Manual bidding vs smart bidding: what experiments show

I. Executive Summary

This report provides a comprehensive analysis comparing the effectiveness of manual and smart bidding strategies in Google Ads, with a specific focus on Cost Per Acquisition (CPA). The analysis synthesizes findings from various experiments and studies, revealing a general tendency for certain smart bidding strategies, such as Target CPA and Max Conversion Value, to achieve a lower CPA in many scenarios. However, the effectiveness of each strategy is significantly influenced by factors like conversion volume, campaign goals, and the specific industry. While smart bidding leverages automation and machine learning to optimize bids, manual bidding still offers advantages in terms of granular control and can outperform automated strategies in specific contexts, particularly for new campaigns or those with limited conversion data. The report concludes with actionable recommendations for advertisers to guide their bidding strategy selection and optimization efforts.
 

II. Introduction

In the realm of Google Ads, advertisers employ various bidding strategies to optimize their campaigns for desired outcomes. These strategies broadly fall into two categories: manual bidding and smart bidding. Understanding the nuances of each approach and their impact on key performance indicators like CPA is crucial for maximizing advertising efficiency and return on investment.

Manual bidding entails advertisers directly managing their keyword bids on the Google Ads platform. This method grants complete control over the maximum cost-per-click (CPC) that an advertiser is willing to pay for each keyword or ad group. Adjustments to these bids are made by the advertiser based on performance data gleaned from reports . While offering a high degree of control, manual bidding necessitates significant time, expertise, and continuous monitoring to ensure optimal performance.  

Conversely, smart bidding represents an automated approach where Google's artificial intelligence (AI) and machine learning algorithms manage bids to optimize for specific conversion-related goals in real-time during each auction. This "auction-time bidding" considers a multitude of signals, including device type, location, time of day, and user behavior, to predict the likelihood of a conversion. Common smart bidding strategies include Target CPA, Maximize Conversions, Maximize Conversion Value, Target ROAS, and Enhanced CPC (which is being phased out by March 2025). By leveraging vast datasets and sophisticated algorithms, smart bidding aims to automate bid adjustments for improved conversion outcomes.  

A critical metric for evaluating the success and cost-effectiveness of Google Ads campaigns is the Cost Per Acquisition (CPA). CPA represents the average cost incurred to achieve a single conversion, where a conversion can be defined as a specific desired action, such as a purchase, lead generation form submission, or website sign-up . For many advertisers, the primary objective is to minimize their CPA while maintaining a satisfactory volume and quality of conversions, thereby maximizing the profitability of their advertising investments.  
 

III. Overview of Smart Bidding Strategies for CPA Optimization

Several smart bidding strategies are specifically designed or can be leveraged to optimize for CPA. Understanding the mechanics of these strategies is essential for interpreting the results of comparative studies.
 

Target CPA (tCPA) is a smart bidding strategy that empowers advertisers to set a desired average cost they are willing to pay for each conversion. Google Ads then automatically adjusts bids in real-time to help achieve this target CPA, striving to obtain as many conversions as possible at or below the specified cost. The system employs historical performance data and various auction-time signals to predict the likelihood of a click resulting in a conversion. For tCPA to function effectively, campaigns typically require a sufficient volume of conversion data, generally recommended to be between 15 and 30 conversions within the preceding 30 days . This data allows the algorithm to learn and optimize bids based on conversion patterns. Target CPA is particularly well-suited for advertisers who have a clear and specific CPA goal in mind and possess an adequate conversion history to inform the algorithm's decisions.  
 

Maximize Conversions is another fully automated bidding strategy that focuses on generating the highest possible number of conversions within the allocated daily budget. While the primary aim is to maximize conversion volume, Google Ads introduced the option to set a target CPA alongside this strategy, providing a degree of cost control . It's important to note that Maximize Conversions, even with a target CPA, prioritizes the sheer volume of conversions and may not always strictly adhere to the target CPA as consistently as the dedicated Target CPA strategy. This strategy is generally recommended for advertisers who are primarily focused on increasing their conversion volume while staying within their budget, and the optional target CPA allows for some influence over the cost per conversion.  
 

