Google Ads Bidding Explained: Which Strategy to Choose
Updated on: 21 December 2020
Artificial intelligence has been a hot buzzword for a while now, and its impact hasn’t spared the digital marketing world. In the past and even today, pay-per-click marketers had to rely on their experience, intuition and analysis of past performance data to guide their decision-making. However, with the rise of AI-driven bidding tools, there’s much potential to ease the workflow and involvement of the PPC marketer, leaving more time for other types of strategising.
Is AI automated bidding really the way forward? Before we delve into the art of choosing the best PPC bidding strategy to go for – with a focus on Google Ads – let’s first establish what bid strategy means.
What is bid strategy in Google Ads?
Your bid puts you in the auction of displaying your ads on a search result, or on a blog, news site, or some other page. It can decide the position that your ad is placed at, and the keywords you can target your ad for.
While the concept seems simple at first glance, there are a multitude of strategies that can be employed in bidding for PPC ads like Google Ads. The right strategy can make a world of a difference in determining the costs you incur on your campaign, and the performance of your ads in terms of impressions, conversions, or revenue earned. On the flipside, one wrong click can cost you precious time and money.
For these reasons, it pays to know the bid strategies available to you, so you can make an informed choice depending on your (or your client’s) goals.
What are the main bidding strategies in Google?
To get you started on choosing the right strategy for your Google Ads bidding, here is an overview of each strategy and how to use them best.
The do-it-yourself method gives you tight reign over your campaigns, but requires a lot of work monitoring, analysing, and deciding on the best course of action. This method is best reserved for experienced PPC experts, or in the case of new campaigns where there is insufficient data to do automated bidding.
Think of it like a mix of manual and automated bidding. You can set the cost-per-click (CPC), but let the algorithm decide how best to optimise them. Google Ads can adjust your bid amount based on the competitiveness and CPC of your keywords, averaging out the cost according to the max CPC you have set.
The target cost per acquisition (CPA) is essentially what you are willing to spend to acquire one customer. This method involves setting the target CPA to get the highest possible number of conversions as close as possible to the target you’ve set. This is useful when clients have set a maximum cost per conversion required to break even, to ensure that they profit.
Instead of setting the target cost, this method involves setting your goal for return on ad spend (ROAS). For example, if you want to earn $10 for every $2 ad spend, your ROAS should be set at 500%. This is applicable to e-commerce campaigns that are focused on maximising revenue. Similar to target CPA, this method is suitable when a client has expressed their desired minimum return in order to profit on every sale.
Target Impression Share
In this strategy, you set your target for impression shares, and choose your ad position (top of page, or absolute top of page) for these impressions. Generally, this strategy is used for branded campaigns.
Cost per Thousand Impressions
This strategy lets you set the maximum cost you are willing to spend on 1000 impressions. Only applicable to Display Network and YouTube Ads, this strategy is useful when you want to raise brand awareness, rather than drive conversions and sales.
Cost per Thousand Viewable Impressions (vCPM)
Building on the previous strategy, the vCPM only counts viewable impressions, i.e. when a display ad is shown for more than 1 second, or when a video ad on YouTube is played for over 2 seconds.
A comparatively simple one, this strategy lets the algorithm decide how to split your budget to get as many conversions as possible. For an account that is doing relatively well, you can boost its performance even further with this strategy. Set your budget carefully to an amount you are willing to spend, as it will almost always be fully utilised.
Maximise Conversion Value
This works similarly to Target ROAS, except that you leave it to the algorithm to decide on the best ROAS value achievable.
This automated bidding strategy optimises for the maximum number of clicks possible with your set daily budget. While it doesn’t take into account the quality of relevance of said traffic, this method can be useful for campaigns with a tight budget or limited search volume keywords.
In some PPC marketing guides, you may still see another two terms being thrown around: Target Search Page Location, and Target Outranking Share. These two strategies have been discontinued in Google Ads as of June 2019.
Pros and cons of Manual Bidding and Automated Bidding
Manual bidding requires a marketer to draw from their experience, intuition, and analysis of past keyword performance data to guide their decision-making and manage their keyword bids on the Google Ads platform without AI-assisted solutions. This allows for finer controls and quicker reaction to any changes. However, this can be time-consuming, especially when marketers have dozens or more projects on hand at any one time.
In automated bidding, Google uses machine-learning to create a bidding strategy. By analysing the user’s Google profile such as device, location, and demographics, it will automatically set bid amounts and figure out the likelihood of conversion. The field of automated bidding is extensive, as there are several methods available just in Google Ads itself. When the right method is used, it can save the PPC manager plenty of valuable time, effort, and money. However, this route can have its limitations as it requires sufficient data to work with, and can be prone to sudden, unexpected changes in algorithm.
How to choose a bidding strategy that’s right for you
The best bidding strategy in Google Ads depends on your goals. You must also take into consideration the amount of account data Google needs to make them work.
For focus on conversions, there are Smart Bidding strategies you can use such as Target CPA, Target ROAS, and Enhanced CPC.
To increase sales or leads, get as many conversions as possible with Maximise Conversions and Target CPA at a fixed budget. If your goal is to maximise visibility, vCPM and Target Impression Share can help to increase awareness and maximise reach.
With our quick guide, we hope you’ll have a better direction on which bidding strategy to go for. Still need help? Speak to our PPC managers to get a customised plan and quote to boost your campaigns, without the hassle!