Google Ads Bid Strategy Explained

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Choosing the right bid strategy for Google Ads can be a daunting prospect – so many options, many of which can look quite similar on the surface but can deliver quite different results. The key to success is making sure you choose the option which most closely aligns with your ultimate business goal.

In this article, we’ll look to summarise your options, highlight the best use for each bidding strategy, and also cover some additional helpful pointers around how to launch a new campaign type.

Manual Bid Strategies

CPC (Cost Per Click)

Manual CPC bidding is the original, and most easily explained, bid method available on Google Ads. It allows you to simply set the maximum amount you are willing to pay for a visitor to your website.

While simple to setup, manual CPC bidding can take quite a bit of time to manage effectively, as it requires extensive performance monitoring across all of your ad groups and keywords. With recent Google reporting changes and the fact that it is near on impossible to take into account all the data points Google has access to within its smart bidding/machine learning algorithms, this bid strategy can be limiting for larger accounts.

Enhanced CPC (ECPC)

Enhanced CPC bidding is similar to manual bidding, but allows Google to make automatic adjustments to bids when it thinks it will result in a conversion. This smart bidding method will attempt to keep the average cost per click below your max CPC (including bid adjustments) when optimising for conversions.

This bidding method is handy for those that want to keep manual control over bids but use some Google smart bidding technology. To use Enhanced CPC bidding you must have conversion tracking set up within your account.

Automated Bid Strategies

Automated bidding is designed to take the heavy lifting and guesswork out of setting bids to meet your performance targets. You provide Google with guidance as to your target outcome and they use machine learning algorithms to automatically adjust your bids to achieve your goals.

To slightly complicate matters, within automated bidding, there is a subset called “smart bidding” campaign types, which are focused on conversion-based campaigns. These campaign types use Google machine learning to optimise for conversions or revenue in every ad auction – commonly referred to as “auction time bidding”. In short, smart bidding campaigns can take into account additional signals not available through normal manual bid adjustments.

Google bid signals

Each type of automated bid strategy mentioned below is designed to help you achieve a specific goal for your business. The key part is making sure you choose a campaign type which aligns with your overall business goals.

Target Impression Share

The Target Impression Share strategy automatically sets bids based on the goal of showing your ad on the absolute top of the page, the top of the page or anywhere on the page (you choose which). This method is focused on ensuring your ads are present and you get the desired level of impression share – so is completely focused around visibility.

Target Impression Share Bid Strategy

It is possible (and recommended) to set a maximum CPC bid limit to help guard against overspend with this method. This bid strategy is not recommended if you are looking to generate actions and/or have performance targets outside of maintaining or increasing search impression share as Google is purely focused on generating search impressions.

Business Goal: Increase Visibility

Maximise Clicks

Maximise Clicks is a fully automated bid strategy which instructs Google to generate as many clicks as possible based on your daily budget. Google will work to spend your full daily budget each day, so it can pay to make sure you monitor your average CPC rates over time, particularly within competitive search auctions.

Maximise clicks bid strategy

This bid strategy can be useful if you are simply focused on driving as much traffic as possible for a set budget, however, it should be used with caution if you are interested in generating onsite actions or conversions, as cheap clicks do not always display the greatest levels of engagement or conversion behaviours.

Business Goal: Increase Visitors

Maximise Conversions

With the Maximise Conversions bid strategy, Google will attempt to spend your full daily budget and generate as many conversions as possible. You can’t control your CPC levels as there are no maximum bid limits.

Obviously, the key to using this form of bid strategy is to first make sure you have conversion tracking in place but it is also vitally important that you set your bid strategy against only your most important business goals – if you include multiple conversion actions (eg: email subscription, brochure download and enquiry form submission) they will be treated, and bid against, equally.

While this bid strategy can sound very appealing, it can sometimes be a little hit and miss for retailers or anyone with profitability based targets, as Google will always try to spend the allotted daily budget regardless of any form of ROI performance. If you have a slow conversion day, Google can still spend your daily budget.

Business Goal: Increase Leads

Maximise Conversion Value

The Maximise Conversion Value strategy automatically sets bids to help you get the most conversion value for your campaign while spending your daily budget. It is geared towards increasing the revenue generated from your campaign, without the need to set specific targets.

Similar to the previous two methods, this strategy will always attempt to spend your full daily budget and is therefore not as focused on efficiency as some other methods discussed below. If you have ROI goals, Google recommends adding a Target ROAS to your bid strategy.

Business Goal: Increase Revenue

Target CPA (Cost Per Action)

Target CPA is a smart bidding strategy which allows you to set the average amount you are willing to pay for a conversion. Google will then optimise your campaign to generate as many conversions as possible at or below your set CPA rate.

Target CPA bid strategy

For this method to perform well, you often need a solid level of historical conversion data for Google to draw on. There is no stated minimum number of conversions required, however, you’ll really want at least 30 conversions per month to see good results.

When changing an existing campaign to a Target CPA strategy, Google will suggest a recommended CPA rate. It’s worth noting that if you set your target CPA too low, you will likely see very little traffic coming through as Google will be limited in displaying your ads.

