What Is Smart Bidding? Definition and Its Advantages

Ever had trouble figuring out the right ad bidding strategy? Now, you do not have to bother setting everything up manually. That is because you can use smart bidding in Google Ads to automatically manage your bidding strategy more efficiently.

With smart bidding, the ad setup process becomes more efficient and data-driven. Want to learn more about this bidding strategy? Read on to understand what Google Ads smart bidding is and how this automated bidding system works!

What Is Smart Bidding?

Smart bidding is a subset of automated bidding strategies that utilizes Google's artificial intelligence (AI) to optimize conversions or conversion value in each ad auction. This feature is often called auction-time bidding.

The smart bidding AI system analyzes signals such as device, location, time, and user behavior to determine the optimal bid for each auction.

With this automated bidding system, you can achieve more optimal conversion targets and ROI without the hassle of manually adjusting bids.

Advantages of Smart Bidding Strategy

A smart bidding strategy offers various advantages that can help you manage your digital campaigns more efficiently. Here are some of the benefits you can enjoy when implementing it in your digital campaigns:

• Time management efficiency: With an automated system, you no longer need to manually adjust bids. Smart bidding saves time while ensuring your strategy continues to run optimally without constant monitoring.
• Uses advanced machine learning: Smart bidding utilizes machine learning technology to analyze millions of signals, including location, device, time, and user behavior, to determine the most promising bids in real time.
• Historical data-based accuracy: The system learns from previous campaign performance data to predict future conversion opportunities. The more data collected, the more accurate the results.
• Flexible for various aims: Smart bidding provides multiple types of strategies that can be tailored to business needs, such as increasing conversions, maximizing sales value, and optimizing Return on Ad Spend (ROAS).

 

Read also: How to Calculate Churn Rate in Your Business, Take Note!

When Should You Use Smart Bidding?

Despite its many advantages, you still need to understand when the right time is to use the smart bidding strategy to achieve maximum results. Here are some conditions that should be considered before implementing this strategy in your advertising campaign:

• When you have sufficient conversion data: Before implementing smart bidding, make sure your account has enough conversion history. This data is needed so that Google's machine learning algorithm can analyze patterns and adjust bidding strategy accurately.
• When your campaign has a large enough budget: Smart bidding works best when you have a large enough daily budget. This allows the system to adjust bids more effectively to achieve maximum results.
• If you use exact-match keywords: This strategy is ideal for campaigns that use exact-match keywords. This type of keyword helps Google's algorithm recognize relevance more precisely, so the bids can be adjusted to target accurately.
• When you already have insights from A/B testing: It is better to run A/B testing on your audience before implementing an automated bidding strategy. The results of this test can provide important insights that Google's AI system can adjust bids to a more specific and relevant target audience.

 

Factors That Can Affect Smart Bidding Results

Although Google Ads smart bidding works automatically with the help of AI, the results obtained can vary depending on the following factors:

• Time: Ad performance can vary depending on when it is displayed, such as audience activity hours or days with high conversion rates.
• Location: Each region has different levels of competition, user behavior, and conversion potential, so the system dynamically adjusts bidding.
• Price competitiveness: If many advertisers target similar keywords, bid prices will rise, affecting your bidding efficiency.
• Device used: Google algorithm adjusts bids based on the user's device, such as smartphone, tablet, or desktop, according to the highest conversion opportunity.
• Audience behavior on the website: The system also takes into account how users interact on your site. The higher the engagement and conversion rate, the better the optimization results.

 

Read also: How to Set Target CPA Bidding & Tips to Optimize It

Types of Smart Bidding in Google Ads

Each type of Google Ads smart bidding has a different function. Here are some types of Google Ads automatic bidding strategies based on campaign objectives:

• Target CPA (Cost Per Action): This strategy focuses on achieving conversions at an average cost per action according to your target. This bidding strategy is suitable for those who want efficient results with a measurable budget. 
• Target ROAS (Return on Ad Spend): This strategy helps you maximize conversion value based on your target ROAS.
• Maximize Conversions: This strategy aims to get as many conversions as possible from the available budget. Later, Google's AI system will automatically optimize bids to get the highest conversion results.
• Maximize Conversion Value: Unlike maximizing conversions, this strategy focuses more on total conversion value so that business profits increase optimally. This strategy is suitable for e-commerce or businesses with a wide variety of product prices.
• Enhanced CPC (Cost Per Click): Although it still uses manual bidding, this feature automatically adjusts bids for clicks that are more likely to produce conversions.

 

How to Set Up Smart Bidding in Google Ads

Implementing smart bidding in Google Ads is quite easy, as long as you have determined your campaign goals and have sufficient conversion data. Here are the steps:

1. Log in to Your Google Ads Account

Go to https://ads.google.com/ and log in to your Google Ads account. Then, select the campaign you want to set up or create a new one based on your goals.

2. Select a Campaign or Create a New One

You can set up smart bidding on an existing campaign or create a new campaign with the goal of conversions, sales, or website traffic.

3. Go to Bidding Settings

In the “Settings” section, find the “Bidding Strategy” option. Then, click to adjust the type of smart bidding you want to use.

4. Select Smart Bidding Type

Choose an automated strategy that suits your needs, such as:

• Target CPA (Cost Per Action).
• Target ROAS (Return on Ad Spend).
• Maximize Conversions.
• Maximize Conversion Value.
• Enhanced CPC (Cost Per Click).

 

5. Set Your Target and Daily Budget

Enter your CPA or ROAS target according to your campaign goals, then make sure your daily budget is enough for the algorithm to optimize results to the max.

6. Save and Run Your Campaign

Once everything is set up, you can click the “Next” and “Save” buttons, then let the automatic bidding system start working and learning from the data for a few days.

That concludes our comprehensive explanation of smart bidding in Google Ads and how this strategy can help optimize your ad campaign performance. Now that you understand the concept and the factors that influence it, it is time to determine the best automatic bidding strategy that suits your business needs.

Before implementing it, make sure you pay attention to several important things, such as sufficient conversion data, an adequate daily budget, and clear audience segmentation. All these factors play a big role in ensuring that the smart bidding algorithm works optimally and delivers the best results.

The good news is that you can now take advantage of SEM Services by cmlabs to determine and manage the best Google Ads automatic bidding strategy for your business.

With a data-driven approach, understanding of the latest algorithms, and precise targeting methods, the cmlabs team is ready to help you maximize your search engine advertising performance and improve your business conversion results.

So, are you ready to run high-performing ads that drive optimal conversions? If you have any questions about SEM Services by cmlabs or would like to get the best offer, contact our team now!

Read also: 4 PPC Bidding Strategies to Maximize ROI, Check Them Out!