Cui Bono? A Critical View on Bidding Features in Google Ads

“Do SMART Bidding! Why should your own solution outsmart Google?” I always wait for sentences like that in the quarterly Google meetings over several big customers we run manual CPC bidding on. Let’s have a look on how Google tries to force you to give up bidding control.

First things first: If you setup a new account, please have a deeper look on all default settings Google wants you to use. They want to maximize their profit. By default Google enables enhanced CPC when you select manual bidding. But what does it mean? Google used to be able to raise or lower your bids by 30%. Then they announced that they removed this cap. That means, now Google has full control over your manual bidding. Cui bono?

Do search partners run on Smart Bidding now also when everything is set to “manual CPC”?

In this article Google released in 2019, there seems to be an option called “Smart Pricing” that sounds fine enough. 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 this is the default option.

There is also a “Smart Bidding” option where Google tells you “some clicks on the Search partners sites may cost more or less than your max. CPC bid on the Search Network”. Fair – they tell you that this may happen when you do this. All Google wants is to “help you get a similar cost-per-conversion (CPA) as 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 happend to the CPC (cost per-click) peaks after 2019-09-20: the bid cap of $10 was not working anymore. It seems that Google added up to 300% on the manual CPCs. We have seen the exact same issue on several 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 is not caused by Google.

We have to talk Google!

The first answer of the person that was telling us the last 2 years to test Smart Bidding was: “you run Smart Bidding already”. There was a in-product message sent out in March 2019 (haha, really?) telling this. And there is also a documentation on that here.
Hm, why are we using “Smart Bidding”? We have to op-in somewhere – by default it should be “smart pricing” where Google only lowers your bids. Now more people got involved in that conversation. Another Google person then told us that we are using “smart pricing” – but indeed documentation does not say that CPCs can be raised above your manual limit. Even more confusing. Now the global product leads are involved. This was 4 weeks ago – it seems that the answer is not that easy. I will update on this!

Google’s disastrous changes to max bid

At this customer we are using in-house bidding models with a lot of additional data and different target variable than the conversion event visible in the Google Ads account. This is the reason we always declined when we were asked to test Smart Bidding.
This is what happened to search partners when Google took over control:

  • The costs for search partners increased by 600%
  • The CPO of the “soft” conversion in the Google Ads account (we are not using as target variable in our in-house bidding) nearly doubled
  • When we have a look at the “real” conversions there is no increase at all – Google just burned the money. Cui bono?
  • For the same time period our in-house bidding created more conversions with less budget – well done. But this was the reason why this issue was “hidden in the average” of a still good overall performance.

Anybody suffering from the same issue?

I only found a blog post of Nils Rooijman’s who has the exact same problem.

My guess is that nobody discovers this issue because it is that hard to identify. Please check if you also have this problem and share!

What does this tell us about Smart Bidding?

Please answer yourself – Google wants more profit – it is that simple. My case is obviously a big Google mess up. If you opt in 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 is all inside the blackbox.

Cheat Sheet

  1. Take a deeper look on all default settings Google wants you to use. It’s all about maximizing their profit.
  2. When Google took over control the costs for search partners increased by 600%.
  3. For the same time period our in-house bidding created more conversions with less budget.

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