The 7 Types of Automated Bidding Strategies & When to Use Each One

Last updated on by Brandon Weaver in Advertising

Google Ads automated bidding, Smart Bidding, manual bidding — the number of available bidding options available seems to keep growing and understanding how each one works can be confusing. All the same, it’s important to stay up-to-date on Google’s ever-evolving ad platform so that you can maximize your campaign’s ad performance.

In this article, you’ll learn what automated bidding is and how Smart Bidding and manual bidding factor into the equation. Additionally, you’ll learn each of the different automated bid strategies and the benefits of using an automated process.

What is automated bidding?

Automated bidding is a Google Ads bid strategy designed to maximize results based on your set campaign goals. With automated bidding, Google automatically sets bid amounts based on the likelihood that your ad will result in a click or conversion. To do this, they analyze data such as a user’s device, operating system, the time of day they are searching, demographics, and location.

All of Google’s automated bid strategies are portfolio bid strategies (an automated, goal-driven bid strategy that groups multiple campaigns, ad groups, and keywords). This means that advertisers can apply their chosen strategy across all of their campaigns, ad groups, and keywords. Some are available as standard strategies (an ad strategy that can be used in single campaigns).

Automated bidding aims to solve two concerns that advertisers often face their campaigns:

  1. Whether or not their bids are high enough to compete for qualified buyers.
  2. Whether or not their bids are too high and possibly showing to people who have no interest in making a purchase.

By automating bids, there’s no need to update bids for keywords or ad groups manually. Bids are set automatically and are unique to each auction (the bid will be different for every auction).

Automated bid strategies analyze past data and learn over time, using performance to inform future bids. This performance is another indication of Google’s movement towards machine learning, which is also used by their Universal App Campaigns.

While machine learning helps to automate the bidding process, the system has its drawbacks.

For instance, automated bidding can’t take into account things like recent events, media coverage, weather, or flash sales, all of which can affect ad performance (e.g., increased brand recognition because your company name was mentioned in the news). This is where a manual approach to setting bids may be necessary.

Finally, automated bids are available for both Search and Display ads depending on the bid strategy you are using.

What is Smart Bidding?

Smart Bidding is a term associated with automated bidding and some may confuse the two as being the same thing. However, Smart Bidding is simply an automated bid category that includes only conversion-based strategies.

Smart Bidding uses machine learning to maximize conversion results by tracking and analyzing data signals from every search and click. Using this data, Google will either increase or decrease bids based on whether or not it believes a click will result in a conversion. For example, it will set a higher bid for a searcher who is more likely to make a purchase.

There are currently four Smart Bidding strategies:

  1. Enhanced CPC
  2. Target CPA
  3. Target ROAS
  4. Maximize Conversions

Requirements and recommendations
To use Smart Bidding, you must have conversion tracking enabled (unless you are using Enhanced CPC with Display campaigns). Additionally, Google recommends that advertisers have at least 30 conversions in the past 30 days before using Target CPA and at least 50 conversions before using Target ROAS.

To learn more about Smart Bidding, read Instapage’s guide, “A Look Inside AdWords Smart Bidding & Automated Bidding Strategies.”

The 7 types of automated bidding strategies

There are seven different automated bid strategies:

1. Maximize clicks

2. Target search page location

3. Target outranking share

4. Target cost-per-acquisition (CPA)

5. Enhanced cost-per-click (ECPC)

6. Target return on ad spend (ROAS)

7. Maximize conversions

Benefits and disadvantages of automated bidding

Before you implement any automated bidding strategy, you should weigh the benefits and disadvantages equally:

Benefits

Disadvantages

Make the most of your search and display ads

Google’s automated bidding presents a fantastic opportunity to save time spent on manually setting bids while optimizing for more conversions, clicks, or whatever your desired goal may be. It’s not without its drawbacks, though. Automated bidding doesn’t provide the extensive control that manual bidding offers, plus you should have historical data before you start using the bidding method anyway.

Make the most of your Google search and display ads along with your entire digital ad campaign strategy. Download the guide below and discover many other ad types across all major platforms including real examples, ad specs, and targeting options available.