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What is Smart Bidding? And How Can I Use It?

What is Smart Bidding? And How Can I Use It?

Trapica Content Team

Marketing Guides
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4 min read
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May 3, 2021

If advertisers have wanted anything in recent years, it’s automation. Thankfully, Google heard the calls and has introduced Smart Bidding. If you have not heard of this before, now is the time to learn because it’s all about to change even more. With lots of recent investment, the Smart Bidding system is being updated in April/May 2021, so now is the perfect time to get involved.

In this guide, you’re going to learn all about Smart Bidding and how you can get started with the technology!

What’s Smart Bidding?

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Starting with the basics, what exactly is Smart Bidding and why have marketers been getting excited over the system? Essentially, it is a new bidding strategy on the Google advertising platform that optimizes for conversion actions using machine learning and advanced algorithms.

If you activate Smart Bidding on a campaign, Google automatically optimizes the bids over time to maximize performance (conversions). In other words, it uses machine learning and artificial intelligence technology to ensure that you’re always bidding the right amount to get the most from your marketing budget. When the feature was first introduced, there were four main Smart Bidding strategies:

  • Target ROAS
  • Target CPA
  • Enhanced CPC
  • Max Conversions

However, as mentioned, Google has invested in Smart Bidding in recent months and April 2021 will see some changes to how we use the tool.

Benefits of Smart Bidding

According to Google, four reasons explain why you should use Smart Bidding when advertising on the platform.

Range of Signals - First, when we use the phrase ‘signals’, we mean an individual’s identifiable attributes. With Smart Bidding, the idea is to optimize bids by considering a larger range of signals. It achieves this through a process called ‘auction-time bidding’ - using machine learning to optimize for specific conversion actions. As well as location, these attributes include user devices and even some signals that can only be found in the Smart Bidding system. You’ll find the following:

  • Remarketing list
  • Location intent
  • Browser
  • Interface language
  • Time of day
  • Operating system

Machine Learning Technology - Another reason that Google points out is the advanced machine learning capabilities. If you haven’t heard of this growing technology area before, machine learning algorithms are designed to continually learn without direct input from humans. Using data, you get accurate spending predictions and learn how conversions could be affected by various bid amounts.

Of course, the benefit of using machine learning is that data is processed faster than any human could perform the same task. You free up some time for the marketing team while also enjoying the improved performance.

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Performance Reporting - Next, there aren’t too many better ways of checking bidding performance than through Smart Bidding. With advanced reporting tools, you get deep insights and quickly learn the issues affecting campaigns. One feature we like in particular is the campaign drafts feature where you learn how Smart Bidding would perform compared to your existing bidding systems. Simulators can also explain how Smart Bidding improves performance with a different strategy using metric analysis.

Flexibility - Finally, people often feel as though they’re losing control when implementing a tool like Smart Bidding. However, marketers have performance controls to ensure that Smart Bidding only ever follows our instructions, which is important to remember. For instance, you’ll customize settings and choose your own performance targets.

Should You Choose Smart Bidding?

We’ll go through the upcoming changes in a moment, but we first want to answer a common question regarding Smart Bidding. Just because Smart Bidding has lots of benefits, doesn’t mean that these benefits automatically apply to everyone. Will your business benefit from Smart Bidding?

First and foremost, we don’t recommend using Google Ads just because of the Smart Bidding feature. If Google isn’t your chosen advertising platform, Smart Bidding doesn’t change this fact. If your funds are better spent on Facebook, Instagram, or another platform, you’ll find some effective automation tools online to help with bidding as well as targeting and creatives.

If you do use Google Ads already, it’s fair to say that Smart Bidding has potential for businesses of all sizes. Since the feature uses historical data across all campaigns, it’s possible to launch new campaigns and still enjoy the feature. As long as you give the technology time, Google believes that Smart Bidding can help a campaign of any size to become more efficient thanks to the machine learning capabilities.