Business Goal: Increase Sales or Leads

Target ROAS (Return On Advertising Spend)

Target ROAS is a smart bidding strategy which allows you to set the average conversion value you would like to get for each $1 of advertising spent. Google will then set your CPC bids to maximise the conversion value generated while also trying to meet your average ROAS target. For example, if your goal was to generate $5 in revenue for each $1 spent on advertising, you would set your ROAS target to 500%.

Target ROAS bid strategy

To use Target ROAS in a search campaign, you need a minimum of 15 conversions within the past 30 days. That said, Google recommends around 50 conversions within the last 30 days to give the machine learning algorithms the best chance to maximise results.

When switching an existing campaign to Target ROAS, Google will suggest a recommended ROAS value based on your historical performance. If you set your ROAS too low, your ads will likely be limited.

Business Goal: Increase Profit

What Is The Best Bid Strategy?

Google Ads is definitely not a one-size-fits-all marketing platform, as can be seen by the continual introduction of new features and options for advertisers to try and hit their various goals. For a lot of marketers, smart bidding is likely to be the way forward, as few advertisers have the time or ability to leverage the wealth of contextual signals and real-time bid adjustments which lie at the heart of Googles machine learning algorithms.

Choosing the right bid strategy should be done at the campaign level and should be dependant on what you are trying to achieve with a particular campaign, alongside your ultimate business goal.

Business GoalBid StrategyCampaign Goal
Increase Visibility or AwarenessTarget Impression ShareMaintain or increase search impression share
Increase Website VisitorsMaximise ClicksGenerate as many clicks to your website as possible while spending your budget
Increase LeadsMaximise ConversionsGenerate as many conversions as possible while spending your budget
Increase RevenueMaximise Conversion ValueGenerate more conversion value while spending your budget
Increase Sales or LeadsTarget CPAGenerate as many conversions as possible with target cost settings
Increase ProfitabilityTarget ROASGenerate as much conversion value as possible with target return on advertising settings

We should point out that it is possible to have multiple types of bid strategies across campaigns within your account, so you could look to structure things in different ways depending on what you are trying to do with each campaign (ie: a conversion-focused campaign, a consideration influencing campaign, an awareness-building campaign etc).

Launching An Automated Bid Strategy

When launching a new bid strategy, there will be a learning period and likely variable early results. Assuming you have put thought into adopting the most suitable strategy, you must be patient and give the campaign adequate time to learn, optimise and grow. We would strongly recommend against regularly switching between campaign types as you are likely to see large fluctuations and very inconsistent results.

The best way to launch a new bid strategy is to first test changes and understand their impact before committing with drafts and experiments. You can use drafts to prepare multiple changes to a campaign. From there, you can either apply your changes back to the original campaign or use it to create an experiment. Experiments help you measure your results to understand the impact of Smart Bidding before you apply it to a campaign.

How To Test A Bid Strategy

  • Ensure that your bidding test is simple, consistent and focused on a single KPI.
    Why: Adding new variables as you test automated bidding can cloud your test results. The K.I.S.S. (Keep It Simple Stupid) rule applies.
  • Focus your test on the largest campaign you’re comfortable experimenting with.
    Why: In testing, more data means more confidence and faster results. If you only test smaller campaigns, meaningful results may take quite a long time.
  • Start with realistic targets which align with your historical CPA or ROAS.
    Why: This allows for a clearer comparisons. Also, overly-aggressive targets can affect your volume and cloud the comparison with your historical averages.

How Long Is The Learning Period

The learning period will typically take 1-2 weeks while Google calibrates your campaign, but this may vary based on the type of campaign and the historical volume of conversions generated. As a rough rule of thumb, the more conversions your campaign generates – the more stable your automated bid metrics are likely to be and the quicker the initial learning period.

Target CPA Learning Period

There is no conversion volume threshold required to activate Target CPA, however, Google recommends to focus on campaigns that have generated at least 30 conversions in the past 30 days.

Number of Conversions
(in the past 30 days)
CPA FluctuationInitial Learning Period
30Medium to HighSlow
60MediumMedium
100LowFast
500Very LowVery Fast

Target ROAS Learning Period

Revenue-based bid strategies tend to have higher thresholds as they see greater performance variations across conversion values in addition to conversion rates. As a result, for a bid strategy like Target ROAS, Google recommends a higher conversion threshold of at least 50 conversions in the past 30 days.

Number of Conversions
(in the past 30 days)
ROAS FluctuationInitial Learning Period
50Medium to HighSlow
100MediumMedium
200LowFast
500Very LowVery Fast

Summary

When launching a paid search campaign on Google Ads careful thought needs to be made as to how you are going to bid, as this forms the foundation of your overall performance. The default of paying per click is often not the most suitable option across the board anymore, as marketers should be looking to align the performance of their campaigns as closely as possible with the overall business goal.

Smart bidding technology provided by Google can help reduce the burden of highly granular keyword management and, where an account has a strong level of historical conversion history, can often improve performance. That said, no automated bid strategy is a golden bullet, so you definitely need to do your homework, test wherever possible and make sure you are keeping a close eye on your overall KPI performance.

Let us know if you’d like to have a chat about your SEM strategy.

About the author

Paul

Paul has worked across a wide range of brands in NZ, Australia & internationally. He is known for untangling complex search issues and delivering results within both SEO & SEM.

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Paul - (027) 513 6134
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Paul - (027) 513 6134
Charles - (021) 807 829