What is Google Ads Smart Bidding?

Introduction:

Smart Ads Bidding is a vital strategy to grasp if you use Google Ads. Therefore, we have compiled this article to assist you in optimizing your Google Ads campaign.


[1]Google search ads are a well-known tool for driving sales and traffic to a website. This is a big part of why they’ve become one of the most popular advertising methods.

But managing this sort of ads campaign can sometimes feel complex and time-consuming. If you’re already running a pay-per-click search ads campaign, then you might have heard about Google Ads Smart Bidding. What is Smart Bidding?

Smart Bidding is designed to help make advertising easier and more efficient for marketers and businesses. It’s a resource that automates some processes and uses machine learning to optimize ads for better conversion or a higher conversion value every time the bid process occurs. This allows businesses to take a more hands-off approach with their search ads while still prioritizing specific goals like more product sales or increased revenue.

Smart Bidding gives you a range of signals to adjust and customize to set up your ads for your business’s ideal goals and KPIs. If you are interested in automating some ad campaigns while making sure you reach your goals, then Google Ads Smart Bidding gives some options.

However, working with Google Ads Smart Bidding isn’t necessarily as simple as it seems. To get the most out of your Smart Bidding strategy, you’ll still need to run and maintain your ads strategy and make sense of the results.

But because of how Smart Bidding works, there are pros and cons to each set-up. So we’ll go over each one.

What is Google’s Smart Bidding?

Smart Bidding with Google Ads means using a few automated bidding strategies designed to improve the efficiency of your ads and help you reach a specific goal. With machine learning, Google Ads Smart Bidding can optimize for general purposes like cost-per-action (CPA), return-on-ad-spend (ROAS), more conversions, maximized conversion value and enhanced cost-per-click (ECPC), etc.

This calculation takes place at the very moment your campaign is putting up a bid for a search query.

After you set up your Google Ads Smart Bidding, there is a “learning period” where Google Ads gathers performance data from your ads to understand how they are working and the result they are getting based on your settings. After this, they can use that info to feedback into intelligent bids.

  • Maximize Conversions: Optimises bids to maximize conversions from your budget.
  • Target ROAS: Optimise your bids to achieve your target return on ad spend (ROAS) from your budget.
  • Target CPA: Optimises bids to maintain your target cost-per-action (CPA) from your budget – in other words, the amount you pay for each conversion.
  • Target impression share: Sets bids to show your ad at the top of the page as often as possible.
  • Enhanced CPC Optimises your maximum cost-per-click (CPC) to maximize conversions.

Those are five powerful optimization strategies, and Smart Bidding takes care of all the work for you.

It’s not all good news, though.

[2]Should I Use Smart Bidding In Google Ads?

The most obvious use case for Smart Bidding is a small business that wants to start using Google Ads without the technical knowledge to optimize bids or the means to hire an agency.

That said, there are real campaign scenarios where Smart Bidding can be helpful to:

  • Brand awareness: Total impression share can make your brand, new products and other offers more visible.
  • Increase traffic: Maximise clicks and generate more traffic to work with.
  • Increase conversions: Maximise conversions, and your bids will adapt accordingly.

Smart Bidding offers a quick answer to some common PPC challenges, but the impact is generally short-lived. To truly maximize the performance of your campaigns, you need to take control of your bids and the data being used to optimize them.

Instead of relying on Google, you can implement your algorithms tailored to your campaign goals and target audiences. This is the approach we take with our Google Ads clients, allowing us to optimize for the specific needs of our customers.

For example, you can automate bids to constantly adapt for the most profitable hours, days or months of the year if you see significant changes in sales. Or, instead of simply optimizing bids for conversions, you can adapt them to increase the percentage of mutations that turn into paying customers, even if this results in lower conversion rates overall.

[3]So How Do You Get Smart Bidding To Work?

Conversion Tracking

To use any of these bid strategies and accurately evaluate your campaigns’ performance, you need to set up conversion tracking. This is a critical factor in determining if your PPC campaigns meet your business goals and generate a return. Some of these bid strategies are best used if your campaign meets a threshold of conversions. Consider either using a different approach or adding micro-conversions to your account if your business doesn’t get the recommended modifications to optimize better. Micro-conversions are goals that assist in the path to primary (macro) conversions, such as a lead or a sale. Your bid strategy will optimize any conversion goals that have “Include in Conversions” selected. If you have micro-conversions that you do not want to optimize for, make sure this isn’t specified.