For those planning to use Smart Bidding this year, please be aware that you’ll need to comply with the Google Ads policies as well as the platform’s legal requirements. In particular, we recommend paying attention to the personalized advertising policies on Google. If the contextual signals don’t apply to your marketing strategy, you might be better off without Smart Bidding.

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2021 Changes for Smart Bidding

So, what are the changes to Smart Bidding to which we keep referring to? Ultimately, it comes down to a reorganization of the strategies. Earlier, we mentioned that when the feature was first introduced, there were four main strategies for businesses using Smart Bidding. Now, when you log into your account you will realize that some areas have changed (do not fear, Google has already stated that the adjustments shouldn’t impact performance too much!).

In April and May, you may not see the options to use tCPA (target CPA) or tROAS (Target ROAS) strategies for a new campaign. When choosing a bid strategy for a new campaign, you’ll notice that you can add a target CPA or a target ROAS when using a strategy called ‘Maximize Conversion Value’.

The page will look essentially the same, but the difference comes with the green tick section at the bottom of the page. For example, you’ll choose your focus and then you’ll tick to set a target CPA or ROAS - from here, you’ll enter a percentage, which will focus on the Maximize Conversion Value rather than the previous system. Therefore, the Maximize Conversion Value strategy is absorbing the other two.

Pre-April Strategies

  • tCPA
  • tROAS
  • Maximize Conversions
  • Maximize Conversion Value

Post-April Strategies

  • Maximize Conversions - with tCPA
  • Maximize Conversion Value - with tROAS
  • Maximize Conversions
  • Maximize Conversion Value

What does this mean for advertisers using Smart Bidding? In truth, not much. However, you will need to familiarize yourself with the new strategies. You’ll need to choose a different strategy to achieve the same result - Google has cleaned up the strategies and made them more accessible for all. If you’re already using Smart Bidding for Shopping, you’ll probably recognize the new system because it almost mirrors what has been used there for some time.

To summarize, you’ll now Maximize Conversion Value with tROAS rather than choosing tROAS alone. Likewise, you’ll Maximize Conversions with tCPA rather than tCPA alone. If you don’t want tCPA or tROAS settings, just choose the third or fourth option.

Seasonal Conversion Rate Adjustment

Additionally, Google has introduced a setting for those expecting conversion rate increases. Using the ‘Conversion rate adjustment’ setting, you’ll tell Google how much you expect conversion rates to increase. From here, Google adjusts the algorithm so you can still meet the desired CPA. Once again, this is Google providing more control for businesses and a feature that we like.

As an example, let’s say that you sell clothes and are about to run an end-of-season sale to sell off lots of stock. With conversion rates set to increase, you can inform Google who can then use this information to optimize bidding more effectively.

Best Practices for Smart Bidding

Since its introduction, Google has helpfully given marketers and businesses a helping hand by explaining how to get the most from the platform. Above all else, it has been very outspoken about the use of keywords. Long story short, they’re just as important as ever before. In particular, load your campaign up with negative keywords to ensure that your ads don’t show for people with little to no interest in the brand/products. Also, consider Impression Share as well as tROAS and tCPA when pushing for keywords containing your own brand name.

In terms of audiences, complement your Smart Bidding campaigns with all Similar Audiences, RLSA (remarketing lists for search ads), and Customer Match lists. If you have first-party audience lists, this is only going to improve the performance of the algorithm.

Finally, utilize the controls and enjoy the flexibility built into the system. We mentioned that Smart Bidding has lots of controls, which is the best way to differentiate from the competition. Believe in the technology and trust that machine learning will indeed learn the best bidding strategies to meet your cost and conversion goals.

If things aren’t going well, be patient. If they still aren’t going well, don’t be afraid to make adjustments and make sure Smart Bidding continues to work for you in the coming months!

Learn how Trapica can help you automate and optimize your Google ad campaigns

Marketing Guides
|
4 min read
|
May 3, 2021

The Trapica Content Team aims to share relevant industry news, marketing tips, and company updates to make sure our readers have the best info about digital marketing.