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Dotidot glossary
Bid optimization

Bid optimization

In short

The process of adjusting advertising bids or bidding targets to improve results against a chosen objective and budget.

Bid optimization changes how aggressively an advertiser competes for advertising opportunities. The aim depends on the campaign: more visits, more conversions, or greater conversion value within the available budget.

How bids are optimized

With manual bidding, the advertiser reviews results and changes bids directly or through rules. Automated bidding uses a platform’s systems to adjust bids toward a selected goal. The advertiser still chooses the strategy, budget, and relevant targets.

A bid is not the same as a budget. A bid affects competition for an opportunity; a budget controls available spending over a period. Increasing one without checking the other may change delivery in an unexpected way.

Reliable measurement is part of the process. If the campaign optimizes for purchases but records duplicate orders, its bidding decisions follow a distorted signal.

Illustrative example

A store reviews two product groups. One generates clicks cheaply but few orders. The other has more expensive clicks and stronger conversion value. The team evaluates value relative to spend before deciding which group deserves more competitive bids.

The figures and outcome are intentionally unspecified: lower CPC alone does not establish better performance. Compare results over a suitable period and allow for conversion delays before reacting to a short-lived change.

Related terms

  • Smart Bidding
  • CPC (cost per click)
  • ROAS (return on ad spend)

Sources

  • Google Ads: About automated bidding
  • Microsoft Advertising: Budgets, bids, and pricing

Related reading

  • Automate PPC to maximize ROI | Dotidot
  • Product Analytics helps you understand your products and your budget
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