February 28, 2020

Google Ads Bidding Tools: Why Smart Bidding? (Part One)

By Imogen Collins at Genie Goals

In Part One of their two-part series, Genie Goals covers the reasons an advertiser would choose to use smart bidding instead of more traditional bidding tools.

As technology, AI, and machine-learning continue to evolve it’s important to stay up to date with the latest bidding tools. But many advertisers are understandably nervous about switching to Google Smart Bidding.

Part Two will provide you with the tools you’ll need to make smart bidding a success. 

Keywords are not the whole story

The basic building block of paid search is the keyword. We typically start with lists of highly relevant keywords, setting bids to maximise profit based on the performance of each one. But the context of the user is also important, not just what they’re looking for.

We can bid differently at different times and locations, on different devices, or based on past behaviours, increasing or decreasing all bids in a campaign based on the average performance.

This does give better results than not using any kind of segmentation. But we’re still targeting the average person who buys our product, or the average of all the different types of people who buy our product. So, what can we do better?

The paid search customer profile 

We know that there are lots of different types of customers who buy from our brands: there might be a small group of customers who aren’t sensitive to price and buy full price items on a regular basis, a larger group of price-sensitive customers who only shop in sale periods, and a group who have no brand loyalty but buy full-price items on a whim with little consideration. The issue with traditional bidding tools is that all bids are set using average data, so every customer is treated like the average customer. 

In theory, we could address this by splitting each campaign to target different types of customers, with bids set at the correct level for each user. But no campaign would have enough data to set statistically significant bids with this level of segmentation. That’s where smart bidding comes in. 

What is smart bidding?

There is a misconception that smart bidding works in the same way as other bidding tools, but Google Smart Bidding is more than just a tool for setting keyword bids or bid adjustments at a campaign level. Smart bidding utilises machine-learning and auction time bidding to implement bidding which doesn’t just set bids for an average user, but instead sets bids in each auction which are tailored to the unique context of the user making that search. 

The myth of smart bidding is that by utilising a free Google tool, you are removing your competitive advantage with other retailers. We would argue that using a tool which is constantly learning, has more data available about the user than other tools, and sets an individual bid in each and every auction is providing a unique advantage to any retailer who uses it. Every retailer has different business objectives and a unique proposition, and every customer will respond differently to them. The key to smart bidding is setting this up in a way which aligns with your business objectives in order to perfectly target the customers best suited to you. 

So that’s why in the next article we’ll be discussing why smart bidding is your new “smart” and how you can utilise it to achieve success in 2020.

Written by

By Imogen Collins at Genie Goals