Your first experiences with smart bidding might intimidate you. It could confuse you, you could wonder what the whole point is, or if it's even helping you or your business at all. It’s not surprising that many marketers still distrust machine learning and artificial intelligence in ecommerce.
They think — or maybe you yourself also believe — that machine learning isn't "there" yet and manual control of how you bid on Google ads is still the way to go. You may want more control because you think smart bidding doesn’t take limited budgets into account.
However, all of these could not be further from the truth. Many hesitant marketers when it came to smart bidding also changed their mind as soon as they learned what it truly entailed.
We here at Marketing Ignite will teach you all about managing smart bidding strategies in Google Ads for your convenience!
What is Smart Bidding in Google Ads All About?
Long story short, smart bidding is when you let Google Ads — which was formerly called Google Adwords until recently — use A.I. to optimize bids for you, thus doing all the hard work for you.
Many marketers are hesitant to use smart bidding because they want to do the bids themselves in light of their available budget. Keep the following in mind:
What is (Keyword) Bidding? In this context, a bid refers to the price or money amount you're willing to pay for in order to get a single click on a given Google Ads keyword.
These bids determine where your ads will come up during searches on Google. You need to choose keywords wisely and bid just enough to make it a worthwhile investment.
Yes, This Favors the Rich: Yes, ad bidding for Google Ads favors the rich and those with huge amounts of money spend to bombard Google Ads with clicks on popular searches and keywords.
However, even multinationals want to optimize their use of bids. They don't want to just throw money on keywords that don't work, and neither should you!
Does Smart Bidding Replace Your Input? Does that mean Google smart bidding tends to replace your input completely when it comes to placing bids? Not really.
Rather, you're allowing Google to take over an aspect of your Google Ads management you're better off automating
Best Handled by Robots and A.I.: Anyone who has dealt with doing ad bids can confirm it's difficult, time-consuming, but a necessary part of making Google Ads work for you.
Keeping up with the how much, how, and when to bid for any auction is something you can use robots to help you out with.
A Constantly Changing Market: The bidding market is in constant flux. It always changes according to social trends and changes in the Google algorithm.
This makes sense, since Google undergoes 5.6 billion (with a Letter B) searches daily. Many of such searches go through a behind-the-scenes auction for Google Ad placement.
No Human Can Manually Do Bids: Even the most dedicated of Google Ads enthusiasts can't watch hundreds of thousands of searches.
They can't read the ones that showcase relevance to their business or their clients' companies and bid the exact amount needed to place properly via Google Ads.
By the Way, Even Google is Automated: Google has become the front page of the Internet even in the dawn of social media giants like Facebook and Tik-Tok.
It's exactly because it's run by A.I. and an algorithm to curate quality sights you could hunt down for and whatnot.
It Only Makes Sense to Also Automate Google Ad Bids: Why not optimize your Google Ad keyword budget by having the robots take care of searching for context and top keywords?
They'll figure out which keywords you or your clients should invest in with a bid since searches are also automated as well?
This is where smart bidding A.I. and robots come in. They can sort through those billions of searches to get to the hundreds of thousands of keywords most relevant to you.
Some marketers who have first heard of smart bidding might conflate it with automated bidding, thinking they're one and the same. They're not exactly interchangeable terms though. They're similar and related terms but they're not the same thing.
Automated bidding is an umbrella term. Also included in that umbrella are the strategies to do smart bidding.
Therefore, smart bidding is a type of automated bidding. Automated bidding covers any strategies for keyword bidding that use machine learning in order to set up bids in a dynamic fashion.
These smart bidding strategies in Google Ads cover a particular category or set of automated bidding techniques created for the sake of driving more revenue or more conversions while maximizing your spend or bid relative to the rewards.
With that in mind, let's get down to the nitty-gritty.
How Should Smart Bidding Strategies Work for You?
Brush up on how ads show within Google search and how bidding and auction works for keywords before reading up on Google Ads smart bidding strategies. Before you can walk or run, you need to first crawl then stand up.
It's a gradual process, but once you master it you'll end up staying ahead of the curve than even multinationals with their huge advertising spend or budgets.
Are you good to go now? Then let's continue. Firstly, you need to realize the incredibly dynamic or changeable nature of the Google Ad bidding environment to brace yourself for what's in store for you.
