Smart Bidding in Google Ads leverages the power of artificial intelligence to improve the effectiveness of your advertising campaigns. This strategy automates bidding to help businesses achieve specific goals, such as increasing website visits or boosting sales.
By understanding and implementing Smart Bidding, you can optimize your ad management and budget allocation, making your advertising efforts more efficient and targeted. Read on.
What is Smart Bidding?
Smart Bidding is a subset of automated bidding strategies in Google Ads that uses machine learning algorithms to achieve the desired objective. The Smart Bidding strategy makes use of historical data, such as ad performance in other campaigns and various audience signals, to help the algorithm bid in real-time.
To date, the goals that Smart Bidding helps achieve are the optimization of advertising campaigns, either to maximize conversions (quantity) or the value of conversions (quality). Within maximizing conversions, the Target CPA (Cost per Acquisition) bidding strategy can be used, and within maximizing conversion value, the Target ROAS (Return on Advertising Spend) bidding strategy can be used.
Smart Bidding has a special feature known as real-time bidding. This means that the bid value for each auction is set in real-time and not just at certain times of the day.
Smart Bidding delivers the best bid value, which is much better than existing performance targets.
Smart Bidding algorithms adjust the bid based on:
- The aggregate performance of the advertising campaign on users.
- Contextual signals present at the time of the auction, such as:
- User device, location, browser, operating system.
- Search query performed, user intent, user interests.
- Time of day the ad is displayed.
- Ad creative shown to the user.
Types of Smart Bidding Strategies in Google Ads
There are basically only two types of Smart Bidding strategies in Google Ads that you can take advantage of. However, if we break them down, there are four types:
- Maximize conversions
- Target CPA (Cost per Action)
- Maximizing conversion value
- Target ROAS (Return on Advertising Spend)
Maximize Conversions:
In the Smart Bidding strategy to maximize conversions, the ad algorithm strives to deliver as many conversions as possible within the given budget. Therefore, some conversions may cost more and others may cost less.
Target Cost Per Action (or tCPA):
In the Maximize Conversions bid strategy, you have an additional option to set a target cost per action. If you have already run some campaigns and have a historical average CPA, you will receive a suggestion at the bottom to set a target CPA. Once you click apply, Google Ads will automatically fill in the target CPA value.
Maximize Conversion Value:
To maximize the value of conversions for your ad campaign, instead of maximizing the number of conversions, you should choose the Maximize conversion value bid strategy. In this bid strategy, the ad algorithm will focus on getting more value from conversions.
Target Return on Ad Spend (tROAS):
The tROAS bidding strategy is a bit more complicated. Don’t choose tROAS until you’ve received at least 15 conversions in 30 days for display campaigns and at least 30 conversions for video campaigns.
To find out how long to wait for other campaigns, check out our guide to value-based bidding in Google Ads.
All of these Smart Bidding strategies have their own pros and cons. Choose the right campaign based on your needs.
How does Smart Bidding work?
Smart Bidding considers four things before setting the bid value:
- Contextual signals at the time of bidding.
- Predicted conversion rate at auction time or conversion value per click.
- Search query performance across all your campaigns.
- The specified target budget/CPA/ROAS.
Taking all of the above into account, the algorithm bids for the most optimal value to obtain the most conversions or the highest conversion value.
All of the above is done a million times for each bid in one second by the ad algorithm using its machine-learning capabilities. It remembers the previous bid and based on the experience of the previous bid, audience signals, and the above factors, the ad algorithm places the best bid.
How to choose the right Smart Bidding strategy
Before implementing a Smart Bidding strategy, it is crucial to carefully consider your marketing goals, budget constraints, and target audience. Each strategy has its unique strengths and benefits tailored to specific objectives, so choosing the most appropriate one for your campaign is vital. Here are some guidelines to help you choose the right Smart Bidding strategy:
- Define your marketing objectives: Clearly state your marketing goals, whether it’s maximizing conversions, increasing sales, or generating leads at a set cost per acquisition.
- Assess your budget: Assess your available budget and allocate resources intelligently, taking into account fluctuations in advertising spending, as Smart Bidding adjusts your bids in real-time to maximize performance.
- Analyze past performance: Review historical campaign performance data to support your decision-making process by determining which bidding strategies have generated the most successful results in the past.
By following these guidelines, you can select a Smart Bidding strategy that aligns with your campaign goals and lay the groundwork for success in your Google Ads advertising efforts.
How to execute a Smart Bidding strategy
After identifying the Smart Bidding strategy that best suits your campaign goals, it’s time to implement it. Follow these steps to implement your strategy effectively:
- Navigate to your Google Ads campaign: Access the campaign where you want to apply the Smart Bidding strategy.
- Open campaign settings: Click “Settings” in the left menu to open your campaign settings.
- Choose your bidding strategy: In the “Bidding” section, select “Change bidding strategy” and choose the desired Smart Bidding strategy from the available options.
- Adjust strategy settings: Depending on the selected strategy, customize the settings for the chosen strategy, such as defining target CPA or ROAS values.
- Save your changes: Click “Save” to apply the Smart Bidding strategy to your campaign.
It is important to closely monitor performance after implementing your selected Smart Bidding strategy, using performance metrics to assess its effectiveness in meeting your campaign objectives.
Monitoring and optimizing your Smart Bidding strategies
Continuously monitoring your Smart Bidding strategies and making necessary adjustments is crucial to the success of your campaigns. Here are some tips to monitor and optimize your strategies:
- Track key performance indicators: Use Google Ads reporting tools to evaluate metrics such as cost per conversion, conversion rate, and return on ad spend, providing valuable insights into the effectiveness of your Smart Bidding strategy.
- Adjust your strategy settings: Based on performance data, make adjustments to your target values or budget settings if necessary, ensuring your Smart Bidding strategy stays aligned with your campaign goals.
- Leverage performance data for future campaigns: Use performance data collected from your campaigns as a reference for future campaign optimization and strategy selection.
By actively monitoring your campaigns and making data-driven decisions, you can constantly refine your Google Ads strategy to maximize your marketing success.
