Google Bid Simulator: A bet you shouldn’t…

If you haven’t played with it before, Google’s Bid Simulator promises to predict how adjustments to your ROAS targets or budgets could impact your future campaigns.

If it worked, it could be one of the most powerful tools at your disposal. A crystal ball for your ad strategy.

The problem? Well … it doesn’t work.

What does Google’s Bid Simulator do, actually?

It’s pretty basic, actually. 

As of 2024, the Bid Simulator takes your campaign data from the past seven days and uses it to estimate how changes in bids or targets might affect your campaigns’ future performance.

It gives you a “what-if” scenario for your campaigns based on historical data.
 

And that’s a problem because …?

It simply doesn’t account for critical factors that impact the current state of your market. Or in other words: In the happy-go-lucky world of Google’s Bid Simulator, the holiday season apparently doesn’t exist.

  • Short-term data dependency
    It stringently looks at your campaigns’ performance from the past week while ignoring key factors, like seasonality, market trends, and competitor moves.
  • ​​​​​High margins of error
    With deviations as large as ±50%, the tool’s projections are no more reliable than a coin toss. 
  • No strategic context
    The simulator doesn’t account for your profit margins, nor your inventory levels, or your broader business objectives. It optimizes for clicks and conversions—not sustainable growth.
Google’s bid simulation tracks the performance of your campaigns in the past 7 days almost 1:1. That’s not a crystal ball – it’s a mirror!

So what do you suggest I should do instead?

  1. Use Theoretical Revenue as your benchmark:
    Replace Google’s guesses with a simple, clear benchmark.

    Daily Budget × Target ROAS = Theoretical Revenue

    👉 If your campaigns aren’t aligning with this, it’s probably time to recalibrate.
  2. Segment campaigns by priority:
    • High-priority campaigns:
      Assign budgets and aggressive ROAS targets to achieve steady returns.
    • Mid-priority campaigns:
      Adjust budgets dynamically to maintain balance, prioritizing campaigns that show room for growth.
    • Low-priority campaigns:
      Evaluate these regularly and reallocate budgets where gradual improvements are minimal.​​​​
  3. Adjust gradually:
    If some of your campaigns are in the market for a refresh in budgets and targets, we suggest doing this gradually to avoid instabilities. Small tweaks between 5% to 10% will do the trick!
  4. Move beyond ROAS:
    Profit beats efficiency     every time. ROAS is one of the most important levers to steer your campaigns, but hitting high targets won’t grow your business.

    Shifting your focus to your broader goals, like high-profit products or new customer acquisition just might.
Instead of following Google’s gamble, strategically allocate your budgets based on what drives the most value.

Wrapping it up

Look: Truth being told, doing all this stuff above is like a full-time job. But it’s a tried and tested strategy that will refine your strategy far more accurately than Google’s palm reading.

To be frank, our solution has all of this baked into its software out-of-the box. And more!

But even if you are prepared to refine your strategy this way on your own, headaches and all, you’ll ensure your campaigns have the focus they deserve.

You can also Head on over to LinkedIn and check out our latest edition of smec Insights for a detailed breakdown!