A Dynamic Environment: Keyword bidding works under a dynamic environment because it's an in-demand feature that requires automated change and management, so it makes sense to automate your bids for these Google Ad keywords in turn. It's tit-for-tat.
Competition Aplenty: Like in a "real" brick-and-mortar auction with a fast-talking auctioneer, you're competing with other marketers or companies (both startups and multinationals) to stay ahead and get the best Google Ads on competitive keywords, same as you.
Automate Like Google Does: Keeping up with bid adjustments for keywords manually is a logistical nightmare, especially when you're dealing with search entries that by all intents and purposes have been automated by the Google algorithm itself, allowing instantaneous sorting as soon as users enter such raw data.
It's Not Just Leave It and Forget: Instead of feeling like running on a treadmill going nowhere when you do things manually, have your smart bidding catch up with the "smart" or computerized A.I. keyword generation of Google to do the work for you. However, you can't just feed the data to it and expect magic to happen either.
What is Smart Bidding Made For? Smart bidding allows you to tell Google Ads what your end game is and what you attend to achieve. It works by setting which bids to go for at auction time (i.e., auction-time bidding) that optimizes your investment and nets actual traffic increases.
Fun with Acronyms: Use your return on investment (ROI) measuring tools in order to tell whether your smart bidding strategies are working. Among the things you can measure includes return on ad spend (ROAS), cost per conversion (CPC), and cost per acquisition (CPA).
Setting Up Your Bid Strategy: One of the ways to set up your bid strategy is to target a CPA goal first. You then tell Google Ads you value CPA, which then has its AI figure out what it needs to hit that goal for you and then pairs such knowledge with a wide array of contextual clues or signals it gets from every auction.
Automatic Bidding: Giving Google a goal allows it to take into consideration what you want to get — better ROI, ROAS, CPA, CPC, and whatnot — then it raises or sets bids on searches or keywords related to your intended goal instead of you having to spend extra money on manual trial and error.
Raises and Lowers Bids: Google A.I. can be instructed by smart bidding strategies to work for you the same way Google search has streamlined searching for anything. This means you can automate it to raise bids on keywords that favor your ROI or ROAS and lower bids that aren't related to your bottom line.
How Smart Bidding Compared to Manual Bidding
Smart bidding allows you to do things like optimize conversions by telling Google your bidding goals and letting it use your past conversion data to search and make bids on your behalf.
For example, it bids on ads for people searching for Californian organic diet apps or Minnesota bear spray at around 7:00PM to 8:00PM, who are more likely to convert into paying customers when they see your ad.
Manual bidding involves you not using smart bidding or Google and instead it's you bidding on a search timeslot and hoping for the best. For most startups, this involves not so much as figuring out the premium time and keyword but buying affordable keywords.
What Does Manual Bidding Entail? Manual bidding could or could not be a shot in the dark depending on how informed you are. It's a huge gamble because you lack the context that smart bidding has.
Manual Bidding Offers More Control: If you have money to spare, manual bidding gives you more control than smart bidding strategies. You don't want some computer bidding up a storm on something you didn't decide on!
Some Marketers Want More Control: Some marketers want more control and they're willing to bid and pay extra to win that keyword bid. Regardless of optimization, Google Ads in general are effective at driving traffic to your site.
Your Money and Your Rules: Like with a real auction, you might not want any robots doing your "bidding" for you, especially when you yourself know what your budget limits are.
A Robot is Better at This Than You: A robot, machine learning, A.I., or algorithm can do much better at achieving your goals than you. It's because they're more specific at it,
Contextual Signals and Inferences: Google's educated guesses on what you're searching for allow it to figure out the likely results on its first page. Its A.I. is smart enough to understand context.
You're at a Disadvantage: Google A.I. can time the ads to the specific hour and make strategic bids on top keywords you absolutely cannot lose out based on timeslot and based on your budget.
Sometimes, Manual Bidding Just Works: You can find a place and time for manual bidding over smart bidding. It's not automatically inferior to its smart counterpart, like how "snail mail" has advantages to email.
Newer Accounts lack Google Data: Just as Google search tends to at first flounder searching through new info until it collects enough data to contextualize it, Google-based smart bidding also flounders with newer companies and accounts.
Can Manual Bidding Work? It can. Sometimes by luck and sometimes by trial and error until you figure out your audience enough to know when they'll do their searches for keywords related to your specific offerings.
