Choosing the right Google Ads bidding type and implementing a solid strategy for adjusting bids is critical to driving your ad costs down.
In this post, we’ll walk you through all the different types of Google Ads bidding strategies, and how to use them to your advantage.
When launching a new campaign on Google Ads, Google asks what type of bidding you want to use:
Automated or Manual?
Most people opt for automated because it is easier to not have to manually change your own bids.
But unfortunately, it’s not as simple as just choosing “automated” just because it's easier, it is about choosing what is right for you based on your performance.
There are 11 different bidding strategies available, and they all have their time and place.
You need to be familiar with all of them to make the right choice.
Google Ads Bidding Strategies: Your 11 Options in 2021 Explained
On Google Ads, there are currently 11 different types of bidding that you can use for a variety of goals.
In this section, we’ll break down each one and what its ideal use case is, including the new maximize conversion value option.
Target Cost Per Acquisition (CPA)
Target CPA bidding is a bidding strategy you can use if you want to optimize for conversions. If driving conversions are your primary goal for the campaign, selecting Target CPA bidding will focus on trying to convert users at a specific acquisition cost.
With this method, Google Ads will automatically set your bids on each campaign based on your CPA. While some conversions may cost more, others may cost less to even out and align with your acquisition costs.
Target CPA bidding can be complicated if you don’t know what your acquisition costs are.
Your Cost per Acquisition is simply the amount of money you can afford to spend on acquiring one customer.
For example, if you sell a product for $50, you don’t want to set your target CPA at $50. That would be breaking even when the goal is to profit.
When selecting this bidding method, you can enter your target CPA, and you’re good to go!
Target Return on Ad Spend (ROAS)
Target Return on Ad Spend is a bidding strategy that throws most for a loop.
Why?
Because it requires some calculations and this is very important.
Target ROAS is the bidding strategy where Google Ads will set your bids to maximize conversion value based on the return you want from your ad spend. This number is percentage-based.
Let me give you a basic example:
On your next Google Ads campaign, you want to generate $10 for every $2 spent. To do the math, you follow this formula:
Sales ÷ ad spend x 100% = Target ROAS
Doing the math for the example above, here’s what the Target ROAS would look like:
$10 in sales from campaign ÷ $2 ad spend (clicks) x 100% = 500% target ROAS
Easy enough, right?
Here’s what the Target ROAS bidding strategy looks like when creating a new campaign:
If you still aren’t sure what to set as your percentage, you can navigate to a previous campaign on Google Ads and modify your columns.
Add the following metric to your columns:
Conv. value/cost
Use the number from your top-performing campaigns as your new Target ROAS.
Maximize Conversions
Maximize Conversions is one of the simplest bidding strategies that Google Ads offers.
Using the maximum daily budget that you set, Google will automatically run your bidding for you to get you the most conversions for your money.
For example, if your daily budget is $100, Google will spend it wisely to find the most conversions.
If a single conversion costs $100, Google won’t bid on it for you.
Before selecting this bidding method, be sure to check that you set your daily budget amount at a reasonable level that you’re willing to spend.
At the end of a campaign, check your return on investment to see if maximizing conversions lead to profitable sales.
Using this strategy, you don’t have to enter any details upon setup (aside from your daily budget).
Maximize Conversion Value
The maximize conversion value strategy was added in August 2019 and is the newest bidding strategy on the platform.
It works essentially like Target ROAS, with the Google Ads algorithm trying to maximize the return on your ad spend.
The difference is that you don’t have to specify a target ROI, you just let the algorithm try to maximize all your ad spend to the best of its ability.
Enhanced Cost Per Click (ECPC)
In a few words, it’s a mix of manual and smart bidding. You set the basic CPC for your ad groups and keywords, but the algorithm gets to optimize them.
Google has the right to increase or decrease your bid amount based on the likelihood of driving the sale. Bids will try to be averaged out at your max cost per click settings.
If a search is too competitive and CPCs are outrageously high, Google can lower your bid to cost less due to decreased chances of converting.
If it’s an easy steal by increasing bids, Google will make the call.
This type of bidding is available on both the Search and Display networks.
You can choose whether you want the algorithm to enhance your set bids based on a flat number of conversions, or to optimize for the value of the conversions.
