takes approximately 1 to 3 weeks to optimize automatic bidding.

Rather than immediately deciding whether something is good or bad after implementing it, try verifying its effectiveness once optimization is complete.

Disadvantage 2. Difficult to function if the number of conversions is low

Machine learning adjusts bids based on past conversion data.

The more data you have, the more accurate the delivery will be, and the less data you have, the less accurate and unstable the delivery will be.

Therefore, a certain number of conversions is required.

Specifically, the target number of conversions is 30 or more in the past 30 days.

Please note that the accuracy of automatic bidding is unstable until the number of conversions is collected.

How to set up automatic bidding

In this chapter, we will explain how to set up automatic bidding for each medium.

Let’s check how to set it up.

Set up with Google Ads

Here’s how to set up automatic bidding for Google Ads.

1. Log in to Google Ads
2. Select [Campaign] from the left menu
3. Select the campaign you want to edit
4. Click [Details] < [Edit with settings]
5. Click [Bid Settings] <[Change Bid Strategy]
6. Select a new bid strategy from the drop-down menu
7. Click [Save]

reference: Change your bid strategy – Google Ads Help

Examples of advertising operations using automatic bidding

We would like to introduce a case study of our company where the use of automatic bidding led to results.

This time I will explain the following contents.

• Goals and issues at the time
• Measures to address issues
• Learning by example

I’ll explain them one by one.

Goals and issues at the time

At that time, a certain company had the following goals and issues in its advertising operations.

Goals and issues at the time
Distribution medium	Google Ads
Target	CPA must be within 20,000 yen
Topic	It was not possible to secure a sufficient number of clicks each day, and there were variations in the number of conversions and CPA (cost per customer acquisition). When automatic bidding was introduced, CVR improved, but CPC soared. This did not lead well to CPA reduction. (I didn’t meet my goal of 20,000 yen)

The average CPC for the industry in which we were operating was high, and the number of clicks per day tended to be low.

In addition, CVR improved by introducing automatic bidding, but it did not lead to CPA reduction because CPC increased.

Measures to address issues

We decided to introduce automatic bidding after carefully examining the target through manual bidding.

Specifically, we did the following:

• Understand the market CPC and CVR for each keyword with manual bidding
• Take measures to increase the number of acquisitions using keywords with high CVR (creating ad copy, etc.)
• Discontinuation of delivery of keywords with low prospects and other targeting
• Operate while setting the target CPA with automatic bidding “Maximize the number of conversions”

The measures we took led to the following results.

Results after implementing measures
	CPC	CVR	CPA
Before policy implementation begins	¥1,543	7.47%	¥20,644
Policy implementation begins 1st month*	¥1,792	10.07%	¥17,801
Policy implementation begins 2nd month	¥2,345	13.83%	¥16,955

*We switched to “automatic bidding” around the middle of the “first month of the initiative.”

Even though the CPC was soaring due to the introduction of automatic bidding, we lowered the target value of CPA because we considered measures after understanding CPC and CPA through manual bidding.

Additionally, by implementing these measures, CVR nearly doubled.

Learning by example

In this case, “automatic bidding” was introduced from the beginning, but it was not operating properly.

In other words, if you rely solely on machines to adjust prices, you may end up failing.

Therefore, instead of relying solely on machines, advertising operators must always consider measures to improve results.

If you use automatic bidding after thinking about how to operate it, it will be easier to achieve results.

[Summary] Get efficient results by introducing automatic bidding

This time, we explained the basics of automatic bidding.

Automated bidding is a feature where a machine adjusts the bid price on behalf of a human.

There are several types of automatic bidding, and you can choose one based on what criteria you want to use to adjust your bids.

There are three advantages to automatic bidding:

Automatic bidding is convenient because it automatically adjusts the unit price, but accuracy will be low if the learning period or amount of data is small.

Therefore, it is dangerous to introduce automatic bidding and expect results immediately.

Please understand the disadvantages before using it.