Smart Bidding on YouTube – Do Budgets & Bids Really Matter?

With the importance of Smart Bidding growing across Google campaigns, and YouTube in particular, it is important to familiarize yourself with its nuances. Knowing the actual options is only step one. More important is knowing how to set your campaigns up for success when you choose to leverage them.

Before we get into a few definitions, it is important to note that Smart Bidding can only be leveraged with Action Format campaigns (tCPA and Max Conv.) to generate sales, leads, or signups, such as Video Action Campaigns. But there is also one option for Reach formats, like bumper ads, primarily intended to generate awareness.

Recap of Smart Bidding Options on YouTube:

Bid & Budget Recommendations:

As noted above, Google recommends setting budgets anywhere from 10x to 15x in relation to cost per conversion (CPA). That means, if you want to use tCPA and you have a campaign avg. CPA of $85, you will need to set the budget to at least $1,275. Want to use Max Conv.? Then your budget would need to be at least $850. Sometimes these bid to budget recs may seem like a stretch, but we have seen time and time again that they are necessary to help set up the campaign for success. Please note, we recommend starting campaigns on Max Conversions to help set a baseline CPA before swapping to tCPA.

Mini Case Study:

Situation: Campaign running on tCPA is flagged as Limited By Budget (LBB)
Bid to budget ratio: Initially sat ~10x current CPA
Update: Increased budget to 15x current CPA
Results: After updating (and excluding the 2 week learning period), we saw both growth and efficiency gains.

Other considerations when leveraging smart bidding on YouTube:

• tCPA is very sensitive on YouTube. Fluctuations in CPAs can throw off algorithms and result in drops in spend. We have consistently seen that if CPAs rise above set tCPA bids it is difficult for spend and conversion volume to rebound with tCPA bid increases alone. In many instances campaigns have to be reverted to Max. Conv. to allow campaigns to pick up volume again.
• If you can’t afford to set budgets off of your main KPI, consider using a conversion event higher up the funnel with lower CPAs. Ex: If your main KPI is a lead sign up but you often see more people download an asset first, you may want to optimize towards asset downloads instead to provide the algorithms more data to work with.
• Creative and targeting matters! Bid-to-budget ratios matter, but don’t forget about creative and targeting. Ensure you are optimizing both to be in line with best practices.

While there isn’t a one size fits all approach, we hope these tips help to guide your YouTube smart bidding set up. For more information on how to take full advantage of the smart bidding on YouTube, contact our team.