One of the most common questions asked about online marketing, is how to ensure you are optimizing your campaigns and seeing the best ROI (Return on Investment). An increasing number of tools and marketing platforms are making use of machine learning to try and simplify these optimization processes – at the forefront of which is Google. Google makes use of machine learning for its smart bidding strategies in Google Ads.
This blog post explains what exactly Google Ads smart bidding is.
What Is Google Ads Smart Bidding?
Smart bidding is one of the automated bidding strategies in Google Ads. It optimizes keyword bids for conversions or conversion values, using machine learning. With smart bidding, the available campaign budget is used to achieve as many conversions as possible, while ensuring campaign profitability.
You can choose between the following smart bidding strategies in Google Ads:
- Target CPA bidding (Cost per Acquisition): The aim of this bidding strategy is to get as many conversions as possible at a set target CPA. The target CPA is the average amount you are willing to pay for one conversion.
- Target ROAS bidding (Return on Advertising Spend): This Google Ads smart bidding strategy is based on a targeted ROAS. The target ROAS is the average conversion value you will get for every Dollar or Swiss Franc you spend on advertising.
- Maximize conversions bidding: With this strategy, AdWords sets the bids automatically to achieve the highest number of conversions for the available budget.
- Enhanced CPC: With the ECPC bidding strategy you will get more conversions than from manual bidding. ECPC will automatically increase your bids for clicks that have a higher chance of turning into a conversion, whereas bids are lowered for clicks that are unlikely to lead to a conversion.
What Are the Advantages of Smart Bidding?
In addition to the most obvious advantage of using automated bidding strategies, namely the time saved, there are two other advantages:
- Optimal bid adaptation: The bids are adapted to the individual needs and behavior of the customer based on user signals. Some of these signals are time of day, devices, location, remarketing lists, browser usage and language. As usual, Google leaves us in the dark over the full bandwidth of signals and the underlying algorithm. What is certain, however, is that the number of different parameters and the complexity of the algorithm exceeds the prognosis possibilities of the human being and can react much faster.
- Success analysis: Google offers a wide range of evaluations and tools to make the analysis of success as transparent as possible. This allows you to check at any time what results your smart bidding strategy delivers. You can also develop campaign designs to test whether a smart bidding strategy delivers better results than traditional bidding strategies. The bidding simulator also offers the possibility of forecasting.
When Should Smart Bidding Strategies Be Used?
In theory, you can use smart bidding regardless of the amount of budget or the number of campaigns. However, we suggest that you already have campaigns running in your account to ensure a reasonable amount of data. If this is not the case, machine learning will only start when the campaign starts, and the initial campaign budgets will not be used efficiently.
As discussed in the “What Is Smart Bidding” section above, all of these bidding strategies optimize for conversions. Therefore, we recommend using smart bidding only if there are at least fifty conversions per month in your account. Thus, smart bidding is mainly suitable for e-commerce companies.
Smart bidding strategies have a lot of advantages and make your daily work easier. Nevertheless, you should never switch off the human brain and try to keep a healthy level of skepticism. For example, using smart bidding strategies should make the use of negative keywords unnecessary, as Google should know exactly what the user is really looking for. Despite this, we advise against giving up negative keywords. Even if you do use smart bidding strategies, make sure to regularly review and optimize your campaign performance, including the bidding strategies.
If you have any questions, feel free to send me an e-mail.