Machine learning (ML) algorithms build a mathematical model based on training data. The model allows the system to make predictions without being explicitly programmed to perform the task. Machine learning measures the error in any predictions as loss, and determines how to minimize loss.
In Adwords, “loss” can be defined as any keyword bid, or keyword bid adjustment that is either too high, or too low. If a keyword bid is too high, the loss is “wasted money”. If the keyword bid is too low, then the loss is “lost conversions”. The challenge is getting the keyword bids and bid adjustments just right. This is where machine learning comes in. You can learn more about ML training and loss here.
Why is this technology useful?
This system is useful for two main reasons.
1. We can make better decisions. We can figure out the correct bid for each and every keyword.
2. We can make faster decisions. We can calculate the correct bid adjustment for every city in the entire world, and we can update the bid adjustment every day.
This technology is a game changer.
