Podcast #18

AI and The Future of Digital Advertising

To improve campaign performance, Google’s algorithmic strategist developed Smart Bidding. It uses machine learning to analyze millions of signals to predict which auction will lead to better conversion rates. With that insight, it can set the right bid for the auction and help you get more from your marketing budget. While Smart Bidding has been around for several years, many advertisers have resisted adoption. But we believe Smart Bidding is the future of digital advertising.

Episode Highlights:

Rich Briddock

Rich Briddock: “Smart bidding is essentially using machine learning to supercharge your auction strategy and make sure that you appear in the right auctions based on the parameters that you’ve given Google and not appear in the wrong ones. So, you’re getting more from your advertising spend.”

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Announcer: Welcome to the Ignite Podcast. The only healthcare marketing podcast that digs into the digital strategies and tactics that help you accelerate growth. Each week, Cardinal’s experts explore innovative ways to build your digital presence and attract more patients. Buckle up for another episode of Ignite.

Alex MembrilloYou guys are in for a treat. PPC has changed a lot over the last year, we’ve got Rich Braddock, he’s our SVP of performance marketing. Don’t judge him by his funny accent, he’s actually really good at advertising. Today we’re going to talk about smart bidding. What is smart bidding Mr. Richard?

Rich Braddock: Hello, everybody, by the way. Smart bidding is essentially Google’s algorithmic bidding strategies, which are not new, they’ve been around for a while now, they’ve been around for a few years. They’ve been refining them quite substantially and now they are really, really pushing them. Google has essentially built its pyramid around the smart bidding approach and all the changes that it’s making is geared around getting higher adoption on smart bidding. It’s really pushing people in that direction.

Essentially, what Google is saying with smart bidding is, “You guys can’t bid as well as we can, because we know more information than you do about the user who is in the auction.”

They’re looking at millions of signals that we as advertisers don’t get access to, to more accurately predict if this individual user inside of this auction is going to be interested in your website, your service, your product. It’s essentially using machine learning to supercharge your auction strategy and make sure that you appear in the right auctions based on the parameters that you’ve given Google and not appear in the wrong ones, so getting more for your advertising.

Alex: Okay, so it takes out some of the lever pulling out of PPC, gets us out of the weeds? Is it just a money play by Google, or is it actually making advertising more effective for our clients?

Rich: I think it’s more about making advertising more effective. There is a play by Google, an overarching play, to try and make Google Ads more consumer-friendly, but I think in this case, it’s really about trying to have a more sophisticated bidding mechanism that will understand nuances about your audience, rather than just looking at the keyword and showing based on the keyword and the bid.

They’re actually trying to say, “Okay, I know that this person in the auction that I’m about to show my ad to is a mother, she’s 55. Her household income is x. She’s been browsing around on these websites, she’s performed these searches. She’s been to this site once or twice already. This matches the profile of people who convert at a much higher rate on my site, so I really want to win this auction and so I’m going to adjust my bid in the auction to try and win that one more aggressively because I know that she’ll convert, and I’ll have a lower cost per acquisition.”

Alex: Google is modifying the bids-

Rich: In auction.

Alex: -because they’ll convert better. When everybody is on smart bidding, who wins?

Rich: Yes, it’s a great question. That’s when it comes back to the old-school advantages of the things that agencies do for you. Yes, you have a better quality score, your bid is lower, so the algorithm can afford to go– What you pay for your CPC is lower, so the algorithm can afford to bid up further. It’s going to come down to quality and relevance of the advertiser again. It’s just if you adopt smart display before everybody else has done it, you also have this material advantage of smarter bidding on top of the fact that you may be more relevant, and have a better quality score, and have a better message and a better landing page and all these other things that are going for you.

Alex: Yes. When did smart bidding come out? Six months ago? [crosstalk]

Rich: No. No. It’s been out for a while, it’s been out for two to three years. It’s been around the block for a while. I think the issue with smart bidding is it wasn’t really compatible with the way a lot of advertisers were set up. You need to get a certain number of conversions at the campaign level in order for smart bidding to really work. It collects conversion data, and it uses that data to make–

Alex: If you are running smart campaigns, it could take months to move to smart bidding, but the bigger advertiser– We just did this for our clients spending $600,000 a month over 100 different campaigns or something, and it was brutal. It hurt. It hurt. It can hurt for a couple of weeks. You take performance for a while, don’t you?

