Smart Bid is a new campaign pricing model that uses machine learning. This advanced Bidding optimization feature enables advertisers to automatically assess their campaign data and determine the ideal price in real-time, based on various factors, including:
#1 The likelihood of a conversion
#2 Analysis across several data points
#3 Using conversion data for specific dimensions: zones, countries, device types, browsers, etc
With this latest feature, advertisers may choose between two different bidding strategies: Target CPA (Cost per Acquisition) or Target ROAS (Return on Advertising Spend). Let’s look into each one of these strategies in more detail.
Bidding strategy 1: Target CPA (Cost per Acquisition)
The Target CPA Smart Bid Strategy is bidding optimization of an optimal bid based on a desired average target CPA for your campaign. During an ad request, the bid algorithm determines the likelihood of a user generating a conversion. If the likelihood is high based on historical campaign analysis, the algorithm bids high and bids low for less likely users. Although some conversions may cost more or less than the target, the algorithm ultimately aims to optimize the cost per conversion to match the set target CPA.
For example, selecting a target CPA of $10 USD will prompt the Smart Bid algorithm to automatically set bids to achieve as many $10 USD conversions as possible and improve performance through real-time adjustments based on signals such as device and location.
Initially, the strategy prioritizes volume to obtain significant data. Once 30 conversions are reached, Smart Bid is activated and adjusts bid prices to maximize either volume or CPA.
Bidding strategy 2: Target ROAS (Return on Advertising Spend)
The Target ROAS Bid Strategy is bidding optimization of an optimal bid for your ad based on a target percentage of the ROAS that you want the campaign to achieve. The Smart Bid algorithm calculates the conversion value based on either a Fixed or a Dynamic Conversion Goal, and predicts the likelihood of a user converting. It then adjusts your bid according to your Target ROAS value, bidding high for high-value conversion potential and low for low-value. Note that the Conversion Goal you use must be based on either Fixed or Dynamic values. No Value Conversion Goals are unavailable for this Bid Strategy.
For instance, if you are building campaigns for your online e-commerce store and want to spend $1 USD on ads for every $2 USD in sales (This is your conversion value), so that you get back your investment back twice in revenue, your target ROAS would be set to 200%. The Smart Bid algorithm would then automatically optimize your bids to maximize conversion value while trying to hit your target ROAS 200%.
Please Note: For both of the two bid strategies, It’s essential to let Smart Bid learn and gather performance data before evaluating campaign performance. Then, it is important not to evaluate your campaign performance too early. After reaching data significance and achieving at least 30 conversions, the Bid Strategy will be effective and start optimizing for its target CPA or ROAS.
Smart Bid Benefits, Tips and Best Practices
Benefits
Guaranteed profitable campaign: The main goal of Smart Bid is to continuously work on your campaign to make it profitable. Remember to let the campaign run even if it hasn’t reached your goal yet. In order for the bidding optimization to make your campaign profitable, it takes investment and time. You have to think long term instead of short term: Your initial investment will be returned and then become profitable overtime.
Saves you time: After you have set your campaign up with Smart Bid, generally only small bidding optimizations are needed as the campaign runs – Tweaking your Target ROAS or CPA and small changes, freeing up your time.
Allows you to concentrate on better converting creatives: Smart Bid allows automatizing the campaign’s management and bidding to reach your goals, which enables you to spend more time on strategy. Now you can focus on the product and marketing tools such as display creatives, video ads and prelanders to improve the offer’s conversion rate.
Enables switching an existing campaign to Smart Bid: You can switch an existing campaign to Smart Bid, so long as you keep the same conversion goal. Your Smart CPM campaign will already be optimized, so switching it to the Smart Bid model will immediately analyze all the historic data generated from the Smart CPM campaign and will start working for you from minute 0. However, if you change the campaign’s goal, you will have to newly set up the campaign for Smart Bid, as it will need to learn a new set of data to reach your new goal.
Allows manual fine tuning: Despite being a bidding optimization tool, you can still manually block ad zones and fine tune the campaign by pausing and adjusting the Target CPA.
