What Is AI Bidding and How Does It Work?

Hey, community! Artificial intelligence is being used pretty much everywhere now. And the scariest part for us is that it is gradually turning into our competitor. On the other hand, you can turn it into your assistant instead—and let everyone else try to outdo whatever you accomplish next. 

Even in advertising campaigns, it is increasingly AI, rather than people, that bids for clicks. On some platforms, this is built in, while in other cases you have to connect and configure a bot manually. But is that always necessary, or can manual bidding still be more effective? Let’s find out in today’s overview. 

Before we begin, a quick reminder: we recently explained why ad campaigns do not always deliver the results you want. We recommend checking it out!

What Is AI Bidding? 

AI bidding is an approach and a set of tools that use artificial intelligence to manage bids in RTB auctions. In practice, the AI itself takes part in the bidding. There are a few caveats, though. 

The term is most often used in the context of Google Ads, Meta Ads, TikTok Ads and other advertising platforms. But as we noted earlier, these mechanisms are now being integrated practically everywhere that bidding is involved. 

Here is roughly how it works:  

1. An affiliate media buyer creates an ad campaign and chooses to have AI place the bids. 
2. They set the maximum amount they can afford to pay per click. 
3. From there, the algorithm decides how much to bid and under which circumstances to pay a particular amount. 

The method has both drawbacks and advantages, so it is worth taking a closer look at each of them. 

How Does AI Bidding Work? 

There is no single answer here, because much depends on the advertising network itself. Still, we can look at AI bidding on Google as an example. The AI algorithm then works as follows: 

1. The system monitors traffic signals. It analyzes users’ cookies and other data. 
2. It estimates how likely a conversion is from that particular customer. 
3. It raises the bid up to the maximum permitted amount if it detects a high probability of conversion. 

So the point of AI bidding is not simply to “play around” with the cost per click. Most importantly, the price directly depends on how likely a particular lead is to convert.  

What Are the Pros and Cons of AI Bidding?  

By looking at how the algorithm works, we can identify its advantages and disadvantages. The benefits include: 

1. Significant time savings. You will not have to spend weeks optimizing campaigns to find the right balance between bids. AI handles it for you. 
2. Automatic optimization that takes numerous signals into account. AI can pick up on things we might overlook. And perhaps that is exactly what will lead to a high conversion rate. 
3. Easier scaling when you have too many ad campaigns. This is great for people who work with large budgets but manage everything on their own. 

 There are downsides, too. In particular: 

1. Lack of control. AI can make mistakes as well, and when money is involved, those failures can have extremely negative consequences. That is why you should set limits in advance. 
2. Poor algorithm performance when there is not enough data. This can become apparent when working with new products. 

Manual bidding is still safer and may even be more profitable. On the other hand, if saving time is your goal, AI bidding can help you do that—albeit with the risks discussed above. 

Conclusion 

AI bidding can make managing advertising campaigns much easier by automatically analyzing traffic signals and adjusting bids according to the likelihood of conversion. However, you should not rely entirely on the algorithm: it can make mistakes when there is too little data or the settings are incorrect. Manual bidding therefore remains the safer option, while AI primarily helps save time and scale campaigns. 

And how do you handle the auction? Do you do everything yourself or trust AI with the process? Share your experience in our Telegram community, where we are always looking for ways to optimize ad campaigns and generate even more profit! 

Best regards, Your Geek! 

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