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Who has the edge when it comes to paid search bid management – human decision systems or computer decision systems? Dixon Jones, director at Receptional looks at the two approaches.

Google Adwords and Overture (Yahoo’s equivalent) are the two of the most successful new advertising mediums of the modern age. They give an impressive and (for a change) measurable return on investment. Administering pay per click campaigns, on the other hand, is complicated. Doing it properly in whatever way you define “proper” means that there is a cost associated. Leaving it to the Googles of this world, or agencies trying to cut the mustard on commissions only just isn’t as cost effective as spending some of the campaign spend on enhanced bid management services. In other words – you get better returns by paying a surcharge cost per click for someone – or something – to manage bidding strategies on your behalf.

There is little doubt that in some areas of this process, automation is the way. Tracking clicks and key phrases from spend through to sale would be a crazy task not to automate, and the traffic providers themselves have taken the shine off of most automated bidding tools by automatically ensuring you only pay a penny above what you need to attain the position you deserve or pay for. But the real cleverness is in defining and implementing a bid strategy. Who has the edge – human or machine? Well – it depends on which human and which machine. In the final analysis, Kasparov still beats the best chess computers, but mere mortals would get thrashed by the average chess program. Here are some of points of difference between human and machine.

  1. Choosing your keywords: I think here, a computer can certainly develop a keyword list faster than a human, but the quality needs a serious sanity check – both from the optimiser and the client, for different reasons. A computer can give you thousands of search phrases that your customers MIGHT type in, but is unable to make a qualitative judgment as to the relative value of each phrase to your business. This means that the computer can create a faster list, but the human has to cull the list manually and then give every keyword some kind of value to the client as to whether they think it can convert well or poorly. Alternatively, every search phrase could start with an equal “value” and then you could let the computer decide which ones actually work – but there is a hole in this theory, as we will see later.

  2. Writing the creative: Definitely humans win here. There are a few mechanical tricks – like matching the title of the advert to the actual search phrase of the user, but these are built into Google Adwords and don’t require a management tool. Automated management tools are so bad at understanding creative, that this is the largest failing for them, with unexpected consequences. For example, we compared two creatives for a block of luxury apartments in London. Advert A had a high click through rate and advert B had a low click through rate. However, Advert B was far more targeted. Deleting the advert with the highest click through rate is counter intuitive to a rules based machine, but quite obvious to a human understanding the client’s business. This failing of the software solutions to interpret creative can (and we believe does) occasionally totally undermine the tools whole raison d’