Tips and Best Practices
Initial targeting set up: Use insights gained from past campaign testing to set up your targeting. Launching smaller test campaigns prior to full ones is crucial as the data gathered during testing is incredibly valuable. For instance, if a broad test campaign reveals that the offer does not perform well on Samsung’s browser, it’s vital to exclude Samsung’s browser from targeting when launching the full campaign with Smart Bid. Failing to do so may lead to wastage of budget while Smart Bid tests Samsung’s browser.
Manual optimizations: To make Smart Bid work faster for you, make some manual optimizations. Smart Bid operates on layers of dimensions and aims to maximize on your traffic. Therefore, you can fine-tune certain parameters such as browser dimension, to boost its performance. For instance, if you notice that your offer is winning bids on Chrome but too expensive for Safari conversions, it’s wise to exclude Safari from your targeting. Otherwise, Smart Bid may lower the bid price for browsers, which can adversely impact your Chrome bidding too.
Don’t be too cautious with budget settings: Although it can be tempting to set a lower bid price, bear in mind that you will not win decent volumes while Smart Bid learns from the data generated. It needs to reach a certain data significance level to kick in, otherwise it will just run as a Smart CPM campaign. Although you will make a loss at the beginning, Smart Bid will generate a profitable campaign for you, which means you will make this loss back. Smart Bid requires a budget and time commitment from you to turn profitable.
ROAS setting: It is also tempting to put your ROAS setting at over 100%, but this may make the goal difficult to reach and it could prevent you from testing more volumes of traffic. Try setting the ROAS below 100% (Initially, you could go as low as 70%) to maximize the chance of reaching data significance quickly. Later on you can adjust the setting to reach your goal, but not during this initial exploration phase. If you set a Target ROAS to 120% it means you are aiming for a good return on your ad spend. In this case, say on $1,000 spend you want to generate $1,200 revenue. Whereas at 70% you are happy actually allowing Smart Bid to bid at loss if necessary to acquire some volume, and set a much lower target of only $700 revenue for a $1,000 ad spend. This allows Smart Bid to bid higher and more aggressively, and this tends to provide better results overall. If you target 120% Smart Bid will bid lower, and this can affect results. By lowering the bids you can get locked out of certain segments of traffic where bids are higher and the traffic quality might be higher.
Stops bidding if no conversions: The algorithm will still bid on the ad zones even if you are getting no conversions. However the bid might be too low to receive traffic. Look for possible reasons why your campaign is not converting. These could be poor performing ad creatives, the copy on your landing page, a product that isn’t right for your campaign, and so on.
PPS versus PPL: Smart Bid optimizes based on campaign conversions. PPS tend to have higher payouts but also get less conversions proportionally, so try a PPL goal to avoid overspending on your bids. Also, an easier goal helps you get a more accurate bid. If you want to stick with a PPS goal such as Credit Card payment, it is not impossible, but it will be more difficult for Smart Bid to maximize your campaign’s profit. Think about all your KPIs and pick one that is easy to achieve as your goal. If that goal is not reachable in the end, put a lower break even point.
Invest with a good budget: The Smart Bid machine learning algorithm works to drive success based on generating conversions. That means that a decent campaign budget is needed along with time to let the campaign run to allow Smart Bid find the best campaign conversion formula.
Smart Bid FAQs
What initial CPM should I fill in?
This will depend primarily on the competitiveness of the campaign’s targeting. A Popunder format will require a much higher CPM than a Banner format, just as a campaign targeting the US will require a higher CPM than India. At the launch of a new campaign, the initial CPM is the equivalent of a Smart CPM campaign which will prevent you from overpaying the traffic.
Tip: Ideally, if you have a campaign with similar targeting, you can refer to it to set your initial CPM. Otherwise, we recommend you to start with a competitive CPM from the beginning, as the faster you get data, the sooner Smart Bid will efficiently optimize your campaign.
What if my campaign fails to meet my goal?
If your campaign does not reach its goal, here are different actions you can take to solve the problem:
#1 Give it time. Smart Bid requires data to efficiently optimize your campaign.
