Cui Bono? A critical view on bidding features in Google Ads

Google’s Smart Bidding feature has caused a spike in CPCs (Cost-Per-Conversion), resulting in a decrease in conversions and an increase in costs for search partners.

Let’s take a look at how Google is trying to force you to give up bidding control.

First things first: If you set up a new account, take a good look at the default settings. They want to maximize their profits. By default, Google enables enhanced CPC when you select manual bidding. What does it mean? Google used to be able to increase or decrease your bids by 30%. Then they announced that they removed this cap. That means, Google now has full control over your manual bidding. Cui bono?

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    A critical view on bidding features in Google Ads

    Do search partners run Smart Bidding even if “manual CPC” is set?

    In this article published by Google in 2019, there seems to be an option called “Smart Pricing” which sounds good. Meaning, Google can reduce bids when there are bad signals. “You don’t have to do anything to take advantage of this pricing model.” Looks like that’s the default option.

    There’s also a “Smart Bidding” option, where Google tells you that “some clicks on search partner pages may cost more or less than your maximum CPC bid in the search network.” That’s fair—they tell you that can happen if you do this. Google just wants to help you “achieve a similar CPC as on the search network”

    Google took over control of max bids in search partner network in mid of August 2019 and added up to 300% on the manual CPCs.

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    This screenshot shows what happened to CPC peaks after September 20, 2019: the bid cap of $10 stopped working. It seems that Google added up to 300% on top of the manual CPCs. We have observed the same issue on multiple accounts, and this is just one of them. There was no other bid multiplier active and the upper bid limit was $10—so there is no other explanation that this observation wasn’t caused by Google.

    Cui Bono? A critical view on bidding features in Google Ads

    We have to talk Google

    The first response from the person who advised us to try Smart Bidding in the last 2 years was, “You’re already doing Smart Bidding.” In March 2019, there was an in-product message (haha, really?) that told us this. And there’s also documentation about it here.

    Hmm, why are we using “Smart Bidding?” We have to op-in somewhere—by default it should be “Smart Pricing” where Google just lowers your bids. Now more people were getting involved in the conversation. Then another Google employee told us that we use “Smart Pricing”—but the documentation doesn’t say that CPCs can be increased beyond your manual limit. That’s even more confusing.

    Google’s disastrous changes to max bid

    With this customer, we use in-house bidding models with a lot of additional data and different target variables than the conversion event visible in the Google Ads account. For this reason, we have always declined when asked to test Smart Bidding.

    This is what happened to search partners when Google took control:

    • The cost of search partners increased by 600%
    • The CPO of “soft” conversion in the Google Ads account (which we don’t use as a target variable in our internal bidding) almost doubled
    • When we look at the “real” shares, there is no increase at all—Google just burned through the money. Cui bono?

    During the same period, our in-house bidding generated more conversions with less budget—well done. But that was the reason this problem was “hidden in the average” of a still good overall performance.

    Anybody suffering from the same issue?

    I’ve only found a blog post by Nils Rooijman who has the same problem. My guess is that no one discovers this because it’s so hard to identify.

    Please check if you also have this issue and share it with us.

    What does this tell us about Smart Bidding?

    Please answer it yourself. Google wants more profit, it’s that simple. My case is obviously a big Google mess-up. If you go for Smart Bidding and give up control, you will be unable to realize things like that at all. And it seems this is happening. It’s all inside the black box.

    Key takeaways

    🔵 Take a closer look at all the default settings Google asks you to make. It’s all about maximizing their profits.

    🔵 When Google took control, the costs for search partners increased by 600%.

    🔵 For the same period, our in-house bidding created more conversions with less budget.

    Let’s tackle Google Ads together

    Struggling with Google’s Smart Bidding feature and its impact on your CPCs and conversions? You’re not alone. Many businesses are feeling the same pressure and are looking for a way to control their bidding strategies. That’s where we come in. Get expert guidance on Google Ads Bidding.

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