Smart Bidding to optimize your Google Ads campaigns: For or against?

Smart Bidding is the name given to the Google Ads functions that work to optimize your campaign automatically. 

Artificial intelligence and machine learning are working their way into your Google Ads campaigns to help you and to make your ads even more profitable depending on what you want to achieve.

What is Smart Bidding?

Essentially, it’s nothing more than the functions that generate automatic bidding strategies for your ads. These features work to make your ads learn and evolve, just like Pokémon, to get conversion values in each bid and make them better.

Smart Bidding can make predictions based on your campaign’s keywords, your objectives, and a huge number of variables. Who better than Google Ads itself to tell you what could work the best in your ads?

You could say that Smart Bidding is an automatic bidding strategy system made by Google Ads to help you save time and get more out of every dollar you invest in advertising.

What are the types of smart Bidding strategies? 

There are different types of Smart Bidding strategies that you can use depending on what you want to get out of your advertising. And the data speaks for itself on how the conversion rate goes up as soon as you switch from a manual campaign to Smart Bidding. Let’s take a look.

Maximize conversions 

Google shows ads to prospective customers who are more likely to make a purchase. In other words, it optimizes the campaign geared towards conversions instead of just clicks.

When you switch from manual to Smart Bidding, there is a 20% increase in purchases

Target CPA 

Reducing the cost of the ad campaign.

Keywords and competition. There are segments and KWs that work out more expensive than others depending on the competition in the sector and their geographical location. (Countries, ages, interests, KWs, etc.) The target CPA is selling to those that work out cheaper to show the campaign and, therefore you are already improving visibility. 

The improvement on these campaigns is up to 31%

Maximizing conversion values 

This is another twist to maximize conversions. Not all customers spend the same amount of money. As such, in this kind of campaign, the ads are only shown to segments that are more likely to spend a larger amount if they are willing to make a purchase.

This type of bidding strategy based on value is the deepest level of Smart Bidding, known as Smart Bidding 2.0. This is very profitable if you program your measurement basis correctly so that you can opt for smart bids.

You will have a 35% improvement if you optimize with Smart Bidding.

Target ROAS

Return on Advertising Spend. In this case, you are playing with the target CPA, since you are not just focusing on showing the ad to the people who will spend the most, but also to the cheapest target customer. This will show the ad to the people or prospective customers who have a higher rate of profitability. This is getting the most out of every dollar you invest. 

If you spend $1 in Colombia, you get $2 back, and if you spend $1 in Mexico, you get $3. Therefore, the campaign is stronger in Mexico.

Switching to Smart Bidding means an increase of 35%

Pros and cons of using Smart Bidding

If you have a small business and don’t have much time to spend on your online campaigns, Smart Bidding is the tool for you. It is like having an assistant who takes charge of optimizing your ads to reach a greater number of people at a lower cost.

Smart Bidding democratizes advertising for all kinds of businesses, regardless of size. 

What’s more:

✅ You save time while Google Ads does the work for you.

✅ You add in the Google’s information on users to apply it to your campaign.

✅ You reduce your advertising investment costs. More effective advertising with better numbers.

The cons that we could list are:

❌ Google Ads’ machine learning function needs time to start paying off, but once it’s been trained, the results are amazing.

Smart Bidding examples

Since there’s no better way to learn than by example, let’s take a look at when it’s a good idea to use one type of Smart Bidding campaign or another.

EXAMPLE

Imagine you sell sunglasses at different prices. Your cheapest sunglasses cost $30, and the most expensive, $100.

In this case, the $30 sunglasses are bought by people aged 18 to 25 and the $100 ones by people aged 30 to 50.

So, when should you use a Smart Bidding strategy?

1. To maximize conversions

If you choose to set up Smart Bidding to maximize conversions, you will probably get much younger customers who don’t spend as much since you are only interested in getting as many sales as possible.

2. To maximize conversion values

With this Smart Bidding strategy, your goal is to get higher value sales. As such, following the example, in this case you would get more $100 customers. Your ad would be shown to people aged 30 to 50. Despite these ads are more expensive, you want to sell to people who are going to spend a greater amount of money.

3. Target CPA

This strategy is based on getting the cheapest sales in terms of advertising investment. As such, if the 18 to 25 ad segment is cheaper, it will prioritize this target audience for the campaign. 

4. Target ROAS

In this case, Smart Bidding would look for the cheapest impressions and, at the same time, those people who will spend more. Following the example, it would show the campaign to the segment that costs less in advertising investment and the 30 to 50 age group because they are willing to spend more. This bidding strategy increases the profitability rate.

How to set up your campaigns with Smart Bidding on Google Ads

In your Google Ads account, go to the “Settings” section, and in “Bidding”, select the “Try Smart Bidding” option.

By clicking on the drop-down box, you will find the default bidding settings that would allow you to the “Change Bidding Type” option and select manual or automated bidding. 

Select “Automated Bidding”, and choose: Target CPA, ROAS, maximize clicks, maximize conversions, maximize conversion value.

Need a guide to Google Ads from scratch?

Artificial Intelligence has worked its way into Google Ads to help you to get better results for your campaign.

It’s just amazing.

Carlos Bravo , 24 May 2021