#2 Your goal is too ambitious; therefore review your Target CPA/ROAS goals.
#3 Your campaign targets many zones (e.g. native), so it will take longer to achieve significant data to reach the first level of zone-level optimization.
#4 Your campaign has a bid optimization configured to “Maximize Volume” which is an optimization that is prioritizing volume and the exploration of new traffic segments over the target goal; switch to “Maximize Target CPA/ROAS”. However, it will impact your volume and likely decrease your conversions. Do not choose this option too early!
If you already know your campaign will not perform well on certain targeting segments. For example, if your offer is not compatible with Android Operating System, then adjust the targeting settings of your campaign to block it, so Smart Bid does not spend time in testing those segments.
Can I target one single zone?
Yes, it is possible to target a single zone, however, Smart Bid is most useful when your campaign is targeting multiple zones.
What is the required budget?
There is no minimum budget. However, Smart Bid requires data. So, an effective budget will depend on the value of the Target CPA or the conversion value for a Target ROAS campaign. The higher the value, the higher the budget you will need to achieve meaningful data. The targeting of your campaign will also affect the budget. A campaign targeting one single zone will require less budget than a campaign targeting thousands of zones.
Tip: PPL models are perfect for Smart Bid and limited budget. However, it is possible for advertisers promoting PPS offers with high conversion values to reduce their budget by setting a different goal that is part of the conversion funnel e.g. form submission, email, etc
My campaign needs more traffic. What can I do?
To increase your traffic, you can increase your initial CPM, allowing you to reach the required conversion volume on zones that have yet to reach the minimum required. Or increase your Target CPA or reduce your Target ROAS to increase your traffic on zones already optimized by the algorithm.
Also make sure to use the Maximize Volume Bid Optimization, which will prioritize conversions volume over the target goal and will allow more budget going towards the exploration of new traffic segments.
Bidding optimization, what is the difference between Bidder and Smart Bid?
These two features are designed to facilitate the management of advertiser campaigns. The Bidder is more of an automation tool, allowing advertisers to apply automatic campaign updates, based on certain metrics. And the “Automatic Bidding Optimization” feature proposed by the Bidder optimizes the campaign bids at the zone. Smart Bid however will optimize the bids of your campaign in real-time, based on the probability of conversion for a large number of data points.
Can I enable Smart Bid on an active Smart CPM campaign?
Yes, and it is even recommended. If your Smart CPM campaign already has conversion data, this will be used from the start by Smart Bid as soon as you switch to this Pricing Model.
How long will it take for my campaign to reach its goal?
With Smart Bid bidding optimization, time will vary depending on the volume of conversions data and actual target goal. Typically, it takes around 30 conversions for Smart Bid to be able to start optimizing more efficiently. The higher the volume of conversions, the sooner Smart Bid will reach your goal.
OK so I’m happy with the initial results of my Smart Bid Campaign. What should I do next to ensure I maximize volume?
#1 Make sure to use “Maximize Volume” Bid Optimization. That should be the most impactful action, as it will bid more aggressively on optimized segments and also test new segments more aggressively.
#2 Increasing the Initial CPM will ensure you get the most volume on segments being tested. It will also increase the chances of being the top bidder, which can have a positive impact on campaign performance.
#3 If you can increase the Target CPA/ROAS then you should. Similarly to Initial CPM, it will ensure you get the most volume, in this case on optimized segments. It will also increase the chances of being the top bidder, which can have a positive impact on campaign performance.
#4 If you hit your Daily Budget on the campaign or you are close to it, increase it. That’s for any campaign, not just Smart Bid.
#5 Frequency Capping is a very important campaign setting with regards to volume. Especially for high frequency formats such as banners or native. Increasing Frequency Capping should definitely increase volume. However, CTR and CR should be monitored as higher Frequency Capping may result in lower campaign performance. That’s for any campaign, not just Smart Bid.
Smart Bid Case Study
Need to know more about Smart Bid’s bidding optimization? Check out how powerful Smart Bid can be for your campaigns on AdNation. Read the case study here.