Enhanced CPC (ECPC) represents a semi-automated bidding strategy that operates as an enhancement to manual CPC bidding. When ECPC is enabled, Google's algorithm automatically adjusts the manually set keyword bids up or down based on the perceived likelihood of a click leading to a conversion. The system aims to keep the average CPC below the advertiser's maximum manual CPC bid . While ECPC strives to increase conversions, it does not guarantee achieving a specific CPA target. ECPC offered a balance between the complete control of manual bidding and the full automation of smart bidding, allowing advertisers to maintain a base level of bid control while benefiting from algorithmic adjustments for conversion optimization. However, it is important to note that Google is phasing out the ability to opt into ECPC for Search and Display campaigns in October 2024, and existing campaigns using ECPC will be automatically migrated to manual CPC bidding by March 2025. This impending change necessitates that advertisers currently relying on ECPC consider transitioning to fully automated smart bidding strategies or pure manual bidding.  
 

IV. Summary of Individual Experiments and Studies

To provide a data-driven comparison of manual and smart bidding CPA, several unique experiments and studies were analyzed based on the provided research material. The findings of these studies are summarized below:
 

Study 1 (Optmyzr - Impact of PPC Bidding Strategies): This analysis of a large dataset of Google Ads accounts revealed that while Manual CPC delivers strong overall performance, it is not the most efficient strategy for CPA. Specifically, Max Conversion Value consistently outperformed Max Conversions with a better CPA, and Target CPA achieved the lowest CPA among all bidding strategies examined. The study also indicated that a conversion volume of at least 50 per month is beneficial for most bidding strategies, including smart bidding and manual bidding. For smart bidding strategies focused on ROAS and CPA, a spend level between $10,000 and $50,000 appeared to be a sweet spot, while manual bidding demonstrated more consistent performance across varying budget levels. This suggests that certain smart bidding strategies can be more CPA-efficient than manual bidding, particularly when sufficient conversion data is available and within specific spend thresholds, but manual bidding offers greater budget flexibility.
  

Study 2 (Inflow Case Study): In a direct experiment, manual bidding was compared against the Target ROAS smart bidding strategy over a three-week period, following an initial month of manual campaign optimization. The results indicated that the manual campaign significantly outperformed the automated Target ROAS campaign. In the final week of the experiment, the manual campaign achieved more than double the conversion value and nearly triple the revenue and transactions compared to the Target ROAS campaign. Furthermore, the manual campaign had a Cost per Conversion of $11.84, while the Target ROAS campaign's CPA was $23.71 . This case study demonstrates a scenario where manual bidding yielded a substantially lower CPA and better overall results than a smart bidding strategy focused on return on ad spend. It also highlights potential discrepancies in reporting between Google Ads and Google Analytics, emphasizing the need for a comprehensive view of campaign performance.  
 

Study 3 (AdShark Case Study): This article presented two contrasting case studies involving the Target CPA smart bidding strategy . In the first case, a B2C e-commerce company experienced a 50% decrease in CPA and a doubling of the conversion rate after implementing Target CPA. This positive outcome suggests that Target CPA can be highly effective in reducing acquisition costs when the conditions are favorable. However, the second case study illustrated a situation where Target CPA led to a 35% decline in revenue over several months. Switching to manual CPC bidding and restructuring the account resulted in a 150%-200% increase in revenue over the subsequent six months, while effectively managing CPA. These contrasting results underscore that the suitability of Target CPA depends on factors such as the primary campaign goal (CPA reduction versus revenue growth) and the availability of sufficient conversion data (at least 30 conversions in 30 days is recommended for Target CPA). In situations where revenue growth is the priority, manual bidding might offer greater control and flexibility.  
 

