The Comprehensive Guide to Getting Started with Google Ads Smart Bidding

This will come as no surprise to any loyal readers, but we are big fans of Google Ads over here at JEMSU. It’s the perfect advertising platform to use when you know exactly what your customers are looking for, and it can help you achieve your CPA goals easily once you have the settings just right. One of our absolute favorite parts of using Google Ads is being able to use Google’s automated bid strategies. It combines the best information that Google has to offer its advertisers with your conversion goals – it’s a win win in our book!

Google Ads has had smart bidding strategies available for almost 5 years, but consumers and agencies alike are still weary to test these strategies in their campaigns and risk the performance numbers they’re used to. After using a tried and true method for over a decade, it’s fair that Google Ads users might be weary. We’re here to break down all of the automated bid strategies available, and give you the JEMSU process for rolling out smart bidding into your own Google Ads campaigns.

What is a smart bidding strategy?

If you’re unfamiliar with this phrase, you might be a little confused about what we’re talking about. After Google Analytics introduced Smart Goals to the world, you might think that any Google product with the word “smart” attached to it may in fact be pretty awful. We promise, these smart bidding strategies are 100x better than Google’s last smart product.

Smart bidding, in its simplest terms, is a bid strategy that leverages machine learning to optimize for conversions or conversion value in the ad auction. Google offers a number of smart bidding strategies based on the goal of your campaign. Options are available for lead generation campaigns, e-commerce campaigns, and everything in between. Additionally, smart bidding strategies can be used on any type of campaign, including search, shopping, display, and even video.

It’s important to note that smart bidding strategies will only work for you if you have proper conversion tracking set up. We recommend you track a meaningful conversion, like a purchase, phone call, or form submission, as Google will optimize towards whatever conversions you tell it to consider. If you are tracking micro-conversions, like add to carts or email newsletter sign-ups, you may not get the value you are looking for in the end. Google will optimize towards what you have set up in the account, so think carefully about what results you want your campaigns to produce.

So if there is smart bidding, is there also non-smart bidding? Yes, but obviously the terminology is different than that. Google Ads offers eight total bidding strategies, 7 of which are automated. Of those 7 automated bid strategies, 5 are considered smart bidding strategies. They are as follows: Target CPA, Target ROAS, Maximize Conversions, Maximize Conversion Value, Enhanced CPC. The other 3 bid strategies available are not considered “smart” because they do not use conversions to optimize their bids. Those three bid strategies are Manual CPC, Maximize Clicks, and Target Impression Share.

Automated Bid Strategies Explained

Manual CPC

Our one and only non-automated bid strategy. Manual CPC lets you dictate exactly how much you want to bid on each keyword or ad group. In general, you set a bid for the maximum amount you are willing to pay for your ad to show up in a search result. The big con for this strategy lies in its name – it’s a very manual bid strategy. Successful users of manual CPC bidding find themselves doing a lot of bid manipulation by hand, or using advanced automated rules and adjustments to see success. 

Target Impression Share

If showing up in a certain place on the results page is important, Target Impression Share bidding may be the best choice for you. You can tell Google how often you want to be on the page, and which part of the page you’d like to show on (absolute top vs. top of page vs. bottom of page). This type of bid strategy is great for something like a brand campaign, where you’d want to show up at the top as much as possible.

Maximize Clicks

The last of the non-smart bidding options, maximize clicks is a safe choice for campaigns that are just starting out. With this strategy, you are telling Google that you want to get as many clicks as possible within your campaign budget. Additionally, this strategy still allows you to set a maximum cost per click, giving you the control of a Manual CPC strategy while allowing you to leverage machine learning. 

Note: We do not recommend this strategy for display campaigns, even when starting out. The traffic coming in can often be far from what you wanted, so we recommend using maximize conversions when starting a display campaign. This will give Google more of a target to aim towards to start.

Enhanced CPC (ECPC)

The original smart bidding strategy. Designed with your average cost per click in mind, Enhanced CPC bidding helps you get more conversions out of your manual bidding. Unlike some of the strategies below, this strategy will automatically adjust your bid if that click is more likely to result in a sale or lead. While other strategies try to hit a target cost per conversion, this strategy will try to keep your average CPC low. This option has been available for almost a decade, and was widely used in accounts before Google ever started pushing for advanced bid strategies. 

