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Smart Bid, EXADS NEW Automated Optimization Feature for Advertisers

By Ana Kealy

April 24, 2023

Table of contents:

What is Smart Bid and how does Smart Bid work?

Smart Bid is the new pricing model offered by EXADS, that is based on machine learning. This new optimization feature helps Advertisers to automatically determine an optimal bid for their campaigns by analyzing campaign data such as:

  • The likelihood of a user to convert
  • The campaign’s historical information
  • Contextual real-time signals 

When using Smart Bid, Advertisers can select one of the following Bidding Strategies: Target CPA (Cost per Acquisition) or Target ROAS (Return on Advertising Spend). 

For the algorithm to be able to predict the traffic that will bring most conversions and optimize bids accordingly, it is important to first allow it to gather data on a minimum of 30 conversions. Once this threshold is reached, advertisers will start seeing the effects of Smart Bid on their campaigns.

Smart Bid and Target CPA (Cost per Acquisition) Strategy

With the Target CPA Smart Bid Strategy, the algorithm finds an optimal bid for the advertiser’s ad based on an average target CPA that was set at campaign level. In this instance, when an ad request is received, the bid algorithm determines how likely it is for the user to generate a conversion. So if based on historical campaign data, the user is highly likely to convert, Smart Bid will bid high. If on the contrary,based on the same data, the user is less likely to convert it will bid low. As a consequence, some conversions may cost more than the set target and some may cost less, but altogether the algorithm will try to optimize the cost per conversion to match the set target CPA over time. 

Target CPA Strategy

For example, if the advertiser’s campaign has a target CPA of $10 USD, the Smart Bid algorithm will automatically set the bids to try to get as many conversions at $10 USD on average. As it uses real-time signals like device, location, etc., it is able to adjust the bids and improve the advertiser’s performance in every ad auction. 

Although in the beginning, this strategy will bid for volume, it only does so in order to gather data significance, the initial minimum 30 conversions required for it to start optimizing bids to maximize volume or maximize CPA.

Smart Bid and Target ROAS (Return on Advertising Spend) Strategy 

With the Target ROAS Bid Strategy, Smart Bid finds an optimal bid for the advertiser’s ad based on a target percentage of the ROAS that was set at campaign level. The algorithm first calculates the conversion value for either the Fixed or Dynamic Conversion Goal specified. 

For dynamic value conversions an average value is taken. Smart Bid then analyzes and intelligently predicts the likelihood of the user to convert. From this point, Smart Bid optimizes your bid towards your Target ROAS value. So, if based on the data available, the bid algorithm determines that a user is likely to generate a conversion with high value, Target ROAS will bid high for that ad request. On the contrary, if the bid algorithm determines that the user isn’t likely to generate a high-value conversion, it will bid low. The Conversion Goal used must be based on either Fixed or Dynamic values.

Target ROAS Strategy

For example, if the advertiser is building campaigns for an online e-commerce store and they want to optimize their bids based on the value of a shopping cart: let’s say their goal is that for every $2 USD worth of sales (this is your conversion value) they want to spend $1 USD on ads. In this case they would set a target ROAS of 200% so that for every $1 USD spent on ads, they would like to get back twice that in revenue. Then the Smart Bid algorithm will automatically set their CPM or CPC (click only formats) bids to maximize their conversion value, while trying to reach their target ROAS of 200%.

Same as for the Target CPA bidding strategy, Smart Bid needs to first gather a good volume of data, so that it can start optimizing the advertiser’s bids. This means that the campaign will need a minimum of 30 conversions before the chosen Smart Bid Strategy becomes effective and at the desired Target CPA or ROAS set.

Creating a Smart Bid Campaign is a straightforward process, however, advertisers need to be patient and not evaluate the campaign’s performance too early.  The Smart Bid model is based on historical data that requires time to be acquired.

Smart Bid Benefits

Our team of ad tech experts have been developing this feature for some time and have delivered an automated optimization tool that will have a major impact on how advertisers can increase their ROI. For platform owners, this feature is a unique selling point, and here is why:

Guaranteed profitable campaign: Smart Bid was developed to make campaigns profitable however, it does have some very clear requirements to achieve this goal. Advertisers must let the campaign run until there is sufficient data for the algorithm to start working, so Smart Bid takes investment and time. Once these requirements are met, your advertisers’ campaigns will start to generate profit.

