Ten years ago, bidding on Google ads was pretty simple. You chose keywords and specified a bid based on the likelihood those keywords would convert on a last-click, desktop, or same-session basis.
Now, signals such as device type, time, weekday, or location make it more complex for advertisers to set bids based on each user's context for each and every auction.
Setting the right bid has become a difficult but essential challenge.
Today, Google has developed smart bidding to help you tackle this more complex bidding landscape.
What is Smart Bidding?
According to Google, smart bidding is a subset of automated bid strategies that use machine- learning to optimize for conversions or conversion value in each and every auction.
Smart bidding frees up time to let you focus on strategy
After all, manually cross-referencing audience data with context to establish intent and set the right bid is a complex and time-consuming task.
According to a study done by the Boston Consulting Group, 80% of digital marketers’ time is spent on manual tasks such as setting bids, while only 20% is spent on strategy.
For many advertisers, automation, such as smart bidding, offers a way to alleviate this strain on marketing resources. Smart bidding improves performance with auction-time bidding. And Google Ads bidding algorithms tailor bids to each user’s unique search context, using relevant signals present at auction time.
This is a unique capability on the market since third-party bidding tools only adapt bids a few times a day. Auction-time bidding allows for bid differentiation with a high degree of precision based on the conversion opportunity of each auction.
Automated bidding takes the heavy lifting and guesswork out of setting bids to meet your performance goals. There are a number of automated-bid strategies you can use, depending on the end goal of each of your ads campaigns plus where they fit into your buyer's journey.
Key automated-bid strategies include:
This is no means an exhaustive list, but each of these strategies is particularly helpful and straightforward if you're just getting started with smart bidding.
Smart Bidding Strategy: Target CPA
Target CPA is a smart bidding strategy that sets bids to get as many conversions as possible at or below the target cost-per-action (CPA) you set. It uses advanced machine learning to automatically optimize bids and offers auction-time bidding capabilities that tailor bids for each and every auction.
How does the cost-per-acquisition (CPA) automated-bid strategy impact conversions?
According to Google, advertisers that adopt the target cost-per-acquisition automated-bid strategy (for lead campaigns following Google best practices) see an average of 31% more conversions at a similar cost-per-conversion.
Smart Bidding Strategy: Target ROAS
The Target ROAS bidding strategy helps you get more conversion value or revenue at the target return-on-ad-spend (ROAS) you set. Your bids are automatically optimized at auction time, allowing you to tailor bids for each auction.
How does Target ROAS work?
The Google Ads algorithm predicts future conversions and associated values using your reported conversion values — conversion tracking provides the necessary reported conversion values to let this happen. Then, Google Ads will set maximum cost-per-click (max. CPC) bids to maximize your conversion value while also trying to achieve an average return on ad spend (ROAS) equal to your target.
How does targeting ROAS influence conversion rates?
According to Google, advertisers that choose Target ROAS see an average of 7% more conversions than manually set CPC bids at a similar cost-per-conversion.
Smart Bidding Strategy: Maximize Conversions
Maximize conversions automatically sets bids to help get the most conversions for your campaign while spending your budget. Using historical information about your campaign and evaluating the contextual signals present at auction-time, maximize-conversions bidding automatically finds an optimal bid for your ad each time it's eligible to appear. Google Ads sets these bids to help get the most conversions for your campaign while spending your budget.
How does targeting max conversions impact conversion uplift?
According to Google, advertisers that automate using the search max-conversions strategy see an average 20% conversions uplift for all campaigns, assuming that the budget is set to an amount that delivers the same CPA.
Smart Bidding helps you bid on exclusive behavioral signals. Google Ads algorithms integrate a large variety of behavioral signals and regularly consider new ones to evaluate intent. They go a step beyond traditional signal analysis by recognizing and adjusting for meaningful interactions between combinations of signals.
Every user search is different, and bids for each query should reflect the unique, contextual signals present at each auction. Google Ads evaluates a wide range of signals, as well as meaningful interactions between signals, to set the best bids.
Smart Bidding in Action
Imagine a scenario where three people give us the same intent signal: a query for “Hilton London.”
One person has just arrived in Paddington and is searching for directions to the hotel on his smartphone.
The second is at home in Paris researching a leisure trip with girlfriends on her laptop.
The third is a Hilton Rewards member who is already in the hotel and wants to know the fitness center's opening hours.
The intent query is the same in each case and alerts Hilton to a user in need of information, but each user is looking for a different piece of information in a very specific context.
Bids for each query should reflect the unique contextual signals present at auction time. That is why Google Ads evaluates not only a wide range of signals but the meaningful interactions between those signals to set optimal bids.
Factors Impacting Smart Bidding
Smart Bidding uses machine learning to predict the likelihood of conversion for every query and auction.
Predictions are converted into bidding decisions to maximize performance as the system learns over time. Audience is one of these signals influencing each auction’s unique bid to accurately predict the likelihood of conversion.
RLSA/Website Visitors: Tracks people who have been to your site and have engaged (product page viewers, cart abandoners, etc.).
Customer Match Lists: Allows you to import and target CRM data from the information customers provide, such as e-mail address and phone number.
Similar Audiences: Reach new users who exhibit similar browsing behavior to your site visitors and customer match audiences.
Note: For search ads, in particular Google Audiences (affinity in-market and detailed demographics), are not used as signals for smart bidding.
How HubSpot Can Optimize Your Smart Bidding Strategy
Ads optimization events (occasionally referred to as offline event syncing) enable you to sync your HubSpot CRM contact lifecycle stages directly to Google. This feeds offline customer conversion data, such as calls or closed deals, right from HubSpot into Google Ads without any integration work or developer help.
By sharing this with Google, you can measure what happens after a prospect clicks your ad or calls your business. This gives Google additional signals to use when optimizing your targeting criteria to drive the most cost-effective conversions.
The ever-growing breadth of data creates more complexity for advertisers to set bids based on each user's context. With Smart Bidding, you can rest easy knowing your bids are being optimized in the context of your visitor’s searches. This will free up more time for you to focus on solving for your customer with the rest of your marketing strategy.