What they fix
If a tag broke and conversions went unrecorded for a few days, Smart Bidding would otherwise learn from that false dip and pull back. A data exclusion tells Google to disregard that window so the artifact does not distort bids.
Use them narrowly
Data exclusions are only for genuine measurement failures, and Google advises keeping them short. Do not use them to paper over real performance drops. They are the backward-looking counterpart to seasonality adjustments, which prepare bidding for a known future spike.
Common questions
When should you use a data exclusion?
Only when conversion tracking genuinely failed for a period, so Smart Bidding should ignore that window. Not for real performance dips, and kept as short as possible.
What is the difference between data exclusions and seasonality adjustments?
Data exclusions tell bidding to ignore a past period of broken tracking; seasonality adjustments prepare bidding for an expected future change in conversion rate.