Study 4 (Jyll.ca - Maximize Conversions vs. Manual CPC): This blog post generally recommends using the Maximize Conversions smart bidding strategy over Manual CPC in most circumstances. The rationale is that Maximize Conversions leverages numerous signals beyond just the keyword, such as user demographics, device, time of day, and browsing history, to optimize for conversions, potentially leading to a better CPA. However, the author acknowledges exceptions where Manual CPC might be preferred, such as for brand campaigns, competitor campaigns, or when an account has not yet generated any conversions. This suggests a general inclination towards the CPA-improving potential of Maximize Conversions due to its data-driven optimization capabilities, while recognizing specific scenarios where manual control might be more advantageous.  
 

Study 5 (Reddit Discussion - Automated vs. Manual): A discussion on Reddit revealed mixed experiences regarding the comparison between automated (including smart) and manual bidding. Some users reported achieving 10-30% lower CPAs and greater consistency with manual bidding, particularly when scaling campaigns. Others found automated bidding strategies like Target ROAS to be more effective for ROI and cost efficiency, provided there is sufficient conversion data and properly optimized conversion actions. Conversely, some users shared experiences of automated bidding campaigns suddenly underperforming, with manual bidding providing a more reliable path to recovery. The consensus seemed to be that manual bidding is often a better starting point for new campaigns to gather initial conversion data, after which testing automated strategies can be beneficial. This suggests that the optimal bidding strategy can depend on the campaign lifecycle, data maturity, and the specific goals, with manual bidding offering more initial control and potential reliability at scale, while automated bidding can excel with sufficient data and optimization. 
 

Study 6 (Freak Marketing - Target CPA vs. Manual CPC): This blog post compares Target CPA and Manual CPC bidding strategies, suggesting that Target CPA is advantageous for scaling campaigns with consistent conversions and can save time, potentially leading to a better CPA through automated optimization. The algorithm's ability to adjust bids in real-time based on conversion likelihood is highlighted as a key benefit. Manual CPC, on the other hand, is presented as offering total control and flexibility, making it suitable for testing new keywords or targeting specific audiences, and for advertisers who prefer a hands-on approach. The author recommends A/B testing both strategies to determine which performs better for a specific campaign, emphasizing a data-driven approach to decision-making. This indicates that while Target CPA has the potential for CPA improvement through automation, the best choice depends on the advertiser's goals, comfort level with automation, and the specific campaign context.  
 

Study 7 (AgencyAnalytics - Google Ads A/B Testing): A 30-day A/B test conducted by AgencyAnalytics compared a Target CPA bidding strategy against a previous bidding method (likely manual or another automated strategy) on their Social Media Analytics campaign. The results demonstrated a significant improvement in performance with Target CPA, including a 33% decrease in CPA, a 66% increase in conversion rate, and a 13% increase in overall conversions. Based on these positive results, the Target CPA settings were applied across the entire campaign. This case study provides compelling evidence of the potential for Target CPA to dramatically reduce CPA and improve conversion efficiency in a real-world application.  
 

Study 8 (Reddit Discussion - Enhanced CPC vs. Manual CPC): A Reddit discussion comparing Enhanced CPC (ECPC) and Manual CPC generally favored ECPC, particularly when there is a higher volume of conversion data. ECPC's ability to automatically adjust bids based on the likelihood of conversion was seen as a significant advantage over manual bidding, which does not consider conversion data in bid adjustments. Some users even found ECPC to perform better than the fully automated Target CPA strategy in certain situations. Manual CPC was acknowledged as offering more control and potentially being more suitable for campaigns with very few conversions or a small budget. This suggests that even a semi-automated strategy like ECPC can often outperform pure manual bidding in terms of CPA by leveraging conversion data for more intelligent bid adjustments, although manual bidding still has its place in specific scenarios.  
 

Study 9 (Blobr.io - What is CPA): While this article primarily explains CPA and Target CPA, it includes a case study of ASOS, a large online fashion retailer, which achieved a 20% lower CPA and a 50% increase in conversion rate by using the Target CPA bidding strategy compared to their previous, unspecified, strategy. This example provides further support for the effectiveness of Target CPA in reducing acquisition costs for established e-commerce businesses.  
 

