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Improve the performance of your Shopping campaigns with Smart Bidding

Maider Cuesta Etxegia & Saba Nasserian, Account Managers, Google Shopping l Expertise Series [August 2021]

In this new article for automated bid strategies for Shopping campaigns, we’ll discuss Smart Bidding, how contextual signals work and what factors they take into account. We’ll also share tips on how to optimise your Shopping campaigns with automation.

How does Target ROAS calculate the right bid for each auction in real time?

Target ROAS (tROAS) bidding strategy relies on advanced machine learning algorithms, which take into account a wide range of criteria to accurately predict each bid, based on the estimated conversion and conversion value. The main signals when determining the impact of the auction-time bidding on Shopping campaigns include the device, physical location, location intent, day & time, remarketing lists, ad characteristics, interface language, browser, operating system and actual search query1. Most signals and signal combinations are exclusive to Smart Bidding.

Signals that Target ROAS takes into consideration

Here are some useful guidelines on how to improve the effectiveness of key Smart Bidding signals in your Shopping campaigns:

A. Product attributes

Bids are optimised based on similar attributes across products such as price, brand, product category and condition. In other words, if you add a new product that is similar to existing products in your portfolio, its relevance and conversion likelihood will be estimated based on its attributes. Because of this, it is a recommended practice to fine-tune your feed data, as well as the product attributes that have the biggest impact on the ad rank of your Shopping campaigns.

There are  several important elements of product attributes. Firstly, accurate product content (such as rich titles, descriptions and high resolution images) is important for search relevance, while unique product identifiers are used to match against Google’s product catalogue to ensure product validity. Categorizing your products in 3 to 5 levels via the attribute ‘product_type’ following an arrangement similar to your website will help improve your impression share. Similarly, all attributes that let you include relevant information that describes your product will be highly valuable. For instance, if you are a merchant in the field of fashion and apparel, you should consider including attributes such as ‘age_group’, ‘colour’, ‘gender’, ‘size’ and ‘size_type’.

Last but not least, pricing along with accurate and competitive shipping rates are important, as these enable you to show the right purchase information to potential customers.

B. Price competitiveness

For a given auction, automated bids may be adjusted if the price of your product (or product set) offers an attractive deal compared to what other advertisers are offering. Therefore, you should check how competitive your product prices are in the Growth tab of your Merchant Center, as this will allow you to assess whether you should set a lower ROAS goal on price-competitive items or bid less on non-price-competitive ones. Given that Target ROAS and maximise value bid strategies take into consideration pricing factors when setting up the bid by knowing how competitive your product prices are, you can capture the increased demand easier.

Note that this information can be used as an input when making pricing decisions or setting merchandising strategy (for instance, by identifying categories or brands where your products are consistently priced too high).

C. Seasonality

During seasonal events, Smart Bidding takes into account holiday performance trends, while bids are adjusted automatically when the conversion likelihood increases. A key tip to use automation in your Shopping campaigns during peak is by reviewing if you are willing to accept a lower ROAS in order to increase sales volume. Also, review the previous year’s results and indicate the algorithm your expected increase in conversion rate.

How can businesses further take advantage of automation for their Shopping campaigns?

As you may know, there is a potential trade-off between the volume and the return on investment you can achieve with your Shopping campaigns.

With this in mind, businesses that are using automation on their Shopping campaigns should find the right balance, based on their business goals, when they set their Target ROAS. To make it more explicit, let’s look at the following example:

  • If sales volume is a company’s focus (i.e. higher conversion value), then a recommended approach would be to lower their ROAS target, as this will allow their Shopping campaigns to participate in a larger number of auctions and drive more conversion value; however, this might impact the Shopping campaigns’ efficiency.
  • If a company wants to achieve higher efficiency and profitability, then it’s recommended to increase their ROAS target, as this will limit their Shopping campaigns from entering several auctions. This means higher cost effectiveness, but lower sales volume.

Key tip: you can find out what your current ROAS is by examining the conversion value / cost in your Google Ads reporting.

Graph that displays the trade-off between volume & value/conversion

Automated bid strategies & seasonality

When choosing a Target ROAS for Smart Bidding during peak, keep in mind that the goal of sales events is usually to maximize volume. This means that many businesses may be willing to trade efficiency for volume. If this is the case for you too, then make sure to adjust your bidding target accordingly to increase volume during these key dates.

When to adjust what?

Adjustments to the target metric to support Smart Bidding during the increased demand of seasonal events should be made right when the Shopping campaign’s (and for new campaigns: the account’s) conversion rate (CvR) deviates from its usual average.

Graph that shows when to make adjustments to the target metric to support Smart Bidding during seasonal events

Key takeaways

  • tick the box

    Adjust your feed data for automation

    Fine-tune your feed data and product attributes in order to build successful automated bid strategies for your Shopping campaigns.

  • graph that shows increase

    Assess how competitive your product prices are

    Check how competitive the prices of your products are, as this will allow you to evaluate whether you should set a lower ROAS target on price-competitive products or bid less on non-price-competitive ones.

  • a lightbulb that represents an idea

    Review your sales volume goals

    Leverage automation in your Shopping campaigns during peak by reviewing your sales volume goals and indicating to the algorithm what your estimated increase in conversion rate is.

1 'Actual search query' refers to the optimisation of bids based on the query, not just on the keyword. For an electronics retailer for example, if a search query is “Smart TV”, the potential customer may be more likely to purchase a new TV compared to “repair TV”.

2, 3 This graphic was created based on ‘Google Ads Excellence - Automation’, Information Guide,  shared by Google with CSS Premium Partners on the CSS Education Hub (CSS Program), Google, May 2020.

4 This graphic was created based on ‘Optimising Smart Shopping campaigns for success’, Information Guide, shared by Google with CSS Premium Partners on the CSS Education Hub (CSS Program), Google, November 2020.

This article was published by Google Shopping (CSS). Google Shopping is Google's CSS and a Premium CSS Partner.