It's you yourself setting bids at a keyword to be exactly what you need for your advertisement to show on the search results front page, kind of like basic SEO.
You can set the bid on keywords so they show your ad on the first page or the top of the page if you want, giving you more control and the final say.
Some users want to simply turn off their brain and just get top result or top tier ads at their expense since that usually translates to traffic increases even without optimization.
It's also helpful when you want more control on which keywords to spend money on relative to your audience in order to control your cost per click (CPC).
They can use Google's wealth of data on all the users who use it to your advantage when it comes to bigger revenue and budget optimization.
Otherwise, if it gets it wrong, it'll get it right eventually and more users go to the second or third page and select the right site or service. You lack access to such info when doing smart bidding.
Google uses that data in turn to make smart bidding work.
You, on the other hand, have no idea which bids to raise or lower based on your intent. You're making an educated guess that's way less informed than the average smart bid or aiming to get top search results with your limited budget.
It's wasteful, not optimized, and even if your CPCs are low, it's still not the best way to maximize your investment or ROI.
Some accounts or campaigns don't work out with smart bidding, especially if you lack historical conversion data for Google to use. In such cases, it's best to go by gut instinct, calculated risks, and trial-and-error.
It's better to do manual bidding or even eCPC if you have a new campaign even if your account has been around long enough to include conversion data history.
Indeed, smart bidding strategies in Google Ads work best when they have historical data to work with for bid optimization. Yes, they can do this on new campaigns based on your track record with old campaigns too.
However, we at Marketing Ignite did notice that the newer campaigns struggle to get going via smart bidding from the get go. Smart bidding works "smartly" and "best" when you're using an established campaign in order to "enhance" it.
Also, if your account is new, you should start doing manual bids first to get a feel of keyword bidding for Google Ads. While collecting more conversion data for your website, you can also go for enhanced CPC (eCPC), which is a separate topic altogether.
Even the simplest manual bidding strategies require constant surveillance or even trial and error to make your bids work and to maximize your advertising spend. It doesn't have to be this way though.
Smart Bidding Strategies to Take Note of
The Google algorithm updates itself and changes dynamically because it's in its nature to do so. Smart bidding strategies change with Google, or at least existing ones get modifications to allow for it to survive every seasonal or even monthly update.
The key strategy to smart bidding — from Marketing Ignite's own experience — is to make a solid strategy foundation that's scalable, renewable, and modifiable so that your bidding options can only get more comprehensive and advanced in the future.
For example, you can currently set a target CPA or target ROAS goal instead of doing target CPA and target ROAS bidding like before (Google has retired them, so to speak), so you need to adjust your smart bidding thusly to such changes.
You can also work under maximize conversion value (for target ROAS) and maximize conversions (for target CPA).
Google says that this new method of bidding should work similarly to targeting CPA and ROAS. However, they're similar but not exactly the same thing.
All the same, let's now talk about smart bidding strategies.
1. Maximize Conversions: This smart bidding strategy, as its title would suggest, involves getting the most out of your bids or investments to Google Ads in the form of the specific metric of conversions or turning your website or landing page visitors into paying customers.
As explained earlier, the Google algorithm itself can help you increase conversions with your increased traffic from Google Ads on certain keywords by using contextual clues or signals that take advantage of your target audience's buying behavior relative to your own conversion data.
Certain keywords and certain times when you can flash your ads on such a keyword can result in them becoming likelier to pay for what you're selling or to at least become loyal subscribers or readers of your website if you aim more about bringing awareness of your brand.
Conversion can be equal to anything valuable that's being tracked — it could be in the form of a purchase, a form submission, a phone call, a subscription to your YouTube channel, a Facebook user becoming a fan, or multiple such behaviors done in tandem.
You might be worried about CPA or how much you spend per acquisition as well as return on ad spend or ROAS, which is the ROI version of marketing expenditures relative to their end results.
This strategy focuses less on either of the two and more about simply getting that conversion rate up. Whether such a hyper-focused strategy might be at the expense of CPA, ROAS, or ROI is the obvious downside to doing it.
However, the bright side is that you will get more conversions from your traffic and you can do something separate from smart bidding Google Ads to take advantage of that higher conversion rate.