Study 10 (Reddit Discussion - Smart AI Bidding): A user shared their experience of switching from a previous (implied manual) bidding strategy to Max Conversions, resulting in a 24% decrease in conversion value and a 10% increase in costs over four months. However, another user pointed out that this was not a controlled A/B test, which could have influenced the outcome. This anecdotal experience serves as a reminder that simply implementing a smart bidding strategy without proper setup, understanding, and a controlled testing environment may not always lead to improved CPA and can potentially worsen performance.  
 

V. Comparative Analysis of CPA Results

The following table summarizes the CPA-related findings from the analyzed studies:
 

The data, while limited in directly quantifiable CPA comparisons across all studies, indicates a general trend where smart bidding strategies, particularly Target CPA and Max Conversion Value, often lead to a lower CPA compared to manual bidding. The Optmyzr analysis and the case studies from AdShark, AgencyAnalytics, and Blobr.io provide evidence of this tendency. However, the Inflow case study stands out as an exception where manual bidding resulted in a significantly better CPA. The experiences shared on Reddit suggest that the outcome can be highly dependent on the specific campaign context and implementation.

VI. Identified Trends, Patterns, and Caveats

Several recurring trends, patterns, and important caveats emerged from the analysis of the various experiments and studies.

Trend 1: Smart Bidding Often Aims for Lower CPA: A significant number of sources suggest that smart bidding strategies, especially Target CPA and Max Conversion Value, are frequently effective in achieving a lower CPA compared to manual bidding. This likely occurs because smart bidding algorithms can process and analyze vast quantities of data in real-time, allowing them to make more informed and efficient bid adjustments than manual optimization. By identifying and capitalizing on conversion opportunities at optimal prices, these algorithms can often drive down the cost per acquisition.  

Trend 2: Conversion Volume is Crucial for Smart Bidding Success: A recurring theme across multiple sources is the importance of having a sufficient volume of conversion data for smart bidding strategies like Target CPA and Maximize Conversions to perform effectively. These algorithms rely on historical conversion data to learn patterns and accurately predict the likelihood of future conversions. Without an adequate amount of data, the algorithms may struggle to make well-informed bidding decisions, potentially leading to suboptimal CPA and overall campaign performance. The generally recommended threshold is often around 15-30 conversions per month, but higher volumes can further enhance the algorithm's learning capabilities.  

Trend 3: Manual Bidding Can Outperform in Specific Scenarios: Despite the general trend favoring smart bidding for CPA reduction, the Inflow case study and anecdotal evidence from Reddit users highlight instances where manual bidding achieved a better CPA or overall results. This outperformance often occurs in situations with very specific campaign goals that require granular control over bidding, or when dealing with unique circumstances where automated systems might struggle, such as recovering from sudden performance drops. Manual bidding allows for immediate, human-driven adjustments based on specific insights and real-time observations that algorithms might not fully capture, providing an advantage in certain niche situations.  

Caveat 1: Results Can Be Industry and Campaign Specific: The effectiveness of any bidding strategy, whether manual or smart, is not universal and can vary considerably depending on the specific industry, the characteristics of the target audience, the specific objectives of the campaign, and other unique factors. What works well for one advertiser in a particular industry might not yield the same results for another. Therefore, it is crucial to recognize that there is no one-size-fits-all solution, and the optimal bidding strategy should be determined based on a thorough understanding of the individual context and goals of each campaign.  

Caveat 2: Proper Implementation and Monitoring are Essential: Regardless of the chosen bidding strategy, successful outcomes hinge on proper campaign setup, accurate and reliable conversion tracking, and consistent monitoring of performance. As illustrated by the negative experience shared by a Reddit user after switching to Max Conversions without a controlled test , simply adopting a smart bidding strategy does not guarantee success. Poorly implemented smart bidding can even lead to worse results than a well-managed manual bidding approach. Therefore, careful attention to setup and ongoing monitoring are critical for maximizing the potential benefits of any bidding strategy.  