This will only work if you’ve created different Google Ads conversions with different values, or if you have dynamic conversion events that track the total value of a sale.
You can set up dynamic conversion tracking with most eCommerce solutions like Shopify or WooCommerce.
Maximize Clicks
Maximize Clicks is an automatic bidding strategy based on your maximum daily budget.
Google Ads will attempt to drive the most clicks possible with your daily budget.
It doesn’t consider the quality or relevance of the traffic and isn’t ideal for driving sales or other conversions.
Maximize clicks is the best option if you have a very limited budget or limited search volume for the keywords in your campaign.
Manual CPC Bidding
Manual CPC Bidding gives you more control over your bidding strategy. But, more control means more time spent monitoring costs and adjusting on your own.
If you aren’t well versed in Google Ads yet, this strategy isn’t your best bet.
Manual CPC is where you set bids for different ad groups or keywords on your own. If specific search terms are more profitable than others, you can quickly adjust budgets to add or remove money from other campaigns.
If you have a varied campaign with a lot of ad groups and keywords, manual CPC is a lot of work. You can also end up bidding for a lot of clicks that are unlikely to convert.
Google has the enhanced CPC check-marked by default, so you need to uncheck it to truly select manual CPC.
You’ll see a warning that the campaign may result in low performance, but if your campaign has no data to go on or a very limited budget, it can be the best option.
Cost Per Thousand Impressions (CPM)
Cost per Thousand Impressions, otherwise known as CPM, is bidding solely based on impressions.
This option is reserved for the Display Network and YouTube Ads and isn’t for use on the Search Network (for obvious reasons).
Cost Per Thousand Viewable Impressions (vCPM)
vCPM bidding is a tactic of manual bidding best reserved for brand awareness campaigns.
Again, like CPM bidding, it is reserved for the Display Network and YouTube Ads.
This bidding type is setting your maximum costs on a viewable 1,000 impressions. It counts as a viewable impression after 2 seconds of a video ad is played on YouTube, or 1 second of a display ad is shown on the Display Network.
Cost-Per-View Bidding (CPV)
Cost-per-view bidding is strictly reserved for video advertising on Google Ads and can be used on the YouTube Ads platform. Using CPV bidding, you pay for video views or interactions.
Interactions on YouTube could be any of the following:
Call to action clicks
Overlay clicks
Cards
Companion banners
A “view” is determined by how long someone watches your video ad for, otherwise known as the duration. In this case, with CPV bidding, a view is counted when someone watches 30 seconds of your ad, your full ad if it’s less than 30 seconds, or whenever they engage with your ad!
CPV is currently the default bid setting for YouTube Ads.
Let me give you a quick example of how it works.
For CPV bidding, you start by entering the highest bid you’re willing to pay for a view or interaction. This is known as your maximum cost-per-view.
For instance, if you set your max CPV to $0.25, you’d pay a maximum of 25 cents when a user watches your ad or engages with your call to action.
So, how do you know what to set as your CPV?
Start low and adjust based on your results.
Focus on first maxing out your quality scores and ad rank, these will drive down the cost-per-view on your ads, allowing you to pay less for better results.
Slowly bump up your CPV to increase your audience reach.
Target Impression Share Bidding
Target Impression Share is a new bidding strategy released in late 2018 by Google Ads.
This smart bidding strategy is focused on brand awareness and helping you reach as many people as possible.
As an example, if you’re looking to dominate impressions for specific keyword searches, like basketball shoes.
Enter your goal percentage of impressions.
Keep in mind that the % impression share is a goal and is affected not just by your bids, but also by the quality score of each individual Google ad group and ad.
So even if you aim for 90% or 100%, you’re unlikely to reach that goal without horribly overbidding for views and clicks.
The impressions also don’t guarantee that your ad is seen or clicked, since it can appear in a lower ad position.
Target Impression Share is mostly an option for your own branded search campaigns and a limited number of key search terms for your brand.
Obsolete: Target Search Page Location
This bidding option was officially removed from Google Ads in June 2019. It cannot be used on any campaigns, new or old.
The bidding option that replaced it is called “target impression share,” and adjusts your campaign bids to target a certain level of impressions.
