What Is AdWords Smart Bidding? | Introduction and Overview

by on June 8, 2018


Combined with other “smart” AdWords features such as Universal App and Smart Display campaigns, the future of PPC marketing lies in Smart Bidding and machine learning technology.

Using data-driven machine learning, PPC professionals can improve keyword bids, increase valuable conversions, and spend more time developing strategy optimizations.

Continue reading to learn more about Smart Bidding and how this new conversion-based automated bidding technology can improve your AdWords campaigns.

What Is Smart Bidding?

Google Smart Bidding is the name given to conversion-based automated bidding across AdWords and DoubleClick Search.
Smart Bidding uses machine learning (AI) to help optimize PPC campaigns based on specific goals, such as:

  • Maximize Clicks
  • Target Search Page Location
  • Target Outranking Search
  • Target Cost Per Acquisition (tCPA)
  • Target Return On Ad Spend (tROAS)
  • Enhanced Cost Per Click (eCPC)
  • Maximize Conversions

The bidding strategy that’s right for you will depend on your marketing objectives.

Campaign Goal Recommended Smart Bidding Strategy
Visibility Target outranking share/Target search page location
Website Traffic Maximize clicks
Conversions Enhanced CPC – Target CPA – Maximize conversions
Revenue Target ROAS

 

Usually, people choose to focus on maximizing conversions. As Google’s machine-learning technology learns and factors in more signal values, it continually optimizes itself to build more accurate bidding models at multiple levels.

The big advantage of machine-based automated bidding is the added ability to analyze more “signals” in order to better understand the audience and optimize conversions.

Due to the moving-target nature of setting the right bid, Google Smart Bidding tries to automate this by making frequent bid changes using comprehensive data models. By automating this fine tuning, advertisers can focus on higher level priorities to driver higher conversion volume or revenue for their clients.

Keep in mind that Smart Bidding needs time to learn, which can mean spotty or inconsistent performance in the beginning.

As Google begins to “learn,” however, performance will improve, leading to better conversion rates, growth, and higher volume and efficiency of cost-per-lead (CPL).

With proper testing of these new strategies, your account is bound to improve.

How Smart Bidding Works

Basically, Smart Bidding works by predicting the conversion rate for each auction based on the signals gathered.

  1. True auction-time bidding

AdWords automated bidding offers true auction-time optimization that sets bids for each individual auction. It’s not just once or twice a day—it adjusts bids for each and every auction! It’s a proactive optimization approach.

Literally, every single time your keywords get triggered, Smart Bidding kicks into action. It’s the most granular we’ve ever been able to get.

  1. Adaptive learning at the query level

Machine-learning algorithms rely on robust conversion data to build accurate bidding models that perform at different levels.

•  AdWords bidding models are very dynamic

Conversion data can be leveraged at the search query level across ad groups and campaigns.

•  Better bid optimization on phrase and broad match keywords

In these cases, having just one keyword-level bid wouldn’t optimize for conversion rate differences across queries.

•  Faster algorithm learning

If a search query has already been matching to other parts of your campaigns, the algorithms simply apply what they’ve learned across your account.

Essentially, it’s comparing what a conversion looks like to every searcher that triggers our keywords.

  1. Richer user signals and cross signals analysis

Signals like time of day, presence on a remarketing list, or a user’s device and location are key considerations when determining optimal bids.

On top of evaluating these signals, AdWords automated bidding includes additional signals like:

  • Device
  • Location
  • Weekday/Time of Day
  • Remarketing List (RLSA)
  • Search/Ad Query
  • Operating system
  • Web Browser
  • Language Settings
  1. Rich contextual signals

If you have multiple ad creatives, Smart Bidding can optimize the bid based on the user’s unique context. For instance, if the user’s language preferences are set to Spanish, you can serve the Spanish version of your landing page.

Contextual signals include:

  • Ad Creative
  • Interface Language
  • Browser
  • Operating System
  • Search Network Partner 

All of this information helps AdWords set the optimal bid by evaluating the likelihood of conversion.

Why Smart Bidding?