Saves time: After setting up a Smart Bid campaign, only small optimizations will be needed. As the campaign progresses, the only tweaks necessary might be just for the Target ROAS or CPA. No manual in-depth campaign optimizations will be required so your advertisers will have more time to focus on other things.

Focus on other conversion driving factors: As Smart Bid makes it possible to automate the campaign's management and bidding to reach the targets of the advertisers, these can concentrate their efforts on their display creatives, video ads, prelanders and landing pages to improve the conversion rate.

Switch a Smart CPM campaign to a Smart Bid one: If an advertiser wants to switch an existing Smart CPM campaign to Smart Bid they can easily do this as long as they keep the same conversion goal. As the Smart CPM campaign will already be optimized, the Smart Bid model will immediately analyze all the historic data generated from the Smart CPM campaign and will start working. If the advertiser changes the conversion goal, then the campaign will have to be set up again for Smart Bid and the algorithm will need to learn a new set of data to reach the new goal. 

Allows manual fine tuning: Advertisers will still be able to block ad zones manually and fine tune the campaign by pausing and adjusting the Target CPA.

Tips and Best Practices

Initial targeting set up: It is recommended to run test campaigns before launching a full campaign. The data acquired during these test campaigns will be a valuable asset when setting up the targeting for a Smart Bid campaign. A test campaign can provide the advertisers with information on what devices, locations or other parameters don’t convert well. They can then apply this knowledge to their Smart Bid campaign targeting and exclude these parameters from the start, without waiting for the algorithm to figure it out and waste some budget in the process. 

Helpful manual optimizations: Advertisers can make Smart Bidd work faster to achieve their goals with the help of a few manual optimizations. As an example, for the browser dimension, if the advertiser knows that their offer is winning bids on Chrome but they are paying too much for conversions on Safari, it is better to stop targeting Safari. Otherwise Smart Bid will drop the bid price for all browsers, which will also affect their bids on Chrome.

Don’t be too conservative with settings: It is tempting to set a lower bid price, but this is not advisable. A lower bid price will impact the volume of conversions in a negative way and it will take longer to reach the data significance required for Smart Bid to start working (minimum 30 conversions). Until this level of data is gathered, the campaign will just run as a Smart CPM campaign. Advertisers should be prepared to make a loss in the beginning knowing that once it kicks in, Smart Bid will make the campaign profitable. Smart Bid requires budget and time commitment to bring in profit.

Target ROAS: Although tempting, it is not advisable to put a target ROAS of over 100%. This will make the goal difficult to reach and it will prevent the advertiser from testing more volumes of traffic. To maximize the chance of reaching data significance quickly, the target ROAS should initially be under 100%, as low as 70%. Advertisers should be prepared to make a loss in the beginning, but once the initial data significance threshold is reached, they can adjust the target if needed to meet their goal. 

If there are no conversions: If the advertiser is not getting any conversions the algorithm will still bid on the ad zones, but the bid might be too low to receive traffic. In this situation, the advertiser should look for possible reasons as to why their offer is not converting such as: poor performing ad creatives, landing page messaging, the product is not right for your campaign, etc

PPS versus PPL: Pay Per Sale campaigns generally have higher payouts but it is more difficult to get conversions. Smart Bid optimizes based on campaign conversions, so a PPL type goal such as email catching is more suitable. This will ensure that advertisers don’t overspend on bids from having a more difficult goal to achieve conversions from. An easier goal also helps advertisers get a more accurate bid. Having a PPS goal such as Credit Card payment is not impossible, but it will be more difficult for Smart Bid to make the campaign more profitable. It is recommended to choose 1 easy to achieve KPI as the campaign’s goal. If this goal is not reachable, then the advertiser needs to put a lower break even point for the goal.

Invest with a good budget: Success with Smart Bid comes from generating conversions, that is how the machine learning algorithm works, therefore a decent campaign budget is needed along with time to let the campaign run, so that Smart Bid can find the campaign’s conversion formula.

Case Study: To see the effect that Smart Bid can have on a campaign, you can read our case study in which an advertiser switches from one campaign to 2 Smart Bid campaigns and sees some very interesting results. In just 3 weeks, the advertiser saw a ROAS of over 150% for Campaign 1 and a ROAS of 120% for Campaign 2.  

FAQs

What initial CPM should I fill in?

This will depend primarily on the competitiveness of the campaign's targeting. An in-stream 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...

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?

The 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?

  • 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.
  • 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.
  • 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.
  • 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.
  • 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.

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