Everyone knows the electric excitement you get when you first start PPC advertising.

Sadly, a lot of eCommerce sellers soon realize their PPC campaigns are not performing that well. Ad campaign profitability is low. ROI is slipping away between your fingers and you are spending way too many hours optimizing your campaigns.

However, there are two PPC bidding solutions. Both can manage your bids and give your ad campaigns the boost they desperately need: rule-based and algorithmic bidding.

They can both ultimately grow your sales on Amazon, eBay, Google or any other online advertising platform. But which one should you go for?

In this article, I will present both PPC bidding optimization options. I will list 5 pros and cons to help you boost your online advertising profitability and grow your sales.

Keep reading!

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So, you have everything ready. The product images are pure perfection and product descriptions are oozing with keywords. You got your first positive reviews, and the stage is set for you to scale your business with online advertising that runs on PPC bidding.

You are confident, you can handle the demand increase and are hungry for success.

You decide to take the logical next step and create your first advertising account. You do all the grunt work there as well – keyword research, campaign creation, budget allocation and everything in between.

But then your PPC campaigns don’t produce the necessary results. How can you solve it? You find a possible solution: bid management optimization.

It’s a daunting concept that’s often not easy to understand. Plus it often means giving away control of your budget, at least partly.

Online advertising is easy enough to get started with. But, when you want to pursuing a specific goal, understanding how everything interacts can be extremely tricky and ever-changing.

It gets worse: what you understand today might be outdated tomorrow. Or not.

The only constant in online advertising is a never ending change. You need a solution that sees the full picture and can react accordingly.

So: this is where PPC bid management comes in.

You have 2 options for optimization of your PPC ads:

What is PPC Bidding?

PPC bidding is an auction-style bidding system. Online advertisers bid on different keywords and (usually) highest bids on relevant keywords win the auction.

How Does PPC Bidding Work?

PPC is essentially an online advertising model that revolves around auctions, bidding, keywords, and products.
Advertisers can bid on either a specific product or keyword. The goal is to have their item displayed at the top of search results on a chosen eCommerce platform or search engine (Google, Amazon, eBay, Microsoft …).

The highest bid (usually) wins the auction, and the winning ad is the only one that will be displayed in the search results.

What is PPC Bid Management?

PPC bid management is the process of optimizing your keyword bids to maximize the return on your PPC marketing.

Before I start, I have to be honest and admit our bias. We have 10+ years of bid management experience under our belt and a proven track record. We are fierce defenders of algorithmic bidding, the core of our solution for PPC optimization.

But we do recognize the advantages rule-based bidding can offer as well.

Let’s take a look at possible pros and cons. This will help you make an informed decision about how you’d like to manage your bids.

It’s only human not wanting to cede control, especially of your budget. But, remember – with the ever changing nature of online advertising, you don’t know what you don’t know.

Here’s where we get to the first obvious difference between algorithmic bidding and rule-based bidding.

Algorithmic bidding backed by an advanced, powerful AI can take into consideration factors beyond the immediate environment of the keyword.

Which on the other hand means that not every biddable object – keyword, ASIN, placement, etc. – will perform to your liking. In short, you have less control over your PPC bids.

But if you are ok with that, algorithmic bidding also brings great benefits:

You might not have the freedom to let a PPC bid optimization tool make flexible decisions on your behalf. Or you simply feel an aversion to the algorithmic bidding concept. Then rule-based bidding is your way to go as rule-based bidding gives you full control.

Rules based bidding enables you to:

But here’s the kicker: be prepared for a hard work tradeoff.

Us humans usually don’t have the mental capacity or the time to keep on top of all the changes.

To say the least, it’s tricky, to:

So this is a tradeoff you need to be aware of and OK with.

Even if you haven’t yet seen the desired success from your Amazon advertising bidding, eBay bidding or any other PPC advertising activites, you have observed some results.

I can almost guarantee that if you look at your results, you will notice that long tail keywords are actually bringing in a higher percentage of conversions.

Long tail keywords (i.e. keywords consisting of more than three words) don’t come in big volume. However, their conversion rate is high, and in PPC bidding, this is an opportunity you should not miss!