AdWords bidding algorithms are able to compute data quickly in order to make informed bid optimization decisions.

  1. Bidding Impacts Performance – If you don’t bid efficiently, you can miss valuable conversions.
  2. The Auction Is Adaptive and Dynamic – Given the dynamic nature of search auctions, the “right” bid can be a moving target that’s hard to reach at scale.
  3. User Journey Is More Complex Than Ever – Many signals influence user behavior; taking them into account for each keyword and bid would require an army.

Smart Bidding allows us to evaluate vast sets of data signals in order set the optimal bid for every auction. Every user search is different. Time of day, device and browser used, presence on a remarketing list, location, and demographics are all important signals that AdWords Smart Bidding evaluates when optimizing performance across platforms.

What Is AdWords Smart Bidding? Smart Bidding Signals
Source: Google

Imagine knowing specific details about each and every user and search query in order to predict conversion and set the optimal bid. On top of using unique contextual signals, AdWords automated bidding can alert you when a new searcher resembles users who have converted in the past.

All of this helps PPC professionals set the optimal bid and frees up time for strategic thinking. By knowing which signal combinations are most predictive of conversion performance, account managers can better optimize bids.

What does this mean for you? Simple: higher return on investment and lower cost-per-lead (CPL).

Consider that accounts with little performance history and low-volume may result in poor performance, which is why it’s still very important to have human eyes looking everything over.

Does Smart Bidding Make PPC Professionals Obsolete?

To be clear, machines will not make PPC professionals and account managers obsolete. In fact, the human element is more important than ever.

Granted, the introduction of machine learning and its automation abilities will change the nature of the job; however, we mere humans are still necessary for interpreting the Smart Bidding results, writing and designing the ad creative, and much, much more. In fact, by taking over the menial tasks, Smart Bidding helps us focus on the things we’re best at.

PPC managers who know their industry and marketplace well can use Smart Bidding to uncover new information and use it to gain a competitive advantage.

Machines are good at crunching data and spotting trends, such as revealing new keywords that could be added to the account. This allows astute PPC professionals to better strategize bids and keyword lists, as well as automatically pausing underperforming ads.

Machine learning and Smart Bidding doesn’t mean that PPC managers are any less busy—it just means that more time can be focused on strategy and higher level priorities. With machine learning, we can better understand overall ad performance in order to make more informed strategy decisions.

Some of the best indications of PPC campaign success are interaction and conversion rate. Any performance changes will still be analyzed by the PPC campaign manager in order to diagnose and resolve issues as soon as possible.

What Is a Conversion?

A conversion is a customer action that you’ve defined as valuable to AdWords. There are 4 sources of conversions that AdWords allows us to track:

  1. Website – adding a tag to your website.
  2. App – adding a code snippet to your app.
  3. Phone Calls – using Google Forwarding Numbers.
  4. Import – uploading data from another system.

VitalStorm counts conversions by utilizing both the Import & Phone Call sources to help “tell” Google’s algorithm what actions equated to a converted lead.

We import conversions to our Metrics platform from:

  1. Click-to-Call (CTC)

Tracks the actual landing page click-event of clicking on the phone number and placing a call. Typically, these are Mobile leads.

  1. Manual Calls

Matches calls to the Google Click ID (GCLID) manually based on the time the call was placed.

  1. Emails

Any converted emails that were requested through the Metrics form.

Just a few years ago, PPC account managers spent more time focusing on the mechanics of operating a successful PPC campaign at the expense of the bigger picture.

Smart Bidding and machine learning allows us to grow our clients’ accounts because we can focus more on strategy, learn more, and execute faster.

Conclusion

Smart Bidding is changing the PPC game. Don’t miss out! While data crunching and keyword insights give us the opportunity to improve our campaigns, machines are far away from being able to translate all this data into coherent ad strategies.

Smart Bidding increases the value of your PPC ad campaigns, but you still need the human element. With more time to focus on the big picture, we can connect the data and insights to results that will help you grow your business. Is your PPC team intelligently implementing Smart Bidding?

Contact VitalStorm today to set up your first Smart Bidding campaign!