Another thing to consider when evaluating automated Bidding is the time it takes a user to convert after interacting with an ad. You can see your average days to conversion by going to segments, conversions, then selecting days to conversion. Those businesses with a longer conversion length will need more time to test.

Let it Learn

Another important aspect of getting smart Bidding to maintain or increase performance is to let the algorithm learn. In general, the learning period for most of the strategies is about two weeks. Google recommends that you not make any changes during this period since it completely restarts the learning period. Once the learning period is over, make sure any changes are only in 10% increments. This will avoid resetting your campaigns back into learning. It’s scary to let Google take the reigns for two weeks, but if you’re committed to the test, it is the only way to accurately test if Google smart bidding will work for your campaigns.

Choose the Right Strategy

Not every strategy will work for all campaigns. Set yourself up for success by choosing the right strategy that aligns with your campaign size, budget, and business goals.

Target CPA (tCPA)

Target CPA or Cost per acquisition allows you to tell Google what your ideal cost/conversion is, and it will set your bids during the auction based on the probability that the user will convert. One thing to note is that Google treats this as an average; there will be times you may pay more or less per conversion. Also, If you have device bid adjustments while using Target CPA, the algorithm will add that modifier to the tCPA for that device.

This strategy works best if you have at least 30 conversions in the last 30 days, and your budget is set to about 5-10x your target CPA. Google recommends an even higher budget (surprise, surprise), with 2021 guidance to marketers to have a budget of 15x your target CPA. This will ensure that your campaign does not become budget-capped, which will hinder the strategy. Set your CPA target higher than your ideal target for now, then after the two-week learning period, gradually lower it in 10% increments per day. Selecting your target too low will result in a decrease in traffic for your campaigns.

Target ROAS

Target ROAS or return on ad spend is a smart bidding strategy designed for eCommerce or any other business that knows the value that a conversion is to their business. Google will take your ideal return and use that to determine the bid for that auction. Unlike tCPA, any extra bid adjustments (location, device, time of day, etc.) will be ignored; the only exception is a -100% device bid modifier.

To use tROAS, make sure you have conversion values set for your account. Google needs to know how much your conversions are worth to accurate bid based on returns. This bid strategy works best with more data, so having at least 50 mutations in the last 30 days is recommended. You can use a portfolio strategy that will allow you to group multiple campaigns in a single bid strategy if your account has this much data, but one single campaign does not. Like with tCPA, make sure your budget is set high enough to not cap (5-10x is recommended), and you don’t put your ROAS target too low. You can always lower it after the 14 day learning period, just in 10% increments.

Maximize Conversions

If your goal is to get as many conversions as possible without a CPA or ROAS goal, use Maximize Conversions. It uses the campaign’s budget as its guide to optimally set bids during the auction to maximize the number of conversions—the goal with Maximize Conversions is to get the most amount of them possible for your budget.

Maximize Conversions is not able to work with a shared budget. So make sure your campaign has its own. It will also try to spend your whole daily budget; to avoid any spending surprises, make sure your daily budget is set to the correct amount you are willing to spend every day.

This strategy has a much lower conversion requirement at about 5 per month. This makes it an ideal method for smaller accounts or accounts that do not generate many conversions. Another strategy will ignore your bid modifiers, giving you fewer things to worry about. For example, with a Maximize Conversions bid strategy, Google recommends an average daily budget of 10x your average CPA.

Enhanced CPC

If you’re not ready to take the full plunge into automated Bidding, eCPC will work alongside your manual bids to help you increase the number of conversions in the campaign. Enhanced CPC will take the bid you have set and raise or lower it during the auction to help increase conversions while maintaining your cost per conversion at the campaign average. This bid strategy still allows you to have the majority of control over your campaigns and will enable you to continue to use third-party bidding systems. It’s perfect for those who want to dip a toe into the pool of automated Bidding.

By choosing the right strategy for your business and taking the time to let the method learn, you should be able to benefit from using Google smart bidding. This will allow you to spend more time analyzing results and less time manually updating bids.


Conclusion:

Google Ads are a critical component of your ad strategy. We hope that this article has been helpful in your overall Google Ad strategy.

Article compiled by hughesagency.ca

Article reference links:

  1. https://raddinteractive.com/what-is-google-smart-bidding-ads-smart-bidding-strategies/
  2. https://www.thedrum.com/opinion/2019/07/22/smart-bidding-the-pros-and-cons-automated-bidding-google-ads
  3. https://www.rootandbranchgroup.com/google-ads-smart-bidding/