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About AdWords Smart Bidding

AdWords Smart Bidding is a subset of automated bid strategies that use machine learning to optimize for conversions or conversion value in each and every auction—a feature known as “auction-time bidding”. Target CPA, Target ROAS and Enhanced CPC are all Smart Bidding strategies.

For more information on how auction-time bidding works, download our guides for Search and Display. If you’d like to automate your bidding for a Shopping campaign, read About automated bidding for Shopping campaigns.

This article explains what Smart Bidding is and how you can use it to save time and improve your return on investment.

Before you begin

If you’re new to automated bidding in Adwords, read About automated bidding first.

To use Smart Bidding, you need to have conversion tracking enabled. Learn how to Set up conversion tracking.

Why use AdWords Smart Bidding

With AdWords Smart Bidding, you get 4 key benefits that help you save time and improve performance.

1. Advanced machine learning

In bidding, machine learning algorithms train on data at a vast scale to help you make more accurate predictions across your account about how different bid amounts might impact conversions or conversion value. These algorithms factor in a wider range of parameters that impact performance than a single person or team could compute. 

2. Wide range of contextual signals

With auction-time bidding, you can factor in a wide range of signals into your bid optimizations. Signals are identifiable attributes about a person or their context at the time of a particular auction. This includes attributes like device and location, which are available as manual bid adjustments, plus additional signals and signal combinations exclusive to AdWords Smart Bidding. See a list of several of these important signals below.

Automated bidding signals
Device

Description: AdWords can optimize bids for Target CPA or Target ROAS strategies based on whether someone is on a mobile, desktop, or tablet device.

Example: For a car dealership, bids may be adjusted if a person is searching on a mobile device and therefore more likely to book an appointment at a nearby location.

Physical location

Description: AdWords can optimize bids based on the specific location (down to the city) someone is located in, even if the advertiser’s implemented location targeting isn’t as specific. 

Example: For a bank, even if the advertiser’s location targeting is set to New York state, bids may be adjusted if a person searches for “new checking account” from a city with higher branch penetration where they’re more likely to apply for an account.

Location intent

Description: AdWords can optimize bids based on someone’s location intent in addition to their physical location.

Example: For a travel provider, bids may be adjusted if someone is actively researching a vacation destination you offer (e.g. “paris vacations august”), even if they’re not physically located near there.

Weekday & time of day

Description: AdWords can optimize bids based on someone’s local time of day and day of week in their time zone.

Example: For a restaurant, bids may be adjusted if someone searches at 8 PM on a Thursday when people are more likely to make a reservation for the weekend, compared to 8 AM on a Monday.

Remarketing list

Description: AdWords can optimize bids based on which remarketing list someone belongs to. For Display campaigns, it can also account for how recently a user was added to that list (this is coming soon for Search and Shopping). 

Example: For an online clothing retailer, bids may be adjusted if a person has already browsed a product during a previous site visit, and whether they added it to a shopping cart last week, when they’re more likely to want to buy it soon, versus last month.

Ad characteristics

Description: AdWords can optimize bids based on which version of an ad will be shown, including whether it’s for a mobile app.

Example: For a telecom company, bids may be adjusted if the ad shown is the “Latest Deals” creative or the “Flexible Plans” creative, or if it points to the mobile site or app, based on which variation has a higher likelihood of converting. For Display campaigns, bids take into account which ad sizes and formats are more likely to convert.

Interface language

Description: AdWords can optimize bids based on someone’s language preferences.

Example: For a Spanish language learning site, bids may be adjusted for the query, “learn a new language” if a person’s language preference is set to English instead of Spanish, where they’re less likely to purchase a new tutorial.

Browser

Description: AdWords can optimize bids based on the browser someone is using.

Example: For a health foods company, bids may be adjusted if a person searches from Chrome, which has resulted in a higher conversion likelihood for that business in the past, compared to other browsers.

Operating system

Description: AdWords can optimize bids based on the operating system someone is using.

