Computers are great at simple repetitive tasks requiring extreme precision. Much of paid search marketing fits this description. If you’ve managed paid search campaigns by hand for more than a few thousand terms, you know what we mean. Updating thousands of bids daily, testing copy across thousands of ads, keeping myriad of tracking codes straight –a human quickly goes crazy trying to keep it all straight. Enter the bid robots.
These helpful pieces of software automate much of the intricate drudgery of tracking, managing, and optimizing bids for paid search campaigns. An intelligent and reliable bid robot is a key weapon in a paid search marketer’s arsenal. But as useful as a smart bidding robot can be, even more important to success in paid search marketing is making sure a smart person supervises that ‘bot, particularly during key selling seasons.
Bid robots operate on the basic premise that tomorrow will look like today – that is, the recent past and present are reliable predictors of the near future. And this premise is usually right. Want to predict tomorrow’s weather? Take a look outside today. Crazy as it seems, predicting tomorrow’s weather by stating what happened today is on average more accurate than the National Weather Service.
The problem is that predicting the future based on the past breaks down as soon you’re not in steady state. And a direct marketer’s calendar is full of exceptional events, only some of which can be anticipated. There are the winter holidays, your peak selling season, changes in the competitive landscape, and new developments in the search engine’s algorithms, to name but a few.
A machine may know that bids on blue-striped widgets are best set by looking at the last few weeks’ worth of conversion data, but it doesn’t know that you just mailed a catalog. Or that Madonna was just spotted in Paris wearing blue stripes. Or that your top competitor just went broke. That’s why you need a smart human collaborating with your robot, watching it and twisting the dials to keep it on track.
Consider the fourth quarter, the peak selling season for most catalogers and retailers. As you enter the season in October, business can be pretty slow, and your robot could place bids accordingly. In late November, as consumer spending ramps up, your robot follows suit. December week 1 is strong, week 2 stronger, week 3, stronger still.
Your robot is tracking bids to results every step the way. In fact, based on recent history, the robot might stomp the accelerator to the floor during December week 4. What your robot doesn’t know is that, given your merchandise and shipping schedule, suddenly it’s too late for your shoppers to buy from you and get it in time to place under the tree for Christmas. Headed toward a brick wall, your ‘bot needs a smart human to step on the brakes, as recent data don’t contain any hints about the end of the season.
During holiday 2004, we heard unpleasant stories of retailers who left their robots unchecked, leading to costly and unprofitable bidding overshot the holiday. These retailers privately shared their dismay that their bidding systems kept spending in early January like it was still early December. Ouch. On the other side, robots can also be slow to react to the beginning of a holiday. The migration of shoppers to the Web has made quick reflexes even more important. During the past decade, we’ve seen holiday selling seasons become increasingly compressed. Online shopping and consumer willingness to wait for ever-stronger discounts make for a late start, rapid acceleration, and a sharp peak. Online, when holidays do come, they come in like a freight train. Again, a smart human supervising a smart robot can help you get the jump on the holidays. Unlike a machine flying solo, a seasoned marketer also understands that conversion is always a function of the kind of traffic coming to your site, not just the quantity. Consider the customer shopping for Christmas ornaments on Dec. 15. She’s likely busy and waited to the last minute. If she’s paying for expedited shipping to get the goods in time, she’s more likely to be affluent. Compare this person to the shopper looking for ornaments on Jan. 15, who likely has more time than money, and is looking for a deal.
At its heart, a robot is just a collection of rules and algorithms. It can’t see beyond its data. When you talk to your search provider or inhouse expert, you should be able to ask questions about the basis of their robot’s approach. While you can’t expect an agency to reveal the code behind their technology, you should expect specific concrete answers. Your agency’s explanation of the bidding approach being used to spend your precious advertising dollars should make sense to you. A bid robot may be proprietary, but should not entirely be a black box.
The bottom line? Understand that bidding requires both smart humans and smart machines. And dig in a little, asking your agency or technology partner about the approach their faithful bid robot uses when buying clicks for your firm.
Alan Rimm-Kaufman is founder and Lawrence Becker is vice president, marketing and business development for The Rimm-Kaufman Group (www.rimmkaufman.com), an online-marketing consultancy based in Charlottesville, VA.