TSPL (Target Search Page Location) bidding was the strategy of letting Google automatically adjust your bids to always show your ads either:
On the first page results of Google
At the top of the first page of Google (1-4)
Obsolete: Target Outranking Share
This bidding option was officially removed from Google Ads in June 2019.
The bidding option that replaced it is called “target impression share,” and adjusts your campaign bids to target a certain level of impressions.
The target outranking share bidding strategy used to let you try to outbid your competitors. If your ads and your competitor’s ads were both displaying, Google increased your bids to outrank their ads.
It’s no longer available for any campaigns, new or old.
Choosing the Right Bidding Strategies for Your Campaign
You may know the basics of each bidding type on Google Ads, but where do you even start with figuring out which bidding option is best for you?
It all depends on your campaign goals, budget, and volume.
Every campaign you choose should carefully select a bidding strategy based on desired outcomes.
For instance, if you want to drive sales on the Display Network, picking the CPM is not a great choice.
That’s meant to secure views rather than sales on your site.
Let’s break down a few common goals on Google Ads and the top bidding tactics you can use for each.
Goal: Conversions
If your goal on a specific Google Ads campaign is conversions, or driving traffic to your website or store with the sole purpose of turning them into a sale, consider the following bid types:
Maximize Conversions
Target CPA
Target ROAS
Target Outranking Share (steal competitors’ sales!)
Manual CPC (with enhanced CPC enabled
Goal: Website traffic
If you want to concentrate on driving more traffic to your site with goals other than merely converting, here are a few great bid types to choose from.
Maximize Clicks
Target Search Page Location
Manual CPC Bidding
Goal: Brand awareness
While brand awareness alone is a less common goal on the search network, there are a few great bidding tactics to use for maximum branding.
Target Impression Share Bidding
Target Search Page Location
Target Outranking Share
CPM and vCPM for YouTube and Display Networks
When to Use Manual Bidding vs. Smart Bidding
Should you use automated bidding, or stick to painstakingly setting and updating bids manually to the best of your ability?
Unfortunately, there’s no right option for every single campaign or advertiser.
Two main factors determine if smart or automated bidding will be a viable option:
The quality and detail of your conversion data.
The volume of your campaign (in terms of traffic and conversions, not ad spend).
Smart bidding options focused on conversions (target CPA, target ROAS, maximize conversions, and maximize conversion value) rely on the Google Ads conversion data.
If you set up your conversions incorrectly, like including a conversion tag on every page, this can have catastrophic results.
You can end up overbidding 10x for clicks (consistently $20+ for a $2 keyword) because the algorithm thinks you’re landing multiple conversions per visit.
This can lead to you wasting hundreds, if not thousands of dollars in just a few days.
Are your conversions set up correctly? Do you have multiple conversions or dynamic conversions that show the real value of a sale or conversion?
Unless you can answer yes to both questions, conversion-focused automated bidding isn’t a good option.
If you only use top-of-funnel conversions like unqualified leads, this can lead to poor optimization by the algorithm, focusing on cheap leads that don’t end up converting into sales.
If possible, you should also include bottom-of-funnel sales events.
The next factor you want to consider is whether you even have enough traffic and conversions for the algorithm to effectively handle your campaign.
Google officially recommends 30+ conversions (or 50+ for target CPA) over a period of a month or longer.
To get reliable results, you should get at least 50-100 conversions every single month (from the single campaign that you’re optimizing, or a range of campaigns if using a portfolio bidding strategy).
Best Practices for Choosing a Bidding Strategy
To make sure you’re on the right path, follow these 4 Best Practices:
Select a bidding tactic based on your campaign goals and volume instead of randomly deciding on an option.
Test different bidding strategies (with A/B tests) for a few weeks and see how performance changes.
Measure your key performance indicators like conversions, conversion rate, cost per conversion, conversion value, and more.
Stick with the one with better results!
Don’t jump from strategy to strategy hoping for better results in an unoptimized campaign.
If you don’t have the right keywords, ad groups, or ads, no bidding strategy will help you.
So after all this which bidding strategy are you going to use for your business objectives?
If you do need assistance with campaign setup or Google Ads management please schedule a call with our team and we can see how we can help your business.
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