Smart Bidding is an extremely useful tool that Google provides for marketers. With this tool, you can easily and automatically bid on Google Ads packages. However, using the automatic bidding feature effectively is not easy. You need to research and develop a thorough and reasonable strategy. In fact, understanding the functionality of this feature can significantly increase advertising performance. The following article will guide you on the pros and cons of Google Ads Smart Bidding and how to use it effectively.
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What is Smart Bidding?
Smart Bidding is a feature of Google Ads that analyzes various contextual signals at the moment of the bid to place a bid aimed at achieving your advertising goals. Smart Bidding allows advertisers access to automated bid capabilities for Google Ads. Google Ads has undergone certain changes over the past year, many of which are shaping the future of digital marketing. When it comes to bidding strategies, AdWords’ smart bidding could be one of the best ways. Google Ads has shifted to automated bidding strategies using Smart Bidding because automated CPA or ROAS strategies are optimized by device, time, location, and audience on a per-auction basis.
How does Google Ads Smart Bidding work?
The Google Ads system offers various advertising bid options. It depends on the ultimate goal of the campaign: clicks, impressions, conversions, engagement, or views. When there is an available ad slot on Google, companies must compete to secure that spot. To avoid chaos, the Google Ads system organizes an auction to determine who gets to display their ad.
However, you and your competitors need to place bids and choose the appropriate parameters to take advantage of this opportunity. Google encourages you to focus on clicks, conversions, or impressions — depending on your campaign’s initial goal. You can then specify how much you want to bid either manually or based on the system’s suggestions.
Pros and cons of Google Ads Smart Bidding
Pros of Google Ads Smart Bidding
Google Ads Smart Bidding has modern technology
When bidding, machine learning algorithms use large-scale data to make more accurate predictions about how different bids might impact conversions or conversion value. These algorithms consider many parameters that affect performance more than a person or a team could calculate.
Diverse contextual signals
Signals are attributes that help identify a person or context when bidding. Using real-time bidding, you can apply multiple signals to optimize bidding activities. These signals include attributes like device and location in manual bidding. As well as additional and combined signals in smart bidding. For example, the device, actual location, user’s search location, day of the week, and time of day, operating system.
Support evaluating campaign’s effectiveness
Smart Bidding strategies allow you to set performance goals and customize settings options according to your business objectives. For instance, optimizing search bid strategies for a previously chosen allocation model, including data-driven allocation, or setting specific performance targets for different devices such as mobile, tablet, laptop, PC through target CPA bidding.
Comprehensive, transparent performance reporting
Google Ads Smart Bidding provides reporting tools such as bid strategy reports, bid strategy status, drafts and campaign experiments, simulators, notifications, and necessary alerts… It helps you get more detailed information about the performance of the campaign, and quickly address any issues that occur during operation.
Cons of Google Ads Smart Bidding
The way the bidding strategy works depends on various constraints. Beyond basic constraints like goals (tCPA or tROAS) and budget, factors like geography, keywords, and targeting options also play a significant role. Google suggests removing as many constraints as possible and focusing on a single goal with clear conversion data to automate bidding.
However, setting constraints is necessary to ensure ads reach the correct target audience. You can still change your budget and CPA or ROAS goals even though they are constraints.
Previously, Google recommended for accounts using the tCPA strategy with a limited budget to remove the budget cap by increasing the budget or switching to a Maximize Conversions strategy. However, after changes later this year, accounts using the Maximize Conversions strategy with tCPA settings and a limited budget will need to increase their budget or remove the CPA settings.
How to optimize Google Ads Smart Bidding?
To optimize Google Ads Smart Bidding, you can consider using these following methods:
Increase Cost Per Click (CPC)
You need to ask Google to use the daily advertising budget and try to generate as many conversions as possible. Subsequently, the algorithm will choose an appropriate bid for the CPC based on this objective. You must monitor the CPC conversion rate and compare it with your goal. Otherwise, you might end up wasting a lot of money. In any case, whether the cost per conversion is high or low, the budget will always run daily and will deplete.
Set conversion targets
According to advertisers, CPA is an optimal method for deploying online marketing campaigns. This rate simply means that businesses pay for ads when the desired actions occur. The ultimate expectation from CPA by advertisers is to bring in substantial profits. By setting a cost per conversion target, Google will optimize conversions within your budget limits. Ensure that conversion tracking is activated and that there should be sufficient data for this strategy. About 30 conversions in the previous month are considered a relatively reliable level.
Increase brand recognition
With this strategy, Google will generate as many clicks for you as possible using the entire daily advertising budget. If there are many user clicks, you will increase the chances of brand recognition. With a limited budget, you can still deploy this strategy. The best way is to set a maximum CPC bid and then monitor the average CPC. By doing this, you can optimize the strategy over time.
Set ROAS targets
Target Return on Advertising Spend (ROAS) is a bidding strategy that brings the most benefits in a cycle. Why? Because it requires you to have some mathematical knowledge. Target ROAS is a bidding strategy where Google Ads will set your bids to maximize conversion value, specifically based on the profit you want from your advertising spend. This number is based on a percentage. In your next Google advertising campaign, you want to generate $10 for every $2 spent. To calculate, you should use this formula:
(Revenue / Advertising Spend) x 100% = Target ROAS.
Example:
Revenue is $10 from the campaign, and you spent $2 on advertising (clicks).
(10 / 2) x 100% = 500% ROAS.
Increase reach
This feature was added recently and provides advertisers with more options, especially when looking for places to position their content. Depending on your preferences, Google will predict the bid corresponding to the keyword. Then, Google will adjust your bid to achieve the target position. You can set bids for several ad positions, including absolute top of the page, top of the page, and anywhere on the page.
In the article above, Optimal Agency hopes that you understand the pros and cons of Google Ads Smart Bidding to optimize bidding successfully.
Please see more:
- How to run Google Ads for Small Business in 2024
- What are Google Smart Campaigns? How to set up campaigns
- How to run cosmetics ads on Facebook?
FAQ
Google Ads Smart Bidding plays a crucial role in optimizing advertising strategies on the Google Ads platform. With the capability of using artificial intelligence and big data, Smart Bidding helps automatically adjust bids to optimize advertising performance. This tool not only saves time and effort for advertisers but also delivers higher-quality results. By automatically adjusting bids based on objectives such as maximizing conversions or optimizing ROI, Smart Bidding improves campaign effectiveness and enhances target audience reach. Additionally, it provides detailed reporting tools that help advertisers understand the campaign’s performance better and make necessary adjustments to achieve business goals. Due to its significant role, Google Ads Smart Bidding is an indispensable tool for optimizing advertising performance on Google Ads.
Comparing smart bidding strategies and manual bidding strategies is an important part of managing Google ads campaigns. Smart bidding strategies use artificial intelligence and big data to automatically adjust bids based on objectives such as maximizing conversions or optimizing ROI. This saves advertisers’ time and effort and simultaneously improves campaign performance. In contrast, manual bidding strategies allow advertisers to freely adjust bids according to their specific business strategy and desires. Although this offers flexibility, managing and optimizing the campaign in this case requires periodic intervention and monitoring by the manager. In summary, both strategies have their advantages and disadvantages, and the suitable choice will depend on the goals, budget, and management capabilities of each advertiser.