Rich: Essentially what you do in the very segmented approach, which is a historical approach is, as a human, you are trying to mitigate risk as much as possible. You’re segmenting-

Alex: Every little thing.

Rich: -every little thing so you can control that thing and not spend budget in a way that is wasted. But for smart bidding to work, you have to consolidate everything to the campaign level so that that campaign will generate plenty of conversion volume so that the smart bidding can get smarter. There is this period where you consolidate, and then you won’t have caught every little piece of relevancy and the algorithm has to learn, and so depending on the volume, it can take a couple of weeks for the algorithm to essentially get to the levels that you were at before but what you should see is you see a continue to improve way beyond those levels and continue to approve for months afterward, as it continues to learn with the data that it gathers. Yes, you may see a slight dip but in general, the benefits will be massive afterward.

Alex: What are some benefits? What are the massive benefits, average percentage improvement, and cost per lead after a month or two of doing this?

Rich: For the client that you were mentioning, we saw about a 30% improvement in their return on ad spend which when you think about you’re consolidating and making the campaign actually easier to manage, and do you see a 30% improvement? That’s a win-win right there, right? It’s not like you’re making something more difficult, and you see a 30% improvement.

Alex: You make something easier and see a 30% while this is newer agencies are going to put all their clients on it. Results are going to shoot out. We’re going to sit back and chill for a little bit because it’s easier but if you have a good agency, they’ll go do more of the other, [crosstalk].

Rich: That’s exactly right. It’s the adage the way we presented this to prospects at the time and now a client, who went on smart bidding. By the way, I should say that client, their CPA fell by 75%.

Alex: What industry? What industry?

Rich: That was homecare.

Alex: Okay. Homecare. Got it.

Rich: The way we presented it is do only what you can do and essentially smart bidding– With smart bidding, Google can bid better than you so don’t do it.

Alex: No more.

Rich: Don’t do it because you’re not the best at it, but you’re the best at refining the UX on a landing page experience. You’re the best at crafting this amazing ad copy. Do what only you can do, but don’t try and fight against machine learning and these improvements that Google are bringing in, where they’re actually superior to us. There shouldn’t be hubris. You should ride with it and don’t try and fight against it.

Alex: It’s for the best of the agency because the management time goes down tremendously. You just have to train clients to be okay with the dip for a little while. I went through it with you on some of these bigger ones, and so I saw it. It’s gut-wrenching like, ugh. The client’s like, “My performance is terrible,” and we’re like, “We promise it’ll get better,” and then it does. Everybody out there, you heard it here, do some Googling and look up smarter bidding if your agency–

If you’re not sure your agency is doing it, or if you want to talk to anyone, come chat with Cardinal Flock. Rich specifically and Lauren know a ton about this. They’re running it for all of our clients with Nick our head of paid media. Highly advise you go and talk with somebody. If you’re not on smart bidding, most prospects that come to us are not, most clients were not. Anything else you want to tell them, Rich?

Rich: Yes. I think final thought, don’t think of bidding in itself as a solution to your problems. You can’t just turn it on and it will work. There is a whole methodology to restructuring your account to actually make smart bidding effective. If you just go into your account tomorrow and turn smart bidding on, it probably will not work. You have to do the groundwork first. That’s why you either need to go to your agency and hope that they know what they’re doing in that regard or come see us. We’ll help you out.

Alex: I like it. I like it. All right, guys. I love it. Thank you, Rich, for joining us on Ignite.

Rich: Thanks for having me.

Announcer: Thanks for listening to this episode of Ignite. Interested in keeping up with the latest trends in healthcare marketing? Subscribe to our podcast and leave a rating and review. For more healthcare marketing tips, visit our blog at cardinaldigitalmarketing.com.

[00:08:52] [END OF AUDIO]

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