Nevertheless, maximizing conversions can cost you more in terms of CPA and ROAS, so you should monitor your CPC and how well you deal with ROI to keep your budget in line even as smart bidding does bids for you.
Once you have access to this feature, you can for the sake of this strategy decide to set a target or goal for CPA. This helps keep in check the costs for conversion. You don't want to overpay on bids and end up getting a break-even ROI.
We at Marketing Ignite finagled with this for a client while having a huge amount of conversion data to make it happen. It resulted in incredible increases across the board for their digital marketing campaigns, particularly a more than 600 percent increase in conversions buffered by a nearly 90 percent CPA decrease.
2. Conversion Increase: Maximizing conversions isn't the same as getting a conversion increase. Don't be confused. Conversion maximizing or optimization can result in conversion increase, but these are separate metrics that are mutually exclusive from each other.
This strategy attempts to meet your CPA goal or cut it down relative to your marketing budget. The more conversions you get the higher your ROI will be. It's also accomplished by getting a Target Cost per Acquisition (tCPA) goal along with your maximize conversions strategy.
A tCPA goal is required in order for your maximum conversions goal to not result in a break-even proposition where even if you have high conversion rates, the amount of money you use to bid on quality keywords and time slots with Google Ads don't make it worth your investment.
Long story short, if you go overboard with your maximizing conversions strategy, it might come at the cost of your marketing budget, expenses, ROAS, CPC, and CPA.
It's like selling loads of hot cakes by paying people to eat them. The payment part might curb whatever profits you'll get.
You should set a tCPA close to your marketing campaign's 30-day or monthly CPA average then move forward at that point, even if that's not necessarily your most ideal or end-game CPA. Google itself recommends such an average for you as a rule of thumb when undergoing the conversion increase strategy.
Simply put, great things start from small beginnings. As such, start with a reasonable target at first then lower it in increments to allow your smart bidding to not go out of control.
We at Marketing Ignite tried out this strategy for one of our clients and it proved to be one of the "smartest"smart bidding strategies in Google Ads we made. We were able to draw out conversion rate increases of up to 20 percent while decreasing their CPA at 15 percent.
It's not quite exact, but this smart bidding strategy is kind of like the see-saw balancing act between purchasing an affordable but high-quality product off of Amazon.
Too affordable and you might suspect a low-grade buy. Too high-quality and you might not afford it: ditto with maximizing Google Ad conversions while keeping in mind your bids by lowering CPA at the same time.
You can boost your Google Ad smart bidding by creating a tCPA bidding campaign with a solid enough foundation that it can stand on its own two feet and practically become self-sustaining.
Once tCPA gets phased out by Google, you can have us at Marketing Ignite set a CPA target goal instead for your conversion optimization bid strategy needs. We got you covered in that regard too.
3. Target Return on Ad Spend (tROAS): As for targeting your ROAS, it's about meeting or beating your goal for returns on ad spending within your daily allotted budget. Your ROAS is your revenue or conversion value you get from advertisements divided by the cash you've invested for making your ads.
An effective ROAS is one that nets you more revenue and, in turn, profits relative to your investment or ad spend. Your profits are what you'll get when you take away the cost of the ad expenditures. If your revenue is equal to your spend, you break even,
If your revenue is less than the money you spent promoting your product then that's a net loss. With rising advertising costs, this is more and more likely for many companies, especially startups with their limited funds.
In the end, your tROAS should help you make as much profit as possible relative to your advertising spending. This might require a higher conversion value for you, since more converted leads or visitors into customers are required to raise up your revenue, but it might not necessarily be the case.
You can achieve tROAS with the same tug-of-war between price and quality — you can lower your advertising spending to get more revenue and profits. You can optimize your conversion to justify your current budget and mitigate deficits.
After Google phases out tROAS, you can achieve the same strategy with the tROAS replacement of setting a ROAS target on your bidding strategy involving maximization or optimization of conversion.
This "newer" version of tROAS has more of an eye for detail. Instead of going "by any means necessary", it specifically targets conversion as your means to the end of higher revenue at less of a Google Ads bid spend.
On one hand, don't forget that the ROAS metric has a specific figure or number representing it. If you have a goal of 5 ROAS, this means for every dollar you spend you should at least make $5.
On the other hand, the ROAS goal of a Google Ad bid strategy is instead represented in percent. The same 4 ROAS is represented in percentage as 500 percent, or you should get 5 times the amount as you spend.
