The Day the Algorithm Ate a Plumber’s Retirement Fund
I remember sitting in a cafe in New Farm early last year, meeting with a local plumbing business owner who was, frankly, terrified. He’d been told by a big-name agency that he needed to "embrace the future" and switch his entire Google Ads account to Maximize Conversions—one of Google’s flagship Smart Bidding strategies.
He did it. And for three days, he felt like a genius. Leads were flying in. Then, the weekend hit.
Because the AI saw a spike in conversion probability (people frantically searching for emergency plumbers on a Sunday morning), it aggressively bid his Cost Per Click (CPC) up from $15 to nearly $85. By Monday morning, his monthly budget was gone. The worst part? Half those "conversions" were people calling from outside his service area or looking for DIY advice.
This is the reality of the "Set it and Forget it" lie that Google—and many lazy agencies—sell to Brisbane business owners.
Google’s AI is incredibly powerful, but it’s also a hungry beast that doesn't care about your bottom line as much as you do. If you’re a beginner trying to navigate the war between Smart Bidding and Manual Bidding, you need to understand one thing: AI is a great co-pilot, but it’s a terrifying captain.
The Great Bidding Debate: What Are We Actually Talking About?
Before we dive into the wreckage, let’s define the terms.
Manual Bidding is the old-school way. You tell Google, "I am willing to pay exactly $4.50 for a click on the keyword 'conveyancing lawyers Brisbane'." Not a cent more. You have total control, but it’s time-consuming. You have to check in constantly to see if you’re being outbid.
Smart Bidding uses machine learning to optimize for conversions or conversion value in every single auction. It looks at millions of signals: what time of day it is, what device the user is on, their search history, and even their location. It decides in milliseconds whether to bid $2 or $20 based on the likelihood of that person actually buying from you.
Sounds perfect, right? On paper, yes. In practice, it’s where most small businesses lose their shirt because they don't have the data to feed the machine.
Why AI Gets It Wrong (And Why It’s Usually Your Fault)
I’m going to be blunt: AI isn't sentient. It’s a math equation. If you feed a math equation garbage information, it produces garbage results.
1. The Data Drought
Smart Bidding requires data. A lot of it. Google generally recommends at least 30 to 50 conversions per month for its algorithms to truly "learn."If you’re a boutique builder in Ascot doing two high-value renovations a year, you will never have enough conversion data for Smart Bidding to work. The AI will go on a "fishing expedition" with your credit card, trying to find patterns where none exist. It starts bidding on broader and broader terms just to get any click, and before you know it, you're paying for traffic that has zero intent to buy. This is often how your ads tracking is lying to you—showing you "conversions" that are actually just junk data.
2. The Context Blindness
AI doesn't know that it’s raining in Brisbane today and that your outdoor cafe will be empty. It doesn't know that your competitor just launched a 50% off sale. It only knows historical patterns.I’ve seen Smart Bidding spend a fortune on a public holiday because "Mondays are usually high performing," completely ignoring that the business was actually closed and the phones were unmanned. Manual bidding allows you to apply common sense that an algorithm simply doesn't possess.
When to Stick with Manual Bidding (The Unfashionable Truth)
In the marketing world, saying "I use manual bidding" is like saying "I use a typewriter." It’s seen as antiquated. But for many SMBs, it’s the only way to stay profitable.
You should stay manual if: Your budget is under $2,000/month: You simply don't have the volume to train the AI properly. Your conversion window is long: If it takes six months for a lead to become a customer, Google’s AI struggles to connect the dots. You need absolute cost control: If a $20 lead makes you money but a $25 lead loses you money, you cannot trust an AI that is happy to bid $30 just to "win" the auction.
Many agencies will tell you to just "trust the process." That’s code for "I don't want to spend three hours a week manually adjusting your bids." Don't fall for it. If your lead cost is a lie, it's probably because the AI has been given too much rope.
The "Smart" Way to Use Smart Bidding
I’m not a Luddite. We use Smart Bidding for our clients at Local Marketing Group all the time—but we do it with guardrails. Here is the framework we use to ensure the AI doesn't go rogue.
Step 1: Start Manual, Then Graduate
Never start a brand-new campaign on Smart Bidding. You need to gather baseline data first. Run your campaign on Manual CPC for at least 30 days. Find out which keywords actually work. Once you have a steady stream of conversions, then you can consider testing a Target CPA (Cost Per Acquisition) strategy.Step 2: Use Portfolio Bid Strategies with Caps
This is a pro-tip that most beginner guides miss. You can actually set a "Maximum CPC Limit" within certain Smart Bidding strategies if you set them up as a Portfolio Strategy. This tells Google: "You can optimize for conversions, but I forbid you from ever paying more than $12 for a single click." This one setting has saved our clients thousands of dollars in runaway auction costs.Step 3: Focus on Value, Not Volume
One of the biggest mistakes I see is businesses setting their AI to "Maximize Conversions." This is a trap. If you have a service that costs $100 and another that costs $5,000, the AI will naturally gravitate toward the $100 service because it’s easier to get a "conversion."Instead, you should be looking at Target ROAS (Return on Ad Spend). But be warned: if you don't have your conversion values tracked perfectly, this will fail spectacularly. If you're just chasing lead volume without looking at the quality of those leads, the AI will happily find you 100 people who will never buy from you.
Real World Scenario: The Logan E-commerce Shop
We recently worked with a small e-commerce brand based out of Logan. They were selling high-end pet accessories. When they came to us, they were using "Maximize Conversion Value."
The AI had decided that the best way to get "value" was to retarget people who had already visited the site four or five times. It looked great in the reports—the ROI was huge. But there was a problem: those people were likely going to buy anyway. The AI was essentially taking credit for sales that would have happened organically, while completely failing to find
new* customers.We switched them back to a hybrid model—Manual bidding for brand-new prospecting and a very tight Smart Bidding layer for remarketing. Result? Their actual bank balance increased, even though the "ROAS" in the Google Ads dashboard technically went down.
Always trust your bank account over your Google Ads dashboard.
The Checklist: Is Your AI Lying to You?
If you are currently using Smart Bidding, I want you to go into your account right now and check these three things:
1. The "Search Terms" Report: Are you paying for clicks on your own brand name? AI loves bidding on your brand name because the conversion rate is high, making the AI look "smart." In reality, you’re just paying for people who were already looking for you. 2. Bid Limits: Do you have a maximum CPC cap in place? If not, check your highest CPC from the last 30 days. You might be shocked to find you paid $50 for a click that used to cost $5. 3. Conversion Lag: Look at your "Days to Convert" report. If it takes people 14 days to decide, but you’re making budget changes every 3 days, you are breaking the AI’s feedback loop.
Conclusion: Don't Be a Victim of Progress
Google Ads is moving toward a black-box system where they want you to just provide the credit card and the creative, and let them handle the rest. For a multi-billion dollar corporation like Wesfarmers, that works. For a family business in Chermside or a tradie in Ipswich, it’s a recipe for disaster.
Smart Bidding isn't "bad," but it is biased. It is biased toward spending your budget.
My advice? Treat AI like a junior employee. Give it clear instructions, set strict boundaries, and check its work every single day. If you don't have the time or the data to manage the AI, there is absolutely no shame in going back to Manual Bidding. In fact, in the current economic climate, that extra control might be exactly what keeps your business in the black.
Stop letting the machine tell you what your leads are worth. You’re the one paying the bills—you should be the one setting the price.
Need someone to look under the hood of your Google Ads account and tell you if your 'Smart' bidding is actually just 'Expensive' bidding? Contact Local Marketing Group today and let’s get your ROI back on track.