The not-so-good news? Longtail keywords are also difficult to handle:

Longtail Keywords – Search Volume and Conversion Rate – Graphic by Semrush

If this situation rings true, algorithmic bidding is the one that will most likely produce better results.

We are all aware that AI and statistics are very helpful when dealing with many data points (big data). But did you know they can be just as helpful, or more, when dealing with few data points? See this article by Forbes to learn more about small data.

For example: A longtail keyword in your Amazon PPC ads campaign has 3 clicks. Can you tell if that is good or bad? Based on what?

Humans tend to draw incorrect conclusions.

And this is where AI and statistics step in. A powerful AI can:

Here’s where rule-based bidding falls short. Following everything that I described above, you need an approach that is as dynamic and flexible as possible.

And rule-based bidding just won’t cut it when it comes to harvesting long tail keyword:

The fact is that with the full control you get with rules, there’s also more bidding work.

Earlier when I talked about control, I already discussed the hard work trade off that rule-based bidding brings along. And like any hard work, it takes time:

For example: keywords might compete with each other. Or the budget you spend on one keyword, can’t be spent on another. This can easily result in either suboptimal budget allocation or exhausting your budget altogether.

You need to keep a very detailed overview of your bidding. You should also invest substantial amounts of time and attention to your rules and how they interact with each other. You need to make sure they always work to your benefit.

If you won’t, this PPC bidding option will most likely work to your disadvantage.

One of the biggest advantages of algorithmic bidding is saving you your precious time. Forget keeping a detailed overview over your rules, bidding and whatnot.

With automatic bidding ALL that happens automatically. The best part? It also works 24/7.

You just started your advertising adventure. Or you are constantly launching new products. In both cases, you don’t have historical data.

You might be wondering: how does this relate to PPC bidding? When you’re starting from scratch, with little or no performance data there are many moving parts.

There is a lot of uncertainty about how your intended audience will react. Let’s have a look at both bid management options and see what each of them offers.

In cases where there is little or no data, rule-based bidding isn’t the strongest. When there are no conversions rule-based bidding can find that tricky to handle, and can’t make much of it.

Your PPC bidding is pretty much an empty canvas. You have to go through lots of trial and error to figure out what works for PPC campaigns of your newly launched products.

You should ask yourself – do I have the skills, time and energy to do all that?

On the other hand, even if there is little or no data, a PPC algorithm can:

To sum up, algorithmic bidding can push things on your behalf to get you to your desired results faster.

Don’t get me wrong: algorithm is not infallible. Even with an algorithm, it can take a bit of time to ramp up to the deliverables you’re after.

But overall, algorithmic bidding will consider more factors than the thresholds and conditions that you set yourself within rule-based bidding.

Algorithm reacts in a more flexible and informed manner on your behalf and can save you time and money.

The last point I will cover is PPC software. Neither of the PPC bid management options is a standalone feature, it is always a part of a PPC software.

There are excellent PPC tools and solutions for bidding optimization out there working on both ends of the spectrum. If you’re willing to put in the time and effort, I am absolutely certain you’ll find the one that best suits you and your unique business needs.

Either path you decide to try first, I recommend one thing: patience. Very few things in life come immediately, and the same goes for online advertising performance improvement.

Make sure you manage your own expectations. Give your PPC bidding experiments sufficient time. This way you will get a good sense of what’s working for your PPC campaigns and what isn’t.

Which PPC bidding option is better? Rule-based or algorithmic bidding? Well, this depends on who you ask.

I admitted our bias towards algorithms to handle your online advertising bidding. We do recognize not everybody might be ready to give up the control. If you want to see how algorithmic bidding works, start a free 30-day trial.

Based on five different aspects of PPC bidding, I compared algorithmic bidding and rules based bidding and presented their pros and cons.

Hopefully you now feel more empowered to make an informed decision that suits you best.

Which PPC bid management option do you prefer?

Let me know by sharing and commenting on this post on Linkedin, Facebook, Instagram, or Twitter.

Head of Product @Adspert

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