Maximize Conversions

If you are looking to increase the volume of your conversions, this is your winning strategy. Maximize conversions just does that, pushes to get the maximum amount of conversions within your budget. Google will use historical conversion data across all campaigns to learn more about your ideal customer. This strategy is great for the beginning stages of your campaigns, especially when you don’t know exactly what you cost per conversion should be. 

Maximize Conversion Value

Conversion value is a slightly confusing concept, as it can mean different things based on your campaign goals. Often, a strategy like this is used in the context of e-commerce, where each dollar of revenue is tracked as conversion value. However, values can be assigned to any type of goal, including phone calls and form submissions. Using the maximize conversion value bid strategy tells Google that you are focused on getting the most conversion value, regardless of conversion type. 

Target CPA (Cost-Per-Action)

At JEMSU, we believe every client should know how much they should pay per conversion. The Target CPA bid strategy relies heavily on you knowing that number. In this strategy Google will try to get you as many conversions as possible at your specified cost per action. You can either set your own target cost per action, or Google will recommend one to you based on that campaign’s historical conversion data. Warning: If you set your target CPA too low from the start, you may end up shooting yourself in the foot. Be conversative in your CPA to start, Google will often try to beat your number if they can.

Target ROAS (Return On Ad Spend)

Much like Target CPA bidding, Target ROAS is focused on hitting your goal for a return on ad spend. Google will aim to hit your target return on ad spend number by optimizing towards conversions with the right conversion value. This strategy is most popular in ecommerce focused campaigns, where ROAS is typically an important metric for success. We recommend being conservative with your Target ROAS number, as you’ll want to give Google some room to play with.

Why should I use a smart bidding strategy?

Smart bidding is AMAZING! There, we said it! In all seriousness, there are quite a few reasons why smart bidding should be leveraged wherever possible in your Google Ads account. We strongly believe that not all accounts are the same, and your own campaigns may need something special and different, but a large majority of accounts will benefit from the right smart bidding strategy.

Pros of Smart Bidding

Machine Learning: All of Google’s smart bidding strategies are powered by advanced machine learning. These strategies are informed by complicated algorithms that take data they already know about your account and other accounts in the auction to make accurate predictions about how your bids will turn into conversions.  In layman’s terms, Google’s algorithms know way more than any human or company could, and work at 100x the speed. 

Leverage Contextual Signals In Your Bids: Gone are the days of a million bid adjustments based on everything from location to gender to time of day. Smart bidding strategies factor in demographics, location, hour and day, and more without you setting any parameters. Additionally, smart bidding strategies leverage deeper levels of information like buying habits, what the user has been searching for, and if they have visited your website or your competitor’s. 

Less Day to Day Work: One of the biggest pros of smart bidding strategies is that you can save a ton of time every month that you would have spent doing more manual bid adjustments. Like we said in the first pro, these strategies are incredibly advanced and take a lot of the guesswork out of bidding. Rarely can you bid smarter than the algorithm, so enabling smart bidding strategies can free up time for you to do more meaningful strategy optimizations. 

Incredible Results: The real reason that we love smart bidding strategies is that we have seen the results that they can produce for our clients. We started using smart bidding strategies across all of our client accounts in the middle 2018, and the results were truly unmatched. In one of our legacy accounts, we were able to increase leads by 30% in 2018. In that same account in 2019, conversions increased by 172% compared to 2018. We continue to see growth in these accounts while barely changing budgets.

Cons of Smart Bidding

Less Control: If we’re being honest, using smart bidding strategies is basically handing the keys over to Google to take care of the rest. The thought of that can be terrifying to some campaign managers, as Google has been known to promote products that are better for them than they are for you. We think the results far outweigh the lack of control, but these strategies might not be right for you if you can’t relinquish complete control of your account.

