Smart bidding strategies: what it is, how it works, strategies to use

In this article, I will explain what Smart Bidding strategies are, their usage, and how to maximize conversions in Google Ads, the premier advertising platform widely known and used by those who intend to promote their business online.

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Especially for those who are taking their first steps on this platform, it’s essential to know that there are various automatic bidding strategies called smart bidding that can optimize conversions or conversion value during auctions. This places increasing importance on smart bidding strategies that not only utilize machine learning but also manage campaign functionalities and bids during the auction.

This article will cover various points, such as:

  • what smart bidding is and how it works;
  • how automatic bids work;
  • which strategies to use;
  • the advantages of using it.

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What is Smart Bidding

Smart Bidding is a set of automatic bidding strategies that can be used on Google Ads to promote your business online. More and more businesses rely on Google and its technologies to achieve commercial goals through advertising. Google Ads provides the opportunity to create and optimize successful campaigns based on various smart bidding strategies.

automated smart bidding strategies

These “intelligent” strategies can not only calculate the best bid using machine learning but also accurately predict how different bid amounts can impact conversions and their value. A particularly useful and innovative strategy is smart bidding, which optimizes Google campaigns by combining different indicators to set real-time bids for each online auction, a feature known as “auction-time bidding“.

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How automatic bids work

Automatic bids are crucial elements for the success of an online business and the choice of an effective smart bidding strategy. They deeply influence campaign performance and ad visibility.

There are 3 key factors to consider when choosing the right bid:

google smart bidding

  1. performance. Ad visibility and the number of interactions are closely related to efficient bids;
  2. auctions. The dynamism of auctions makes the optimal bid a moving target that is hard to reach with manual bids;
  3. user journey complexity. User behavior is influenced by multiple indicators that automation can consider during auctions to make appropriate bids.

Specifically, Smart Bidding allows you to:

  1. improve performance using auction-time bids;
  2. efficiently manage bids, saving time;
  3. choose bid strategies in line with your goals;
  4. align structure and settings with automatic bids;
  5. perform tests on chosen strategies;
  6. evaluate strategy performance.

Smart bidding strategies

Those who decide to invest in Google Ads must clearly define the business objectives they want to achieve with the campaign. Choosing the right bid strategy is essential to create a potentially successful campaign.

Why is it so important to choose a suitable, smart bidding strategy? Because the automation behind the campaign is designed exclusively to reach the set goal within the platform.

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The smart bidding strategies available on the platform are as follows.
smart bidding performance

  • maximize conversions: set automatic bids to allow the campaign to generate as many conversions as possible within the budget (get more conversions).
  • maximize conversion value: a strategy to maximize the total conversion value to generate more profitable conversions while spending the available budget (increase the value of conversions).
  • target CPA: set bids for the search network or display network to generate more conversions at a target cost per action (CPA) that is equal to or lower than a specified value.
  • roads target: sets bids to achieve a target return on advertising spend (ROAS) for search network or display network campaigns.

The first two strategies mentioned are suitable for advertisers without a set CPA or ROAS target. On the other hand, CPA targets and ROAS targets are generally used by advertisers who already have a specific target to achieve. Smart bidding strategies can access historical campaign data and automatically calculate the right bid to achieve the best results.

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Some practical tips:

  • with the maximize conversions or maximize value strategy, you can increase conversions or their value simply by increasing the available budget or modifying the campaign targets;
  • if the CPA target or ROAS target campaign has budget limitations, consider increasing it to maximize opportunities and reach the targets;
  • if the CPA target or ROAS target campaign is achieving the expected results and has no budget limits, you can optimize it by modifying the campaign target;
  • if you intend to expand targeting and increase conversions, it’s advisable to add relevant keywords to campaigns with low traffic volumes.

Advantages of smart bidding

Smart Bidding and the use of automatic bidding strategies offer significant advantages that save time and improve advertising performance.

“Right user, right message, right moment”

These are the primary objectives of all Google Ads marketing campaigns.

Today, setting the right bid has become increasingly challenging, as it is understanding user behavior, which varies based on location, time, and device—all indicators that businesses must consider. Automatic bids can rely on machine learning to set the appropriate bid for each auction through an algorithm.

During this process, the platform will set the best bids that potentially can most accurately and efficiently achieve the established goals. The platform’s algorithm, using extensive data, can take into account the indicators present at the time of the auction and estimate user intentions. This unique feature promptly calculates the conversion opportunity of each auction to ensure it is not missed.

Conclusions and strategic coaching on what to do

Effectively managing auctions within the platform is crucial to improving the performance of active campaigns, even though manually managing auctions may seem challenging and time-consuming.

Today, those who choose to automate auction bids on Google Ads not only get the best bids but also save valuable time.

Over 70% of online advertisers state that they rely on automatic bids offered by Google’s advertising platform. Smart bidding is a valuable tool that allows you to automatically optimize bids using advanced machine learning technology, thus ensuring the best performance for advertising campaigns.

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