The following is from Google’s Support page
How Google Ads calculates bids
- Smart Bidding uses Google’s machine learning technology to optimize for conversions across every ad auction.
Why: This allows you to set millions of unique bids every second across campaigns.
- When calculating bids for Maximize conversions or Target CPA, your bid strategy will take into account your specified budget or target CPA, contextual signals at auction-time, and search query-level performance across your account.
Why: This helps your bid strategies predict the auction-time conversion rate before setting a bid.
- When calculating bids for Maximize conversion value or Target ROAS, your bid strategy will take into account your specified budget or target ROAS, contextual signals at auction-time, and search query-level performance across your account.
Why: This helps your bid strategies predict the auction-time conversion value per click before setting a bid.
- The same bid is applied across all keywords when using the Maximize clicks bid strategy.
Why: Bids are adjusted up or down to ensure you hit your campaign budgets while getting as many clicks as possible.
- Bids are set to help achieve your Impression Share goal when using the Target impression share bid strategy.
Why: This will help you show your ad in the Google search results in the optimal location based on your goals.
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