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5 Smart Bidding Strategies to Reach Your Goals

by | Feb 13, 2020

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Whether some of us like it or not, Google Ads’ Smart Bidding is the future of pay-per-click (PPC). Also known as automated bidding systems (ABS), They’re the search advertising platforms’ way to simplify paid search bidding using machine learning to test the optimal ad delivery to meet the goals you set.

The Benefits of Smart Bidding

It can get quite challenging for a typical marketer to manually scale and manage their bids to achieve their desired goals, especially if you have campaigns with a significant number of keywords that they’re trying to optimize for success. Given the dynamic nature of the search auction, where each search by each individual user triggers an immediate auction, setting the correct bid is a fast-moving target.

Plus, we can place a pretty strong wager right now that some of your competitors are utilizing Smart Bidding at this very moment, so basically you are attempting to compete directly with the powerhouse punch of Google’s algorithms. Yes, it’s you versus the computer. You may win in the short term, but the algorithm is probably going to beat you in the long run.

Automated bidding solutions use true auction-time bidding: not simply making adjustments a few times each day, but for every single auction.

These automated bidding systems evaluate relevant contextual signals such as the time of the day, the user’s location, the ad creative being displayed, the browser, the user’s recent search history, and much more. In this way, they determine what a winning bid might be for just the right ad to show for just the right person at just the right time. You will never have access to all the signals that the automated bidding system has at its disposal, especially not in real-time.

Smart Bidding Strategies

Even though Smart Bidding is automated, you must still give it a goal to optimize toward. There are five bidding strategies to choose from.

1. Enhanced Cost per Click (eCPC): In this strategy, the automated bidding system changes your bid depending on whether it thinks the saercher is a good candidate for conversion (raise the bid), or a poor candidate for conversion (lower the bid). Using eCPC could work well as your first foray into automated bidding when you may not know what your goals should be.

2. Maximize Conversions: To maximize the number of conversions you get within a set budget, use this bidding strategy. 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. For example, if you have a hard-stop budget of $50 per day for a particular campaign, the automated bidding system will try to deliver as many conversions as it can for your $50 each day.

3. Maximize Conversion Value: Similar to Maximize Conversions bidding, the Maximize Conversion Value bidding strategy tries to find the traffic that delivers the best ROAS for your budget. You define the value that you want to maximize, such as sales revenue or profit margins, when you set up Maximize Conversion Value tracking for your campaigns.

For both the Maximize Conversions and Maximize Conversion Value automated bidding strategies, pay close attention to your daily budgets. As Google will try to spend as much of that daily budget as it can while it strives to bring you conversion activity, you may find that your budget is spent too quickly or on less relevant search terms. You also won’t see if you are budget-limited. Keep an eye on your impression share loss due to budget.

4. Target CPA (tCPA): For this one, you set a target cost per action, such as for a purchase or for a lead. This is a good strategy if you have a set cost per lead you want to reach, or if your average purchase value is similar, or the same, across all your customers. If you are willing to pay $25 for every lead you can get, for example, then setting a Target CPA bid of $25 will help you reach that goal. If your goals aren’t the same across all customers, you can try different campaigns with different goals.

5. Target ROAS (tROAS): Use this bid strategy to set a target return on your ad spend. This is a better strategy when you have a great variety of purchases being made with varied revenue values for each purchase. For example, some of your purchases may be for $25, while others are for $300. If you want to achieve a four-to-one revenue-to-spend ratio across everything you sell, you would set a 400% tROAS goal. And like tCPA, you can have different tROAS goals by campaign.

Like TV’s 6 Million Dollar Man, automated bidding systems will keep getting better, stronger, faster. Pity the poor human trying to keep pace with the Steve Austins of the bidding world. The ABS have it.

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