VII. Reasons for Observed Differences in CPA

The observed differences in CPA between manual and smart bidding strategies can be attributed to several factors related to the inherent strengths of each approach.

Smart Bidding's Advantage: Smart bidding often demonstrates the potential for lower CPA due to its ability to analyze numerous auction-time signals in real-time. This allows the algorithm to more accurately predict the likelihood of a conversion for each individual auction and adjust bids accordingly, potentially securing more valuable clicks at an optimal price. Furthermore, smart bidding offers scalability and efficiency by automating bid adjustments, freeing up advertisers' time to focus on other strategic aspects of their campaigns. The algorithms also learn from the historical conversion data associated with the campaign and the account. This enables the system to adapt to performance trends and identify patterns that a human campaign manager might not readily discern.  
 

Manual Bidding's Potential Strengths: Manual bidding retains its value by offering granular control over individual keyword bids. This level of control can be particularly advantageous for campaigns with very specific objectives or limited budgets where precise management of spending is paramount. Manual adjustments to bids can also be implemented immediately in response to observed performance changes, providing an agility that can be beneficial in dynamic markets or during promotional periods. Additionally, manual bidding might be a more suitable starting point for new campaigns or those with very low conversion volumes. In such cases, relying on human intuition and initial performance data might be more effective than an under-trained smart bidding algorithm that lacks sufficient data for optimization.  

VIII. Conclusion and Recommendations

In conclusion, the analysis of various experiments and studies indicates that while smart bidding strategies, particularly Target CPA and Max Conversion Value, often demonstrate the potential for achieving a lower CPA compared to manual bidding, the optimal choice depends on a multitude of factors. Manual bidding continues to offer valuable control and can even outperform automated strategies in specific scenarios.

Based on the findings, the following recommendations are offered for advertisers seeking to optimize their Google Ads bidding strategies for CPA:

• Start with Smart Bidding for Established Campaigns: For campaigns that have a consistent history of generating conversions, consider testing Target CPA or Maximize Conversions (potentially with a target CPA) to explore opportunities for lowering your CPA and improving overall efficiency.
• Ensure Sufficient Conversion Data: Before implementing smart bidding strategies like Target CPA or Maximize Conversions, verify that your campaigns have accumulated an adequate volume of conversion data (generally at least 15-30 conversions in the past 30 days) to enable the algorithms to learn and optimize effectively.
• Consider Manual Bidding for New or Low-Volume Campaigns: For new campaigns or those with limited historical conversion data, it is often advisable to begin with manual bidding or Enhanced CPC (while it remains available) to gather initial performance data and maintain a greater degree of control over spending during the learning phase.
• Utilize Manual Bidding for Granular Control or Specific Goals: If your campaign strategy necessitates highly specific bidding adjustments for individual keywords or ad groups, or if you are operating under very tight budget constraints requiring precise control, manual bidding might provide the necessary level of flexibility and direct management.
• Continuously Monitor and Test: Regardless of the bidding strategy you choose, it is essential to continuously monitor your campaign performance, paying close attention to CPA, conversion rate, and conversion volume. Consider leveraging the A/B testing capabilities within Google Ads Experiments to directly compare the performance of manual bidding against different smart bidding strategies within your specific account and campaign context.
• Align Bidding Strategy with Campaign Goals: Ensure that your selected bidding strategy directly supports your overarching campaign objectives. If your primary goal is to minimize CPA, Target CPA is a strong contender. If your focus is on maximizing conversion volume within a set budget, Maximize Conversions might be more appropriate.
• Be Aware of Smart Bidding Limitations: Recognize that while powerful, smart bidding algorithms are not infallible and can sometimes make decisions that appear counterintuitive. Regularly review campaign performance and be prepared to intervene or even revert to manual bidding if necessary, particularly if you observe unexpected or undesirable performance shifts.
• Stay Informed About Bidding Strategy Changes: Keep up-to-date with any announcements or updates regarding Google Ads bidding strategies, such as the upcoming deprecation of Enhanced CPC, to ensure that your bidding strategies remain effective and aligned with the platform's capabilities.