How does smart bidding work in Google Ads?
Posted: Thu Jan 23, 2025 6:30 am
Without Google's smart bidding, you would have to design your own strategies and analyse target groups, keywords and millions of pieces of data to place search engine advertising (SEA) and create search engine marketing (SEM) campaigns . Based on these market and advertising analyses, you would also have to place bids within milliseconds to secure advantageous advertising positions in auctions – which is hardly conceivable without artificial intelligence and automation.
Smart bidding takes care of it all. It evaluates available signals based on ad veterinary email database positions and campaign goals. It then auctions off the best ad space for your keyword or signal on platforms like Ad Exchange , all in seconds. By incorporating advertising context and business goals , strategies are tailored to your capabilities. Plus, with automated ad buying and selling through programmatic advertising , programmatic buying , and real-time advertising , you can spend your campaign budget more accurately.
Advice
Optimize your company's visibility in 35 directories, manage your company information and customer reviews. The IONOS Business Locator makes it easy for customers to find your business online and in your city.
Business goals and bid adjustments for AdWords
Google Ads smart bidding can be easily set up from your Google campaigns settings page. However, you must first activate or implement conversion tracking , as offered by Google Analytics or Google Tag Manager . Google distinguishes between two smart bidding objectives:
Increase sales/leads – conversions with a defined budget or fixed return on investment (ROI)
Increase profits : conversions with a defined budget or a fixed return on advertising spend (ROAS)
The difference between ROI and ROAS is that ROI refers to the actual profit after expenses and deductions. ROAS describes the total revenue . While ROI is a measure of the financial profitability and revenue-to-cost ratio of a campaign, ROAS refers to the success and expense-to-revenue ratio of the different elements of the campaign, such as display advertising .
Google Smart Bidding Strategies In-Depth
Depending on your business goals, the following smart bidding strategies may be useful to you:
Maximize conversions
Conversions refer to specific marketing goals to increase sales or leads . This includes visit-to-purchase conversions and purchase-to-purchase conversions. To maximize conversions and increase ROI, you need as many potential customers, buyers, or clicks as you can get for your budget.
Target CPA to optimize conversions
The Target CPA (Target Cost Per Action) strategy not only defines the highest number of conversions possible, but also a fixed budget for advertising spend or conversion value . As an advertiser, you determine the price of a conversion. The algorithm effectively allocates your advertising budget to the selected conversions. We recommend starting with a few conversion types and letting the algorithm learn for about 30 days.
Maximizing conversion value
Each conversion is assigned a value. To increase the desired conversions and the overall conversion value , the strategy sets bids on the target budget to maximize the overall value, i.e. the return on advertising spend (ROAS). It does this independently of the different measurement and conversion values.
Target ROAS to optimize conversion value
For the Target ROAS strategy, you need to define the return on advertising spend you are aiming for. Note that the ROAS value does not have to be identical to the Target ROAS value. The latter is worth considering if there is enough data available for around 50 conversions in the last 30 days.
Maximize clicks/automate CPC
Automated cost per click (CPC) is used when the algorithm sets bids based on clicks that have a high probability of converting. If the probability is low, the bid is reduced.
Percentage of possible impressions
You define whether ads should be placed above or below the competition . The upper limit on the cost per click limits high bids.
It is important to try to use bidding strategies when the algorithm has a lot of data. Changing conversion values or strategies too frequently during the learning phase can have a negative effect on performance.
Smart bidding takes care of it all. It evaluates available signals based on ad veterinary email database positions and campaign goals. It then auctions off the best ad space for your keyword or signal on platforms like Ad Exchange , all in seconds. By incorporating advertising context and business goals , strategies are tailored to your capabilities. Plus, with automated ad buying and selling through programmatic advertising , programmatic buying , and real-time advertising , you can spend your campaign budget more accurately.
Advice
Optimize your company's visibility in 35 directories, manage your company information and customer reviews. The IONOS Business Locator makes it easy for customers to find your business online and in your city.
Business goals and bid adjustments for AdWords
Google Ads smart bidding can be easily set up from your Google campaigns settings page. However, you must first activate or implement conversion tracking , as offered by Google Analytics or Google Tag Manager . Google distinguishes between two smart bidding objectives:
Increase sales/leads – conversions with a defined budget or fixed return on investment (ROI)
Increase profits : conversions with a defined budget or a fixed return on advertising spend (ROAS)
The difference between ROI and ROAS is that ROI refers to the actual profit after expenses and deductions. ROAS describes the total revenue . While ROI is a measure of the financial profitability and revenue-to-cost ratio of a campaign, ROAS refers to the success and expense-to-revenue ratio of the different elements of the campaign, such as display advertising .
Google Smart Bidding Strategies In-Depth
Depending on your business goals, the following smart bidding strategies may be useful to you:
Maximize conversions
Conversions refer to specific marketing goals to increase sales or leads . This includes visit-to-purchase conversions and purchase-to-purchase conversions. To maximize conversions and increase ROI, you need as many potential customers, buyers, or clicks as you can get for your budget.
Target CPA to optimize conversions
The Target CPA (Target Cost Per Action) strategy not only defines the highest number of conversions possible, but also a fixed budget for advertising spend or conversion value . As an advertiser, you determine the price of a conversion. The algorithm effectively allocates your advertising budget to the selected conversions. We recommend starting with a few conversion types and letting the algorithm learn for about 30 days.
Maximizing conversion value
Each conversion is assigned a value. To increase the desired conversions and the overall conversion value , the strategy sets bids on the target budget to maximize the overall value, i.e. the return on advertising spend (ROAS). It does this independently of the different measurement and conversion values.
Target ROAS to optimize conversion value
For the Target ROAS strategy, you need to define the return on advertising spend you are aiming for. Note that the ROAS value does not have to be identical to the Target ROAS value. The latter is worth considering if there is enough data available for around 50 conversions in the last 30 days.
Maximize clicks/automate CPC
Automated cost per click (CPC) is used when the algorithm sets bids based on clicks that have a high probability of converting. If the probability is low, the bid is reduced.
Percentage of possible impressions
You define whether ads should be placed above or below the competition . The upper limit on the cost per click limits high bids.
It is important to try to use bidding strategies when the algorithm has a lot of data. Changing conversion values or strategies too frequently during the learning phase can have a negative effect on performance.