Up until relatively recently, managing a Google Ads account meant you had a degree in spreadsheet management and time for endless manual adjustments. Marketers used to spend hours every week tweaking keyword bids, adjusting device types, dayparting, and other settings based on the data they got and feel. It was a time when only the most dedicated and data-driven affiliates succeeded.
This time is no more! Nowadays, the core of every high-performance Google Ads campaign is powered by Smart Bidding. It is not just another feature; it's a huge shift in how the platform works as a whole. Google has invested big into machine learning, AI, and tech that can do things much faster and more efficiently. With these changes, AI can analyze thousands of signals in a second and find the perfect bid. Ignoring this tech is not an option anymore. You need to utilize it if you want to have success!
What Is Smart Bidding?
At its core, Smart Bidding is a group of automated, conversion-based bid strategies that use Google's machine learning to optimize campaigns for conversions or conversion value. The goal with it is to take the guesswork out of bidding and manage your budget effectively.
While a manual bid sets a single, fixed value for a keyword, smart bidding does something called “action-time bidding”. It doesn't just look at the keyword. It tries to analyze the person behind the search. In the time it takes a search result to load, the algorithm analyzes signals about the user, like:
- Their location and language
- The time of day and day of the week
- The device they use
- Their browser and OS
- If they are on your remarketing lists
- Their past search behavior
- Their interests
- Their usual behavioral patterns
- And many other signals
Based on all of this data, it sets a precise, unique bid for that auction. It raises the bid for users that look like prime customers, and lowers it for users that seem less likely to convert. This way it spends more on users it determines will actually convert, while minimizing losing money on users that don't convert. It does all of this in real-time for every user, which makes it incredibly powerful.
What The Algo Needs From You
Smart bidding is powerful, but it can’t do everything on its own. To make it work, you need to help the machine learning algorithm with data and goals. To make it work, you need a few prerequisites!
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Accurate Conversion Tracking
This is the most important requirement. Smart Bidding optimizes based on the conversion data it receives, without this, it's just guessing and can’t do its job properly. If your tracking is broken, inaccurate, or incomplete, you are feeding the algorithm bad information. With bad information comes bad decisions, so you need to make sure your conversions are tracking properly.
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Enough Conversions
Machine learning needs data to learn. If you want to use strategies like Target CPA or Target ROAS, you need to have enough volume of conversions for the algorithm to learn what your ideal customer is. In general, you should have at least 30 conversions in the last 30 days, but having more can only benefit you.
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Patience
Affiliates love cutting things as soon as possible, but with smart optimizations, you need to just let it work for a bit. After you launch your campaign will probably be in the “Learning Phase”. Your performance will probably lack there as it collects more data, it needs to optimize itself. This can last up to 2 weeks, depending on your budgets and conversions. Your performance will be volatile for a while there, so don’t make any drastic changes until it's done.
How To Choose the Right Smart Bidding Strategy
Smart bidding isn't a single button, it's a set of strategies you can use. Choosing the right one depends on your business goals, but the main ones fall under two categories!
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Goal 1: Maximize Conversion (Volume Focuses)
These strategies are ideal for lead generation or for businesses where every conversion has roughly similar value.
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Maximize Conversions
Here, you set a daily budget, and Google tries to get the most conversions possible within your budget. With this strategy, you will spend your budget to drive volume without regard for the cost of each conversion. It's a great starting point for new campaigns!
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Target CPA (Cost Per Action)
Here, you tell Google your ideal cost per conversion ( example: “I don’t want to pay more than $20 per lead”). This strategy will then try to find as many conversions as it can below that average CPA. This also means that if the target CPA is too low, it just won’t spend money and get conversions. It also requires more data to work properly than maximizing conversions.
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Goal 2: Maximize Revenue (Value-Focused)
These strategies are more oriented toward e-commerce or businesses where different conversions have different values. As an example, if you have a shop, it's not the same if someone buys a $20 product and a $200 one. For this to work, though, you need to pass conversion value data back to Google Ads so it knows what to optimize for.
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Maximize Conversion Value
This is the value-based equivalent of “Maximize conversions”. You set a daily budget, and Google tries to generate the most revenue possible for that budget. It will prioritize showing ads to users who are likely to make larger purchases.
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Target ROAS (Return on Ad Spend)
This is the gold standard for e-commerce profitability. You tell Google your desired return on every dollar you spend (example: “I want to make $3 for every $1 I spend,” which is a % 300% ROAS target). The algorithm will then try to manage your bids to hit that average return. This needs the most data, as Google needs to know everything about your offer and customer to manage to even get close to your desired results.
When to Use Which Strategy?
Knowing which strat to use when is important, so here is an easy guide to help you choose!
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If you are doing lead generation where every lead has the same value:
Start by maximizing conversions to establish a baseline performance and CPA. Once you have enough data, slowly switch to Target CPA to control your costs and improve profits.
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If you are an e-commerce store with products at different prices:
Use value-based bidding. Start by maximizing conversion value to let the system find high-revenue customers. Once you have a baseline and enough data, you can switch to target ROAS to manage your campaigns better and improve profitability.
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If you are a new brand with no data:
Maybe don’t try smart bidding right away. Start with Enhanced CPC, which you can use to slowly gain at least 30 conversions before you can switch.
Your Role In All of This?
Smart bidding will change your role in all of this as well. You are no longer the guy who has to check on everything and be on top of things all the time.
There is no need to set specific bids for keywords, devices, or audiences. You will have to put your faith into the machine learning models that bid on auctions for you.
Your focus will also shift from management to oversight. Your job will be to find the right goals based on realistic expectations and historical data (putting Target CPA at $5 when your historical average is $50 won’t magically lower your costs, etc).
You will also be tasked with feeding the AI valuable information. This can be keyword research, finding negative keywords, creating better creatives and copy, and improving your landing pages. All of these things should be optimized and connected so they send data to Google Ads, which can make it actionable.
Conclusion
Smart bidding has not been an experimental feature for a while now. It’s the core operation of a modern Google Account that performs. Resisting smart bidding and other changes can only leave you behind in the long run.
Your role as a marketer is changing, but it's still important. Instead of doing everything yourself, let the computer do things for you. Instead of being manual labor, now you can focus on strategy, creativity, and optimization. Make sure you have clear and reachable goals, you track everything properly, and that the data collected reaches the algorithm. Soon enough, you should get great results!
Have you used smart bidding for your campaigns? What was your experience with them? Share your thoughts with us in the comments below!
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