The Problem with Google’s Smart Bidding Strategies

Google offers several ‘smart’ bidding strategies for Shopping Ads that are tailored to different types of campaigns. So, based on what kind of campaign you’re aiming for, you can either focus on maximizing your clicks, enhancing your cost-per-click, targeting your return on ad spend, or maximizing your conversions.

These automated bidding strategies for Google Shopping Ads make use of machine learning and algorithms to monitor your campaign’s performance and automatically set bids based on achieving your set goals.

And… therein lies the problem. If you’re a forward thinker, it probably doesn’t seem like much of a problem for you. After all, what’s wrong with a smart algorithm doing all the work for you? There are plenty of other smart bidding alternatives, like Bidbrain™, that thrive because of that exact same characteristic.

But, that aspect, on its own, is not what people are up in arms about. It’s the fact that no one really knows how Google’s automated bidding strategies work…

Smart Bidding Strategies | Overview

Before we get too deep into the issue at hand, let’s acknowledge our subject matter first. According to Google, Smart Bidding is there so that you can “achieve your goals.”

The algorithm sets the bids for you based on the historical performance of your past campaigns as well as your future goals. Once you’ve entered the goals that you want the bidding algorithm to meet, it’ll begin responding to auctions accordingly in real-time.

At the moment, Google offers four distinct Smart Bidding strategies:

  • Maximize Clicks: This is available only for standard Shopping campaigns, and its main purpose is to automatically set bids that help you get the most clicks as possible based on your Target-ROAS. It can be applied to your campaigns and ad groups.
  • Enhanced Cost-Per-Click (ECPC): This is also only available for standard Shopping campaigns. But, more importantly, it’s for marketers who want a little more control over their bids. With this automated bid strategy, you can set your bids manually, and the algorithm will adjust that bid accordingly (up or down) based on how likely it thinks the clicks will result in conversions. It can also be applied to both campaigns and ad groups.
  • Target-ROAS: This is the last of the bidding strategies for standard Shopping campaigns. And it’s the one to use if what you’re looking for is to maximize your conversion value while reaching your Target-ROAS. Just like the previous two, it can also be used for both campaigns and ad groups.
  • Maximize Conversion Value: This is a Smart Shopping bidding strategy and as such, it can only be used for entire campaigns. With this, what the algorithm is aiming for is to set your bids to maximize your conversion value while (if you set a minimum Target-ROAS) attempting to spend your specified budget.

All in all, it’s not a bad round-up. And, if Google is honest about how their bidding strategies work, then each bid accounts for all your past campaign’s clicks and conversion data to place the best bids possible, which makes it a lot easier to use than just manually bidding on your own.

But, in saying that, we hit right on the problem that we hinted at in the beginning…

Google’s Problematic Black Box

A black box is any form of complex equipment that is completely unknown or mysterious. This can refer to many things, an engine, the human brain, a recording device, or, in the case of Google’s ‘black box’ bidding strategies, an algorithm.

Think of it as an actual physical black box. One that is heavily protected and secure. It’s opaque-coloring means that you cannot see through it either. So, no matter what you do, you can never truly figure out what’s inside of the box.

There’s no denying that Google’s black box works in ‘some’ way. These strategies are used worldwide to some success, after all. However, Google has an endless inventory of pages that needs ads views and clicks. And, furthermore, their business model has always been more in the camp of selling clicks rather than conversions. There is just no way of knowing whether Google’s Smart Shopping strategies are truly working 100% for your benefit. No way of knowing if they’re placing certain ads just to get clicks to reroute to their own network and then combining them with high converting PLAs in the general search results. 

And that is the problem. Not just with Google but with free tools in general, where in most cases, you and your business end up being the currency.

What’s even more troubling is that no matter how many people rage on the unfairness of it all. Google has deemed it perfectly fine to leave their service as just ‘good enough’ — making no moves to fix the problematic black-box approach that really has no place being involved in marketing processes that are so heavily dependent on data and analytics.

The Bottom Line | Google’s Smart Bidding Strategies

When it comes down to it, it’s you that has to decide. Are you willing to trust Google with your budget? If so, then there’s nothing wrong with using the freely available Smart Bidding tools.

But, if you want to be smarter about the way that you’re spending your ads budget and be 100% confident in your campaigns, then you might want to consider a solution that is more transparent about how it works. One such example would be the AI-based bidding solution called Bidbrain™, which is 100% transparent and provides actual insights on the performance of your clusters, described here by founder and CEO Fredrik Lindros. Just don’t forget that there are options for you out there!

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