Do we hear $5? $10?
If you’re new to Google Smart Bidding, you may be just as confused as a first-timer at an auction house.
On Google, your ability to master keyword bids has a huge influence on your ad visibility, as well as the level of interaction you receive for each query. The dynamic nature of search auctions means the right bid is usually a moving target that simply can’t be reached at scale. Bid incorrectly, and you could miss out on a mountain of valuable conversions.
With so many influences affecting online ad bids, identifying the best strategy and price for each keyword can be incredibly difficult.
Google provided an answer to this challenge in 2016 when it created Smart Bidding, using automation and machine learning to deliver the right ad to the right consumer at the right moment.
Let’s take a look at the benefits of Google Smart Bidding and how you can use it to supercharge your online ad strategy.
What Is Google Smart Bidding?
According to Google, “Smart Bidding refers to bid strategies that use machine learning to optimize conversions or conversion value in each and every auction — a feature known as ‘auction-time bidding.’”
In plain English, Smart Bidding is an online advertising strategy that uses automated intelligence to:
- Review historical search behavior
- Predict the likelihood of a conversion
- Increase your bids when conversion is more likely
In an instant, Google can evaluate a number of data signals for each auction to set the optimal bid. The signals Google reviews to make these decisions include a number of contextual clues, such as a user’s location, the time of day, your ad’s historical performance, the user’s device type and more.
How Google Smart Bidding Works
Google Smart Bidding employs five different strategies to help you achieve certain ad goals. To use these, you must already have conversion tracking set up in your Google Ads account. However, you do not need any historical data to get started since Google uses contextual signals to make the best decisions.
Get the most conversions while spending within your budget. On this setting, Google will prioritize ads that are more likely to lead to customer conversion. However, it might maximize your bids to get you there, potentially eating through your daily budget faster.
Maximize Conversion Value
Conversion value is the amount a converted customer spends. Under this model, Google prioritizes ads for you that are more likely to generate value.
Google accomplishes this by reviewing your revenue metrics. Like the Maximize Conversions strategy, you may also run out of budget early if Google prioritizes ads that result in high-spend conversions.
Both Maximize Conversions and Maximize Conversion Value are ideal strategies for companies that do not have a specific cost per acquisition goal in mind. However, they are not ideal for those who are closely watching their budget.
Target Cost Per Action (CPA)
Target CPA allows you to gather as many conversions as possible at the target cost you set (or average amount you want to pay). Google does this by evaluating your past conversion data so you don’t have to pay for clicks that aren’t profitable. Some conversions may be higher than your target, while others are lower, but Google prioritizes staying below the target CPA you set.
The system may even recommend a target CPA based on this data when you’re setting up the campaign.
By maxing out conversions at a price point you set, this strategy could be the best of both worlds. Just remember: if you set your target too low, you may miss out on more conversions.
Target Return on Ad Spend (ROAS)
Bid based on a target ROAS you set (or the average conversion value you’d like to receive for every dollar you spend on ads). Under this model, Google attempts to predict your future conversions and the value of each. It then sets a maximum cost per conversion (CPC) to optimize your returns.
Note: You must have at least 15 conversions in the past 30 days to use the Target ROAS strategy.
If you simply want to increase web traffic or visitors, the Maximize Clicks strategy funnels as many clicks to your campaigns as possible for the target amount you set. If you don’t set a target spend amount, the system will use your remaining daily ad budget.
As with Maximize Conversions or Conversion Value, be on the lookout for a deteriorating budget, as Google Ads can use up your daily allotment for the sake of clicks.
A Note on the Learning Period
Does it seem like your Google Smart Bidding strategy isn’t running the way you anticipated? It’s important that you don’t analyze your results too early. That’s because machines need time to learn and adjust. Google recommends the following timeline:
- Implement Smart Bidding — Choose the strategy that works for you, and limit changes like budget modifications or keyword additions after you set it up.
- Allow the bidding model to learn — It typically takes one to two weeks for Google to adjust to a new bidding strategy. During this time, Google gathers the performance data it needs to optimize your bids.
- Wait for the post-control period — Once Google completes the learning period, it enters a two- to four-week post-control period.
- Consider the conversion time lag — Considering most clicks don’t immediately result in conversions, give your campaign time to work across channels and devices.
- Evaluate performance — Analyze your performance once you’ve given your campaigns sufficient time to learn.
Who Is Google Smart Bidding For?
Google Smart Bidding can optimize campaigns for small, mid-sized and enterprise businesses alike. The service works for both search and display ads — and they don’t have to be existing either. Smart Bidding evaluates data from all of your campaigns and other signals, so even new campaigns can demonstrate performance.
Be sure to familiarize yourself with these signals so you can determine whether Smart Bidding is right for you:
- Physical location
- Location intent
- Weekday & time of day
- Remarketing list
- Ad characteristics
- Interface language
- Operating system
- Actual search query (Search and shopping)
- Search Network partner (Search only)
- Web placement (Display only)
- Site behavior (Display only)
- Product attributes (Shopping only)
- Hotel and itinerary attributes (Hotels only)
- Mobile app ratings (Coming soon)
- Price competitiveness (Shopping and hotels only)
- Seasonality (Shopping only)
Check out Google’s description for each signal, as well as an example for each here.
The Benefits of Google Smart Bidding
Simpler Campaign Management
Google Smart Bidding allows you to “set it and forget it” when it comes to achieving your conversion, click or ad spend goals. Instead of manually monitoring and bidding on individual keywords, Google’s highly sophisticated algorithms do it for you.
And because Google bids on each search query, campaigns with broad search terms can perform just as well as campaigns with exact keyword matches. That means smaller advertisers have just as much chance of winning despite smaller budgets or less sophisticated ad programs.
More Control Over Contextual Signals
There’s no need to make assumptions or draw your own conclusions. Google has way more data than you do, making its predictions and recommendations more accurate than you could ever achieve manually.
Nonetheless, auction-time bidding gives you great control over the wide range of signals to optimize your bids.
ChannelAdvisor Helps Optimize Your Google Smart Bidding Campaigns
ChannelAdvisor provides necessary expertise to brands and retailers to drive long-term growth with their Google Ads and stay ahead of the fast-changing e-commerce landscape. In fact, ChannelAdvisor is part of a select group of Premier Partners in the Google Partners program.
Need help understanding the ins and outs of Google Smart Bidding? Want an ironclad strategy that accounts for all of your key performance indicators (KPIs) and budgetary needs? ChannelAdvisor Managed Services has the insight and hands-on expertise to help you win more bids.
Contact us today to learn how ChannelAdvisor Managed Services can help optimize your Google ad campaigns for the highest return.
Editor’s note: This blog post was originally published in May 2020 and was updated in September 2022 for accuracy and comprehensiveness.