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Goodbye Average Position, Hello Smart Bidding!

By Gordon McFadyen | September 24th, 2019

Google Smart Bidding Hotels

In August 2019, Google announced average position would be retired as a metric, leaving a number of advertisers puzzled as to how they would effectively manage their adverts positions and click costs.

But what does this mean for hotel marketing? Generally speaking, if two adverts competing against each other have the exact same quality score, the one that ranks in position 2 will pay a lower cost per click (CPC) than the ad in position 1. This was an effective way of combating OTA commission whilst paying a cost-effective click. Targeting a position lower than OTA’s such as Booking.com, but winning the click via book direct incentives within carefully crafted ad copy proved to be an effective way to manage CPC’s and, ultimately, improve the return on investment yielded via Google Ads campaigns.

What is Google replacing average position with?

If Google average position is gone, what metrics do we use to analyse the position of our adverts within search engine results pages (SERPs)? Google has rolled out 2 new metrics in the last year that can help.

  • Impr Absolute Top %: Refers to the percentage of time that ads are in the very first position on results pages.
  • Impr Top %: The percentage of times that ads appear above organic search results but not necessarily in the first position.

Although these metrics provide much less detail in terms of exact positions, this is the alternative advertisers should adopt moving forward when analysing ad positions on Google results pages.

So why this change? And why did marketers get so caught up on average position anyway? The answer to this would be that it’s of vital important to some businesses to rank as the very first search result for certain keywords, to ensure their business gets maximum exposure for queries indicating a high level of intent to purchase. However, return on investment is of maximum importance to any advertising campaign and generally speaking, this metric should take prominence over positions on SERPs.

It’s for this very reason that Smart Bidding adoption is rising throughout Google Ads campaigns. Smart bidding methods have your bottom line at the heart of their strategy, so what exactly are they and how do we make the most of these methods?

Smart Bidding

Smart bidding is a group of automated bidding strategies, powered by machine learning and geared towards maximising conversions. So what are the benefits of Smart Bidding, and why do these benefits outweigh bidding to position?

Bidding in what was formerly known as Google AdWords used to be simple. However, the rise of mobile and the increased complexity of the user journey has made bid optimisation more complex. Setting the right bid, at the right time, for the right user, on the right device, in the right location has become increasingly complex. According to Google at their SMART Bidding summit in London, 85% of leading marketers believe anticipating user intent will drive better results.

The key to masterful bidding is to adjust bids on each user’s unique combination of signals. Asserting all of these manually for every auction is virtually impossible, and this is where Smart Bidding has significant benefits when compared to manually bidding.

Benefits of Smart Bidding

So what are the key benefits to adopting Smart Bidding methods? We have identified 3 key benefits of adopting Smart Bidding models.

  • Real time – When we adjust bids manually, we are always looking backwards in time, analysing data that has been collected in the past. The advantage of Smart Bidding and machine learning is it works in real time and anticipates the future, as opposed to depending on historic data. Smart Bidding is proactive and precise.
  • Frees up strategic thinking time – By automating routine optimisation tasks, Smart Bidding allows marketers to spend more time thinking strategically about improving digital performance.
  • Increase conversions – Google state that campaigns using Smart Bidding methods can have an uplift in conversions as high as 30% when compared to manual bidding.

So we know Smart Bidding has benefits when compared to manual bidding, however what are the different types of Smart Bidding methods available to advertisers in Google Ads?

Smart Bidding methods

  • Target Cost Per Acquisition (CPA) – Looks at user intent signals as well as search query performance across a whole domain. The algorithm then predicts a conversion rate for a particular user and search query, and identifies if this is in line with the target CPA applied to the campaign – if so, an ad is served. The manual element of this method is to regularly update the CPA based on seasonality. For example, the target CPA for ice cream would be lower in Summer than Winter as demand is higher, however it is down to human intervention to apply this context to the strategy. This bidding method tends to work well for lead generation campaigns, and budget should not be constrained to ensure that the campaign has the best possible chance of performing
  • Target Return on Ad Spend (ROAS) – A Google Ads account must have a minimum of 15-30 conversions in the last 30 days to successfully adopt this bidding model. This method does not focus on exposure, but rather the return generated by the campaign. Advertisers can set their desired ROI and the algorithm will look to serve ads to users whose intent signals may achieve this target. If your account does not have the volume of conversions needed, maybe you need to think about creating/importing more conversions than just purchases of products or room bookings.
  • Max Conversions – Conversely to Target CPA, this bidding method takes constrained budget into account, however the algorithm will always try and spend this budget if possible. If your business goal is simply volume with no desired ROI or CPA figure, then this method could be best suited to your objectives.

Online Advertising Strategy for Hotels

If you’re interested in learning more about the potential of Smart bidding to drive more direct bookings for your hotel, please do get in touch.

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