Maximising ROI with Smart Bidding Strategies in Google Ads

Search Engine Marketing (SEM) is a powerful way to generate leads, sales, and brand awareness. But running ads without a smart bidding strategy can lead to wasted budget and poor returns. As of 2025, Google Ads Smart Bidding—powered by machine learning—has become the most effective way to automate, optimise, and scale ad performance based on real-time user behaviour.

This article explores how Smart Bidding works, its key types, and best practices to help marketers maximise return on investment (ROI).

1. What is Smart Bidding?

Smart Bidding is a set of automated bidding strategies in Google Ads that use machine learning to optimise bids in real time. These strategies help advertisers bid more effectively to achieve specific goals like:

• Maximising conversions
  
• Increasing revenue
  
• Lowering cost per acquisition (CPA)
  
• Achieving a target return on ad spend (ROAS)
  

According to Google, Smart Bidding uses data from millions of signals, including device type, location, time of day, language, browser, and historical performance to make informed bidding decisions at every auction (Google Ads Help, 2023).

2. Why Smart Bidding Matters in 2025

Manual bidding is time-consuming and cannot react to live user signals. With Smart Bidding, decisions are made instantly at scale, delivering better performance with less manual input.

As per Google’s internal data, Smart Bidding strategies have helped advertisers achieve a 20% increase in conversions on average without increasing cost per acquisition (Google, 2023).

Additionally, due to privacy regulations and limited third-party cookie tracking, Smart Bidding leverages first-party conversion data, making it a future-proof approach.

3. Types of Smart Bidding Strategies

Google Ads offers five main Smart Bidding strategies:

1. Target CPA (Cost per Acquisition)

Automatically sets bids to help get as many conversions as possible at or below the target CPA you set.

Use when: You want a predictable cost per lead or sale.

2. Target ROAS (Return on Ad Spend)

Adjusts bids to get the highest conversion value while maintaining your desired ROAS.

Use when: You track revenue and want efficient budget use.

3. Maximise Conversions

Google sets bids to get the most conversions within your set budget—no CPA target required.

Use when: You want to scale conversions quickly.

4. Maximise Conversion Value

Google bids to maximise the total value (e.g., sales revenue) from conversions.

Use when: You want to grow revenue, not just volume.

5. Enhanced CPC (eCPC)

Semi-automated. Google adjusts your manual bids slightly to increase the likelihood of a conversion.

Use when: You want to keep some control while gaining automation benefits.

4. How Smart Bidding Works

Smart Bidding uses Google’s machine learning models to analyse real-time auction signals, such as:

• User device and location
  
• Time of day
  
• Historical conversion likelihood
  
• Page content and query intent
  
• Browser or app used
  

This predictive power enables dynamic bid adjustments—something human bidding can’t match.

Moreover, Smart Bidding continuously learns from performance data to improve over time, making it more efficient the longer it runs (Google, 2023).

5. Getting Started with Smart Bidding

To set up Smart Bidding in Google Ads:

1. Enable conversion tracking for leads, sales, or other valuable actions.
   
2. Choose a campaign and go to Settings → Bidding.
   
3. Select the most appropriate Smart Bidding strategy based on your goal.
   
4. Define your target CPA or ROAS, if applicable.
   
5. Monitor performance through reports and allow time for the learning period (typically 1–2 weeks).
   

6. Best Practices to Maximise ROI

1. Choose the Right Strategy for Your Goal

• Use Target CPA for lead generation campaigns.
  
• Use Target ROAS for e-commerce or high-ticket sales.
  
• Use Maximise Conversions when you have no CPA target but want volume.
  

2. Set Realistic Targets

Don’t set an unrealistic CPA or ROAS. If your average CPA is $50, starting with a target of $20 may cause under-delivery.

3. Allow for a Learning Period

Smart Bidding needs data to perform. Avoid changing strategy or budget during the first 7–14 days.

4. Optimise Conversion Tracking

Assign monetary values to conversions where possible. Use Google Tag Manager and Google Ads Conversion Tracking to ensure accuracy.

5. Use Broad Match with Smart Bidding

When used together, Broad Match keywords and Smart Bidding can reach new, high-converting search terms based on intent (Google Search Central, 2024).

6. Don’t Mix Manual and Smart Strategies in the Same Campaign

Stick to one bidding method per campaign to allow the algorithm to optimise efficiently.

7. Real-Life Case Studies

Case: L’Oréal

L’Oréal used Target ROAS across 12 brands and saw a 50% increase in conversion value with stable ROAS across markets (Think with Google, 2023).

Case: Open Colleges (Australia)

By switching to Target CPA, the brand reduced cost per lead by 32% and increased conversions by 42% (Google Ads Help, 2023).

These cases show that Smart Bidding doesn’t just save time—it drives results.

8. Common Mistakes to Avoid

❌ Setting unrealistic CPA or ROAS targets
❌ Switching bidding strategies too frequently
❌ Not giving campaigns enough data or time
❌ Incomplete or inaccurate conversion tracking
❌ Using conflicting manual adjustments

Avoiding these mistakes ensures Smart Bidding delivers stable and scalable performance.

9. When to Avoid Smart Bidding

While Smart Bidding works well for most cases, it might not be ideal when:

• You have very little conversion data (under 15 conversions/month)
  
• You run short-term campaigns with tight budgets
  
• You require manual bid control for complex funnel testing
  

In such cases, starting with Enhanced CPC and building up data is recommended.

10. Smart Bidding and Performance Max Campaigns

Performance Max is a fully automated campaign type that uses Smart Bidding by default. It spans all Google channels—Search, Display, YouTube, Discover, Maps, and Gmail.

Paired with Target ROAS or Maximise Conversions, it is designed to maximise performance across platforms with minimal manual setup (Google Ads Help, 2024).

References

Google. (2023). Make Smart Bidding work for your business. https://support.google.com/google-ads/answer/7684216

Google Ads Help. (2023). About Smart Bidding. https://support.google.com/google-ads/answer/2979071

Google Ads Help. (2024). Performance Max campaigns. https://support.google.com/google-ads/answer/10724817

Google Search Central. (2024). How Smart Bidding uses broad match effectively. https://support.google.com/google-ads/answer/7478529

Think with Google. (2023). L’Oréal case study: Smart Bidding boosts beauty sales. https://www.thinkwithgoogle.com/intl/en-apac/future-of-marketing/digital-transformation/loreal-smart-bidding-case-study/