Smart Campaigns utilize a process known as "bid resolution" to establish the optimal bid for newly created keywords and product targets. This process takes into account the presence of clicks and sales within the lookback period to determine the most effective bid value.
For search terms that have generated clicks but no sales during the lookback period, the bid resolution process calculates the average bid from only those parent ad groups where the search term was active, i.e., received clicks.
Consider your electronic accessories campaign with multiple ad groups:
The search term "fast charging USB cable" was active in Ad Groups A and B but not in C. The bid resolution will consider only Ad Groups A and B, resulting in a resolved bid of $0.50.
When a search term has clicks and has also led to sales, the bid resolution employs a weighted average, focusing on those parent ad groups where the search term was active. This ensures that the sales volume significantly influences the resolved bid.
Continuing with the electronic accessories campaign:
For the search term "durable USB cable," which received clicks and sales in both Ad Groups A and B, the bid resolution will be:
[($150 sales x $0.45) + ($450 sales x $0.55)] / (150 + 450 sales) = $0.525 bid
If you've set a bid modifier using the Bid Change field in your Smart Campaign rule, it will adjust the resolved bid further, either by a specific amount or by a percentage, refining the bid to align with your strategic goals.