You should also prioritize making sure that your initial ROAS goal is near the ROAS figure that you've been getting over the last month, and then gradually increase your ROAS as time passes by in order to ensure your marketing expenditures are resulting in company growth.
4. Maximize Conversion Value: This strategy among the many smart bidding strategies in Google Ads out there is a key one. You naturally want to maximize your conversion value or revenue possible out of your day-to-day budget of bids. Google also has this figured out.
Naturally, when you maximize conversion value, the Google Ads algorithm is mainly and only concerned about big revenue. You have to (or we do at Marketing Ignite) therefore pay attention to the rest of the acronym metrics.
You don't want to sacrifice your conversion rate, your ad spend, and/or your profits in order to just have bigger revenue. Bigger revenue that's eaten up by a 1:1 ROAS (or worse, an ad spend bigger than your revenue) will ensure the early demise and bankruptcy of your company.
Regardless, the aim of this bidding strategy is to shoot for the highest dollar number conversion value your money can buy. For a startup, it's slim pickings. For multinationals, they usually default to this before cooler minds optimize their Google Ad expenditures to get more money per invested dollar.
What's the difference between tROAS and maximize conversion value or revenue as Google Ad smart bidding strategies? For one thing, maximizing conversion value is only laser-focused on getting a bigger number of revenue.
This means that even at the cost of ROAS it will target maximum revenue. This as opposed to tROAS, where one of the possible results would be getting a higher conversion value number when push comes to shove.
You can get more cash from Google Ads, like the World Wrestling Federation making a billion dollars in 2021, but it might be at the cost of a much lower ROAS, such as getting only a hundred million or so in profits because you spent almost a billion to get that revenue.
For multinational megacorps with deep pockets like Google, Amazon, Microsoft, and any Hollywood studio who spends millions of dollars on a film to potentially get billions of dollars in return but not usually, this type of strategy might be fine.
Some big companies out there might default to this or getting top keywords at the front page of Google care of Google Ads since advertising money is no object to them.
However, what about the average startup or any medium-sized company that went with Internet-based digital advertising exactly because they don't have multimillion ad budgets on hand?
For them, they might opt for more optimized smart bidding strategies. Or they can set a tROAS goal along with or within their maximize conversion value goal to curb out-of-control ad spend and to maximize ROI while targeting max revenue.
5. Enhanced CPC (ECPC): There are marketers who might not consider enhanced cost per conversion or ECPC as one of many smart bidding strategies in Google Ads. It's because it's a setting usually reserved for manual bidding instead of the automated smart bidding method.
However, you should familiarize yourself with where ECPC is located on your campaign settings because Google does believe it's a smart bidding strategy type regardless rather than a manual bidding enhancer. It's specifically a feature you can use in tandem with manual CPC.
It features smart bidding properties like using a multitude of signals for auction time such as time of day, browser, and location.
This allows it to tailor your bids to every search's characteristics. However, it doesn't target and manipulate bidding to the degree or scope you'd see in Target ROAS or Target CPA.
This smart bidding tactic raises your CPC in an optimized manner, such that you're not wasting your investment with your raised CPC, resulting in a directly proportional increase in conversions the more you allot into your bids.
As such, ECPC might be what you'd start with in order to first dip your toe in the world of smart bidding for Google Ads. This is only natural, because any marketer worth their salt will first have new campaigns and accounts start with manual bidding until there's enough data for smart bidding.
ECPC instructs Google to search for chances to push past your set bids once it's activated, this leads to bigger conversion chances.
Compared to other smart bidding strategies, ECPC doesn't have issues when being used on new campaigns or accounts.
Because it's not as extensive as other strategies, it's also not as dependent on data and can use what little data is available on newer accounts to create CPC optimization or "enhancement". In fact, it helps gather more conversion data that makes smart bidding smarter the more you use it.
6. Maximize Clicks: You can raise your metrics amazingly with maximize clicks, like getting a 55.23% decrease in CPA while getting a 400% conversion enhancement. However, in contrast to actual strategies that target conversions, the results of maximizing clicks are a side effect that might or might not happen at that rate.
Maximize clicks, as its name suggests, is about getting you the most clicks relative to your budget. It involves smartly bidding on Google Ads keywords with the intent or target of increasing the clicks to your website, which could then result in increases in conversion or decreases in CPA.