Needs Time To Optimize: Machine learning is amazing, we use it wherever we can in our advertising campaigns. However, machine learning does require both time and patience. Campaigns need the opportunity to “learn”, which includes some trial and error in the algorithm. If you don’t have time to let the machine learn about your campaigns, smart bidding strategies may not be the answer to your problems.

No Tinkering Allowed: Ok, smart bidding campaigns aren’t fully off-limits. However, we strongly recommend that campaigns leveraging smart bidding try to do as little manipulation as possible. All of these campaigns start in what is called “Learning period”. During the learning period, the campaigns are learning what type of bids and customers they should go after. The learning period is typically only 5 days, but can be reset every time you make a significant change to your campaign (changing location targeting, adjusting budgets, adding or removing conversions, etc.). If you tend to make frequent tweaks and changes in your campaigns, there’s a good chance you will be in the learnding period indefinitely. We recommend only making changes when necessary to avoid this problem.

No More Bid Adjustments: This could be considered both a pro and a con. Smart bidding strategies rely heavily on Google’s contextual signals in real-time to make an accurate bid. Because of that, bid adjustments on things like gender, age, locations, and more are not considered in smart bid strategies. Google will optimize your bids based on the user, not every small adjustment you have set up. The one exception to this is device bid adjustments, which can still be used in smart bidding strategies.

Do I need to have a huge budget to use smart bidding?

Nope, and that’s the best part! Google’s smart bidding strategies require no minimum budgets to run. (Though we do recommend making sure you have a large enough budget to get at least 200 clicks in a month on your account.) We’ve used these strategies on clients ranging from $500/month to $50,000/month in ad spend. 

Now we do want to mention, you shouldn’t expect incredible results with minimum input. All of the smart bidding strategies require a minimum amount of action in order to work effectively, and if you ad spend doesn’t justify that, you should try another strategy. 

How many conversions do you need before using smart bidding?

This is where things start to get sticky. After talks with our Google representatives and some deep searching through the Google Ads help section, there is no official public documentation that tells you exactly how many conversions you need in order to use any of these smart bidding strategies effectively. However, after some trial and error, we’ve come up with these rough guidelines.

To effectively use Maximize Conversion or Maximize Conversion Value bidding, we recommend having 15 conversions over a 30 day period per campaign. If you want to switch over to maximize conversion bidding, we recommend you have at least 5 conversions over a 30 day period per campaign. From there, you should start to see an increase in conversions that will get you up to that 15 mark. Technically, there are no conversions required to run either of these strategies, but we do not recommend starting from 0.

To effectively use Target CPA or Target ROAS bidding, we recommend having 30 conversions in a 30 day period per campaign. This will give Google enough of an idea of a good cost per conversion for your campaign. The minimum requirement for running these bid strategies is 15 conversions in a 30 day period per campaign, and we really wouldn’t recommend going under that number.

It’s important to note that these requirements are per campaign, not per account. Conversions in one campaign will not always mean the same in another, so Google looks to each campaign to set their own standard. Google does use account conversion data when factoring in its bids, so you can still leverage the power of multiple campaigns when bidding.

Where can I set my bid strategy in Google Ads?

It’s very easy to set and change your bid strategy in Google Ads. As a rule of thumb, your bid strategies are per campaign, so you will want to change these within your campaign settings. Simply select the campaign you want to work on, and then select “Campaign Settings”.

From this section, you will see the “Bidding” section of your campaign settings. Click the drop down to expand the section. You’ll be able to see details about your bidding strategy, including the type you are using, a short description of how it works, and if you have set a target CPA, ROAS, or even a max bid in the case of maximize clicks or Enhanced CPC.

Want to change your bid strategy? Click the blue “change bid strategy” text to open up your options. This area will let you adjust your targets or max bids, but will also let you choose a new bid strategy. Now, this will typically default to a question scenario where Google asks “What do you want to focus on?” From there, Google will make recommendations about what type of bid strategy might be best for you. This is great if you don’t know where to start, but a real pro will go right to the bottom where it says “Select a bid strategy directly”.

This will bring you to a list where you can choose from any of the bid strategies. You might have noticed that Enhanced CPC is missing as an option. To use this bid strategy, you will choose Manual CPC and then check the box that you want to use Enhanced CPC.

