Over the next few posts I’ll be publishing excerpts from “Open the Black Box”, OptiMine’s white paper about finding transparency and control in paid-search automation. People who mange large, complex paid-search campaigns often do so with the assistance of a tools that automate some, if not all of the processes. But automation does not guarantee a higher level of transparency and control. In fact, most automated systems are severely lacking in both areas. “Open the Black Box” shines a light on the importance of automation, transparency and control, and how to find a solution that offers all three. 

Background

For online advertisers running large, complex paidsearch campaigns, automation is virtually essential for optimizing keyword bids on campaigns and ad
groups that might involve hundreds of thousands or even millions of keywords. Optimizing such campaigns manually simply outstrips the ability and capacity of
human analysis. Bid automation software typically employs highly complex mathematical algorithms that can analyze millions of transactions per second, producing scenarios for the best cost per click (CPC), return on ad spend (ROAS), revenue goal, profit margin, or other campaign goal or business objective. The best automation systems help advertisers optimize the 10 percent to 15 percent of head terms that drive most of their sales or revenues while improving performance from mid-tail and extreme-tail terms.

But most automation systems for paid-search advertising have limitations. For one, most are basically “set-and-forget” black-box systems. They
don’t provide business analysts or marketers insights into why the software bids the way it does. They do provide some control over campaign or ad group
setup variables, but once these parameters are set, the process by which the software arrives at the bids remains a mystery to the advertiser. If these systems
cluster keywords and bid on clusters as whole, any distinctions in performance among keywords within the cluster will be invisible. This means advertisers
will inevitably spend too much on some keywords and not enough on others – particularly extremetail terms, which often have the greatest potential
for performance gains if the optimal bid can be determined.

This lack of transparency leads to the second significant limitation of most bid optimization white paper: Transparency And Control systems: There’s no functionality to enable human analysts to alter or override what the software does. Software automation isn’t a replacement for humans applying their experience and domain knowledge to a paid-search campaign at a particular time. Often, analysts are aware of an upcoming event or market shift that will change the performance of a keyword or
keyword cluster in ways that no algorithm can predict or react to quickly enough. At other times, businesses need to push inventory or manage fluctuations in stock levels through short-term offers. This requires transparency with regard to how bids are determined and the ability to override what the software is doing, based on both industry-specific experience and short-term business needs. As an analogy, consider the various computers in your car and how they monitor and regulate dozens of metrics related to fuel consumption, braking systems, etc. They are technological marvels, but someone still has to drive. The same is true in bid automation software.
As we unwrap this white paper we’ll detail:

• The need for transparency and control in bid,automation systems;
• How transparency and control can only come through automation,
• but why automation alone isn’t enough to guarantee them; and
• How to find a solution that strikes the right balance among all three elements

In the next post, we’ll put the need for transparency and control into the context of paid-search campaigns, so you can begin visualizing the benefits of having more of both. If you don’t want to wait for excerpt 2, you can download “Open the Black Box” at OptiMine.com now. 

@OptiMineInc

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