Smart Bidding is one of Google’s offerings for businesses used to automate the bidding process on Google Ads. Having debuted in May 2018, it is a subset of automated bidding strategies that use machine learning to optimize conversions or conversion values for PPC campaigns.
Smart Bidding involves machine learning algorithms that train on a huge amount of data to make more accurate predictions about how different bid amounts will affect conversions. This is a job that would be unmanageable for a human or team of people to accomplish, making it an appealing tool for businesses.
Google’s Smart Bidding is a great way to automate the bidding process while still maintaining some level of control. Nevertheless, Google's bidding tool does have its flaws.
A quick overview of Smart Bidding
Google’s Smart Bidding lets users set performance targets and customize settings for unique business goals. It couples this with reporting tools (unlike Smart Shopping's ‘black box’ approach), giving you insight on bidding performance and helping you fix any issues with campaigns.
Using Smart Bidding allows you to make use of signals, which are identifiable attributes about a user that can include details like device and location. You can then set, for example, device-specific performance targets, helping you target your desired audience. Data gained from signals can help you reduce wasted spends on your campaigns, and identify profitable opportunities, like targeting a specific area you know your products are popular in.
Another tool included in Smart Bidding is the use of simulators. These can forecast how your ads would perform if you had set a different CPA or ROAS target, helping you optimize your advertising efforts. This is another tactic you can use to help optimize your campaigns while minimizing wasted spend.
To start using Smart Bidding, you need to have conversion tracking enabled. This will allow Google to see what people are doing once they've interacted with your ads, helping you to calculate ROI and profit.
Google also suggests that users have at least 30 conversions in the past 30 days before using Target CPA (a strategy of Smart Bidding mentioned below), and at least 50 conversions before attempting Target ROAS.
The 4 Smart Bidding strategies
Smart Bidding strategies have been updated, grouping some performance goals. Previously if you wanted to maximize conversions within a set budget, or to maximize conversions to a target CPA you would use ‘Maximize conversions’ and ‘Target CPA’ strategies respectively.
These two bid strategies have now been bundled together, creating ‘Maximize conversions’ with an optional target CPA. Maximize conversions works as follows:
Maximize conversions - This bid strategy aims to maximize conversion value from your budget, which can sacrifice ROAS but is a good option if you’re just looking to drive volume. This strategy only involves a requirement of five conversions a month, making it ideal for smaller accounts. Google will make bid adjustments to try and match your revenue or conversion goals.
Maximize conversion value -Maintains your target CPA (the amount you pay for each conversion). Google will set bids based on the probability of conversion. This option tries to get a greater number of conversions while avoiding paying for unprofitable clicks.
This means you no longer need to compare and choose between Maximize Conversion Value and Target ROAS.
Target CPA - Maintains your target CPA (the amount you pay for each conversion). Google will set bids based on the probability of conversion. This option tries to get a greater number of conversions while avoiding paying for unprofitable clicks.
Target impression share - The algorithms will set bids to show your ad at the top of the page/first in the carousel as often as possible. This will increase users to your site, but this doesn’t mean shoppers viewing it have a high purchase intent. This can then dilute your conversion rate and ROAS.
Enhanced CPC - Optimizes your maximum CPC to increase conversions. This strategy can be used alongside manual bids to help you increase conversions, giving you more control over the process.
The pros and cons of Smart Bidding
Smart Bidding can save you the time of manual bidding, allowing you to set and forget campaigns and leave the algorithm to bid for you. Google has access to a vast amount of data that is used for machine learning, making it a good entry point for smaller businesses with a lack of campaign data.
Similarly to Smart Shopping, Smart Bidding only offers limited visibility and control over the data being used to optimize campaigns. This can be frustrating when you’re trying to figure out a strategy on how to get more conversions. It also means that you can only set limited campaign goals.
While Google’s access to a large amount of data can be seen as a positive, the data may not be wholly relevant to your target audience. This can then dilute your ROAS and the number of possible conversions.
Smart bidding, unlike Bidnamic’s machine learning technology, won’t react to spikes or fluctuations in search trends, meaning you can’t take full advantage of what’s gaining popularity. It does, however, react quickly to any target changes you employ.
Bidnamic’s approach to automation
Bidnamic’s technology platform also automates the bidding process but does this at a far more granular level than both Smart Bidding and Smart Shopping.
We build an intent funnel to identify higher-quality traffic based on high intent search queries and bid accordingly. This allows us to scale as much as possible while maintaining a target ROAS and maximizing conversions and prevents us from wasting spend on targeting shoppers with little actual interest in a product.
Bidnamic’s technology is also totally transparent: our clients are able to access a dashboard to see all data associated with their campaigns and how they’re performing. This lets us collaborate with clients to further optimize campaigns to provide our clients with the best possible experience from their Shopping channel.
Our platform also responds to spikes in search traffic in real-time. Bids are then adjusted as required and can be done 24/7, meaning we can stop bidding aggressively when it becomes less profitable.
If you’re looking for a solution to maximize your Google Shopping experience, book a free demo with one of our specialists today.