This specific tactic also at times can increase your impression share, but it doesn't necessarily target it either but has correlation and direct impact derived from more conversions.
It sounds like a classic SEO tactic almost, right? The most primitive (and outdated to the point that Google discourages it) involved "spamming" or brute-force posting your website link in popular directories and forums over and over in order to increase likelihood of people clicking it and visiting your site.
Nowadays, any attempt of link spam will be punished by the Google search algorithm through filters or banning your site from appearing in the search in the first place. However, maximizing clicks is reminiscent of that old tactic because of their shared goal of increasing website visits.
The tactics both value increasing your CTR (clickthrough rate), since it has links to getting you more conversions.
Also, maximizing clicks is a bit more sophisticated (understatement) than link spam in that it also considers other metrics like improving your CTR and reducing CPC by the way it smartly maximizes clicks without necessarily targeting conversion rates.
Many users favor maximize clicks because you can set a maximum CPC bid if you're worried about advertising or marketing spend going over-budget. This bid ceiling limits benefits but controls spending.
Most importantly, you'll still be getting more value for your investment, with you getting more clicks with this feature turned on compared to just manual bidding.
This feature has a shallow rather than steep learning curve because clicks are things most anyone can understand and use to gain more Internet exposure versus conversions or actually compelling visitors into a positive buying decision.
However, fair warning — you might still have some bids go over your bid ceiling depending on your location or device bid adjustments you've set manually.
Speaking of which, making a maximum click per conversion bid limit helps keep your budget in check when applying various manual or smart bidding strategies in your bag.
7. Target Impression Share: Target impression share or tIS has the intention or endgame of meeting and even altogether beating your target impression share figures while working with the budget that you've allotted for Google Ads.
By the way, in the context of digital marketing, an impression or view-through is when a user sees an advertisement.
By the way, IS refers to the percentage of impressions you actually get that's divided by the amount you could've gotten. If you get "1" or a fraction of that as the answer then that means your Target IS isn't working. You should get an increase.
You can pick between targeting a couple of things with this smart bidding strategy based on page placement.
You can customize top impression share (on the page, it's the first placement) , the overall impression share (it can be located on any place on the page), or top of the page impression share (it can be anywhere at the top position of the page).
The whole point of this strategy is to drive impressions or eyeballs onto your advertising, marketing, and promotions that doesn't necessarily result in conversions from the traffic, but could result in such a consequence.
Newer campaigns can focus on bigger impressions then try to raise up their conversion rates not from smart bidding and algorithmic assistance care of smart bidding, but instead by the content of their ads.
We at Marketing Ignite recommend this to campaigns with exceptionally low IS, which usually (but not always) means they have low conversion rates too.
We've also seen campaigns with high conversion rates but low impression rates, since conversion rates relate to the percentage of conversions of the available traffic or impressions.
What You Should Ultimately Learn
If you're doing your Google Ad keyword bids manually and just defaulting to getting the best possible keywords you can afford, bid management usually eats up more of your day than you'd prefer.
Because you're competing with likely a million (a conservative amount to be sure) other users for such keywords, you're not maximizing your budget. In turn, there's a million other things you should be doing to improve your digital marketing campaigns than surefire Google Ad bids.
Bids change so fast that it's tiring to lose out on top keywords and win out on minor keywords that have significantly less impact.
You can instead use smart bidding or strategically using Google Ads to your advantage in order to automate your bidding. Use this guide or the guidance of Marketing Ignite in order to familiarize yourself with the inner workings of smart bidding for Google Ads.
Check out our blog for more in-depth strategies on how to make an impactful digital marketing campaign without needing millions of dollars and hundreds of overpaid consultants involved!
Let Marketing Ignite Serve as the Architect of Your Brand
Do you still feel confused and mistrustful about smart bidding strategies in Google Ads? Then let us here at Marketing Ignite handle all the details. We can guarantee you a net positive investment when all is said and done.
We'll use our decades of experience and familiarity with multiple technologies — including smart bidding strategies in Google Ads — in order to curb rising advertising costs, maximize your ROI (Return of Investment), and establish a solid brand foundation for your digital reputation.
We will draft your blueprint for success and serve as the architects of your future marketing success! Contact us now for more details!