Con­trib­u­tor Fred­er­ick Val­laeys believes the PPC pro­fes­sion­als with the strongest knowl­edge of paid search fun­da­men­tals will have the best oppor­tu­ni­ties for suc­cess­ful cam­paigns and sol­id career growth.

I’ve been doing pay-per-click (PPC) since 1998, when vir­tu­al­ly every set­ting was man­u­al. While it was painful to man­age every­thing by hand, it forced me to learn the ins and outs of PPC, and that helped me build a suc­cess­ful career.

Today, with automa­tion play­ing an ever-more-impor­tant role in PPC, new account man­agers don’t have to learn all the fun­da­men­tals because tools han­dle the details.

But as humans learn how to co-man­age accounts with arti­fi­cial intel­li­gence, I believe that those with the strongest fun­da­men­tals will have the best oppor­tu­ni­ties for career advancement.

Automation erodes expertise

Remem­ber the days when pho­tog­ra­phy was an expen­sive hob­by? Before dig­i­tal, every time you clicked the shut­ter, you used anoth­er frame of film. To see the result, you’d spend more mon­ey to get the roll of film devel­oped and print­ed. And not only was it expen­sive, it was also slow, with most labs tak­ing an hour or more to turn the film into a print.

In the pre-dig­i­tal days of pho­tog­ra­phy, it mat­tered that you under­stood how to frame a shot and set the right expo­sure to get a beau­ti­ful pho­to. If the pho­to you took didn’t look amaz­ing, there was very lit­tle you could do eas­i­ly and cheap­ly to turn it into a masterpiece.

Com­pare that to today, where every­one has a decent cam­era on their smart­phone and hob­by­ists have mir­ror­less cam­eras that can shoot 60 frames per sec­ond. Results are instan­ta­neous, and all the com­put­ing pow­er in the cam­era almost guar­an­tees cor­rect focus and exposure.

In PPC, where Google is push­ing real­ly hard to auto­mate as much account man­age­ment as pos­si­ble, we run the risk that new PPC pro­fes­sion­als will grow up in an era where they do noth­ing man­u­al­ly and nev­er learn the fundamentals.

When the machine learns too slowly, results suffer

So, why does it mat­ter if the per­son you hire to man­age your AdWords doesn’t know the fun­da­men­tals? Even my 4‑year old takes great pho­tos, after all. But there is a key dif­fer­ence between tak­ing pho­tos with­out know­ing what an f‑stop is and run­ning an AdWords account with­out know­ing how a cost per click (CPC) is calculated.

With pho­tog­ra­phy, we can take shots with ten dif­fer­ent expo­sures in one sec­ond, know­ing that at least one would be great. It costs noth­ing to throw away the nine bad pho­tos, but if we’re lazy as account man­agers and we do nine point­less exper­i­ments in AdWords, those clicks cost real money.

I’ve made the point before that test­ing the right things is what will set great agen­cies apart from mediocre ones. In PPC, that means that fun­da­men­tals still mat­ter so that you can set up a rea­son­able test that gets as much as pos­si­ble right, leav­ing few­er vari­ables to test. This helps find win­ning tests more quick­ly, and that can make a huge impact.

When humans rely too much on machine learn­ing, we run into the fol­low­ing issue. Google doesn’t care if it takes ten clicks before their bid­ding mod­el starts to make good pre­dic­tions; they still make mon­ey on every one of those clicks.

But adver­tis­ers should and do care about the amount of invest­ment required to get to a sta­ble sit­u­a­tion where machines deliv­er pre­dictably good results. This mat­ters even more for small com­pa­nies that may not have the cash flow to wait it out.

The more humans can help machines go in the right direc­tion, the more mon­ey is saved and the hap­pi­er the adver­tis­er will ulti­mate­ly be. Doing all that requires know­ing the fundamentals.

What are fundamentals?

In PPC, the fun­da­men­tals include the basics of how enti­ties in AdWords work and inter­act with each other.

For exam­ple, what set­tings are done at the account, cam­paign, ad group, key­word and ad lev­el? What are the dif­fer­ent types of bids, and what are bid adjust­ments? Which bid adjust­ments work at what lev­el? And the list goes on and on.

In my job as chief exec­u­tive offi­cer (CEO) of Opt­myzr, I talk to a lot of adver­tis­ers, and it’s sur­pris­ing which types of ques­tions stump peo­ple who do PPC for a liv­ing. For exam­ple, you know what a return on ad spend (ROAS) bid strat­e­gy is and what it’s try­ing to achieve. But some adver­tis­ers who use our rules-based opti­miza­tions ask me about the for­mu­la we use to derive the CPC for a tar­get ROAS strategy.

The basic equa­tion we start with is sim­ple, and any­one who does PPC should be able to come up with this. You get the cor­rect CPC by divid­ing the his­tor­i­cal rev­enue from ads by the num­ber of clicks and mul­ti­ply­ing that by the inverse of the tar­get ROAS you’re try­ing to achieve.

The rea­son I think it’s a prob­lem when adver­tis­ers can’t come up with this for­mu­la is that they’ll be hard-pressed when the time comes to use new busi­ness data to improve their meth­ods for man­ag­ing bids. So they’re basi­cal­ly stuck with what­ev­er a tool gives them, and they have to rely on the com­pa­ny behind the tool to deliv­er fur­ther improvements.