From here, you can decide any bid strategy you want to use. I recommend looking through the options, as Google will make recommendations to you about starting target CPA’s, adjusting your budgets, and more. Speaking of recommendations, Google’s recommendation section is a great place to start if you don’t know what to do next in your account. Often, Google will recommend different bid strategies for your campaigns based on the performance, giving you even more insight into why a certain bid strategy might be better for your campaigns. 

There’s too many options, how do I start using smart bidding?

We get it, there’s been a lot of ground covered in this article. You probably have no idea what is right for your campaigns or even how to start. Fear not, as we’re about to break down JEMSU’s tried and true method for using smart bidding strategies. This is the technique we use in every new client account, and it’s worked well for clients regardless of budget and industry.

For Every Campaign – Start with Maximize Clicks

“Wait”, you may be thinking, “this isn’t even a smart bidding strategy.” You’re right, and we recognize that. We consider maximize clicks to be the great equalizer, and the perfect starting point for a new campaign. Since a new campaign will have no conversion data, it’s a waste of money and time to tell Google to optimize towards conversions. Instead, we start all of our campaigns on maximize clicks to get a good foundation. If we’ve done our research right, we should meet our 5 conversion threshold within the first 30 days. This also works on previous campaigns that might have been neglected or had bad conversion tracking. Maximize clicks is a great reset.

For Lead Generation Campaigns

Once we reach our threshold of 15 conversions in 30 days, we will move our campaigns to a maximize conversion bid strategy. In general, this threshold is hit between months 2-3 of a campaign running. Remember that changing a bid strategy will kick your campaigns back into learning mode, so only make the change when you’re ready. 

When your campaign starts seeing more consistent results, you’re ready to move to a Target CPA bid strategy. The minimum requirement for this is 15 conversions in a 30 day period, but we like to aim for 25-30 conversions if we can help it. Typically, we don’t see accounts get into this range until months 4-6 (remember how we said these strategies take time?), but there are always exceptions to the rule.

Note: There is a chance your campaigns will never generate the volume of conversions needed to effectively run a Target CPA campaign, and that is perfectly ok! It can be due to a number of factors outside of your control, including budget or search volume for your keywords. If you fall into this category, maximize conversions will work great for you, and can often still help you meet your CPA goals.

For Ecommerce Campaigns

While maximize conversions can be great for your lead generation campaigns, we recommend using the maximize conversion value for any campaigns that have the goal of online sales. This will ensure that you drive sales for your higher dollar value products instead of just any product. Just like our last example, you will want to aim for 15 conversions in 30 days per campaign before switching to this bid strategy. 

Once your campaigns hit 30 conversions in a 30 day period, they can be moved to a Target ROAS strategy. Google will make a suggestion based on your historical ROAS in the campaign, but you can set this to any level. We recommend being conservative in your estimation, as you want to let Google exceed your goal instead of falling short.

Note: Some campaign types do not support certain bid strategies. For example, a regular shopping campaign will support Target ROAS, but not maximum conversion value. A smart shopping campaign will support both. Choose your strategy based on your campaign setup, or look into new campaign setups that support your desired bid strategy.

For Brand Awareness Campaigns

Your chosen bid strategy will depend on your goals for your brand campaign. If you want to guarantee that you show up for every search of your brand name, a Target Search Impression Share strategy will be most effective. If you want to capture conversions at a reasonable cost, Target CPA might be your best bet (after meeting the minimum for conversions, of course.) If you don’t want to spend a ton of money on your brand, Manual CPC might be the right choice for you. 

Final Thoughts

Smart bidding strategies have been around for a minute, and are definitely here to stay. There are a number of ways to leverage them in your account regardless of budget or industry. Even better, these strategies can help you increase results while saving time and money – a win/win! If you think critically about your goals for your campaigns, you are likely to find the right bid strategy for you.

Still overwhelmed by the thought of doing this yourself? We’re here to help! Our PPC specialists do this all day, every day. We walk you through the process and help deliver results that increase your sales. Give us a call or fill out our form today to talk to a specialist!