Example: For a gaming app developer, bids may be adjusted if a person searches for “puzzle game” on Google Play from an Android device that has been upgraded to the latest OS version, which is more likely to result in an app install, compared to an older OS version.

Demographics (Search and Display)

Description: AdWords can optimize bids based on age and gender. For Display campaigns, bids can also be optimized for interests.

Example: For a toy retailer, bids may be adjusted if someone has been identified as likely being a parent and is more likely to convert on a Display ad promoting a new line of educational toys.

Actual search query (Search and Shopping)

Description: AdWords can optimize bids based on the text of the query that triggered the ad, not just the matching keyword.

Example: For a shoe retailer, bids may be adjusted if a person’s search query is “leather boots” and they’re more likely to buy a new pair compared to a search for “boot repairs,” even if both queries broad match to the keyword “boots”.

Search Network partner (Search only)

Description: AdWords can optimize bids based on which search partner site the ad appears on.

Example: For a consumer packaged goods brand, bids may be adjusted if a query is coming from a more relevant search on an e-commerce site, which has a higher conversion likelihood, compared to a news site.

Web placement (Display only)

Description: AdWords can optimize bids based on which site placement the ad appears on.

Example: For a consumer packaged goods brand, bids may be adjusted if the ad appears on a popular, high-traffic site, which has a higher conversion likelihood.

Site behavior (Display only)

Description: AdWords can optimize bids based on someone’s activity on your site, including number of pages viewed, value of products browsed, how far through the conversion process they progressed, and other sites previously visited.

Example: For a furniture brand, bids may be adjusted if a person has browsed several couches priced at a higher value compared to lamps that have a lower price point.

Product attributes (Shopping only)

Description: AdWords can optimize bids based on similar attributes across products such as price, condition, brand, and product category.

Example: For a retailer selling outdoor gear, bids may be adjusted if you add a new tent to your product data that is similar to other tents that have a high conversion likelihood. 

Mobile app ratings (coming soon)

Description: AdWords can optimize bids based on the strength and quantity of an app’s reviews.

Example: For a fitness brand, bids may be adjusted if an app has many excellent reviews and is more likely to result in an install.

Price competitiveness (coming soon for Shopping)

Description: AdWords can optimize bids based on how your product price compares to other advertisers who are participating in the same auctions that you are.

Example: For a cookware retailer, bids may be adjusted if you’re offering a strong deal on a knife set compared to other advertisers.

Seasonality (coming soon for Shopping)

Description: AdWords can optimize bids based on seasonal performance trends during different times of year.

Example: For an electronics retailer, bids may be adjusted if a person is searching for a new television during the holiday season, which typically sees a higher conversion likelihood.

3. Flexible performance controls

AdWords Smart Bidding allows you to set performance targets and customize settings to your unique business goals:

  • Optimize Search bids to your selected attribution model, including data-driven attribution.
  • Set device-specific performance targets for mobile, desktop, and tablet with Target CPA bidding (coming soon).

4. Transparent performance reporting

AdWords Smart Bidding offers reporting tools that give you deeper insight into your bidding performance and help you quickly troubleshoot any issues. These include:

  • Detailed bid strategy statuses that show you what’s going on under the hood of your bidding.
  • Campaign drafts and experiments for Search and Display campaigns that make it easy to test how well AdWords Smart Bidding performs against your current bidding method.
  • Bid simulators that forecast the number of conversions your ads might have received if you had set different CPA targets.
  • Alerts and notifications that flag issues with conversion tracking and provide clear steps for fixing them.
  • Rich performance reports that help you easily track performance changes back to updates to your bid strategy status or targets. Access these from the “Bid strategy” dropdown in the main Campaigns view or the Shared library.

Who it’s for

AdWords Smart Bidding works successfully for businesses large and small. To maximize results and give machine learning algorithms enough data to make informed bidding decisions, we recommend that advertisers have at least 30 conversions in the past 30 days before using Target CPA. We recommend 50 conversions in the past 30 days for Target ROAS.

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