How the fundamentals helped me

I was a Google AdWords evan­ge­list for a long time in the 2000s before start­ing my com­pa­ny. I was fre­quent­ly on stage, get­ting pep­pered with live ques­tions about some real­ly in-the-weeds AdWords stuff.

I didn’t write the AdWords code, so I didn’t know exact­ly how the sys­tem oper­at­ed, but I spent count­less hours work­ing with engi­neers, prod­uct man­agers, ser­vice reps and adver­tis­ers, and that helped me under­stand the fundamentals.

Here’s the thing: The engi­neer who wrote the code prob­a­bly doesn’t know every cor­ner case adver­tis­ers encounter, so they have an imper­fect under­stand­ing of the sys­tem. And adver­tis­ers and reps, because they didn’t build the log­ic but can only see the results it pro­duces, also don’t have a per­fect under­stand­ing. But if you know how things are sup­posed to be built, and you’ve seen them inter­act in the real world, you can build up a real­ly good intu­ition of how things will work.

As PPC pros, you have access to what Google says the sys­tem should do, along with tons of real-world data, so you’re in a great posi­tion to be a mas­ter of AdWords.

How not knowing the fundamentals will hurt you

Here’s an exam­ple of a sit­u­a­tion where mis­un­der­stand­ing the basics of how AdWords oper­ates can hurt you. Say you’re using a script like the one writ­ten by Daniel Gilbert for hourly day­parts, and all of a sud­den you start to see ads at times of the week when you thought you had no active dayparts.

If you think that day­parts are man­aged as bud­get peri­ods (e.g., I have $0 bud­get from 10 p.m. until 6 a.m.), you would think using a script to set a ‑90 per­cent bid adjust­ment would effec­tive­ly leave your ads turned off at those times of the week because there’s still $0 budget.

But that assump­tion would be false because day­parts are bid adjust­ments on top of the base bids, and so a ‑90 per­cent day­part would serve ads with a max CPC of 10 per­cent of the orig­i­nal bid.

As you deploy more tools, the fundamentals matter even more

As more of AdWords becomes auto­mat­ed, we also have to become bet­ter at under­stand­ing inter­ac­tions. Fun­da­men­tals are real­ly impor­tant for this, too. Say you’re using Google’s Tar­get CPA (cost-per-acqui­si­tion) bid­ding method, and then you use a pri­vate tool to keep some ads in posi­tions one, two and three.

These sys­tems are both chang­ing bids, so you’re like­ly to run into unex­pect­ed behav­ior. This is a sim­ple exam­ple, but you can only get it right if you know how AdWords works and what levers the tools are pulling.

Five ways to learn the fundamentals

AdWords Cer­ti­fi­ca­tion. If you’re new to PPC, take the AdWords fun­da­men­tals exam and try to pass it with­out cheat­ing. Yes, some of the ques­tions may be a bit repet­i­tive, but know­ing the answers will help you lat­er in your career, even if it’s just to have some­thing to com­mis­er­ate over with oth­er adver­tis­ers you meet at a conference.
Lis­ten to Gin­ny Mar­vin. One of the chal­lenges with AdWords is that it’s con­stant­ly evolv­ing. What I learned when I start­ed in PPC in 1998 is still help­ful today, but it’d be use­less if I hadn’t kept up some­how with all the changes. Per­son­al­ly, I read any­thing pub­lished by Search Engine Land’s paid media reporter and asso­ciate edi­tor Gin­ny Marvin.
AdWords Blog. I also sub­scribe to the Inside AdWords blog, but I take their announce­ments with a grain of salt. Google has to build momen­tum for their new tools, so they may hype them before they’re ful­ly baked. That’s why I look to indus­try sites like Search Engine Land and PPC Chat on Twit­ter to hear from real adver­tis­ers about their expe­ri­ences with new tools.
AdWords Devel­op­ers Blog. If you want to go real­ly in-depth, I also rec­om­mend fol­low­ing the AdWords Devel­op­ers blog and the AdWords Scripts updates page. This is where Google announces changes that mat­ter to devel­op­ers. By know­ing what is chang­ing in the ads’ back end, even though you nev­er see the back end, you will get ear­ly noti­fi­ca­tions of what is like­ly to become vis­i­ble in the front end.

I get fre­quent news alerts from sites that decon­struct the lat­est Android Pack­age (APK) for apps I use, like Google Pho­tos. By scan­ning the code changes, they are often able to pre­dict what fea­tures Google is on the verge of launching.

With Google Pho­tos, that’s nice to know, but with pay-per-click, it’s a chance to be on the cut­ting edge of the thing that pro­vides my liveli­hood and to get ahead of a lot of oth­er advertisers.

Conclusion

At the end of the day, I believe it’s just com­mon sense to try to under­stand the under­ly­ing sys­tems that you depend on for a liv­ing. And as machines take over many of our day-to-day man­age­ment tasks, know­ing how they oper­ate and how we can work col­lab­o­ra­tive­ly to improve results will help us have more suc­cess­ful careers.

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