Understanding Bidding Strategies for Your Google Ads Campaign

Paid search is an awesome way to bring exposure to your business and increase sales. Clients often come to us wanting to know more about how bidding works on the Google search engine and within Google Ads. Many times, they don’t know the difference between Smart automated and manual bidding, or that you can choose individual bidding strategies for each campaign you run. This blog will break down the most common bidding strategies, when you should use them, and how to implement them.

Manual Bidding

When Google Ads (formerly Google AdWords) was first introduced in 2000, there was no such thing as automated bidding. Advertisers had to set their bids at the keyword level, and more often than not, there was little visibility into what the actual cost of the keyword was. Many advertisers ended up overpaying for ads and there would be large gaps between what one advertiser bid for a keyword versus what another advertiser did. This created an inefficiency in the bidding process, however, as time went on, this was corrected. 

Advertisers typically lean towards using manual bidding when they want more control over exactly how much they want to spend. There are pros and cons to this strategy. The biggest pro is the amount of control you have over your advertising costs on the most granular level. If you’re new to manual bidding, there are a couple of built-in tools you can use to help you make decisions on specific bids. 

Google Ad’s built-in keyword planner helps you check volume and cost for specific keywords. You can use this in combination with Google’s built-in bid simulator to determine exactly how much a click is worth to your business. Use information about your business in order to help you create your individualized bids.

How much control do I actually have?

With that being said, the amount of control you have over your bids can also be your downfall. The market cost for keywords is constantly changing based on time of day, location, how many advertisers are bidding on the same keyword, etc. There are many factors that go into how much a keyword is worth. It is impossible for one person, or even a business, to take all of these factors into account in order to bid most effectively. 

At the end of the day, even with complete manual control, you could be missing out on potential traffic due to the fact that the bid environment is constantly changing. The lack of sophistication is what leads many advertisers to opt towards automated Smart bidding strategies, or at least mix automated bidding into their account with some campaigns being manual, and some being automated.

Automated Smart Bidding 

Automated or Smart bidding eliminates the guesswork from your bidding strategy. Instead of setting individualized bids at the keyword level, you choose from a portfolio of strategies each with a unique purpose for your business. The strategies are as follows:

1. Maximize Clicks

The overall goal of this strategy is to increase website traffic. Google will take your overall campaign budget into consideration and set your bids accordingly in order to get as many clicks as possible. The amount of clicks you get will depend on your overall budget, as well as the number of keywords. This strategy, while it doesn’t focus on leads, can go hand-in-hand with an inbound marketing strategy.

2. Target Impression Share

The goal of the target impression share strategy is to increase your overall visibility for paid ads. One of the metrics used to measure ads performance is search impression share. If you struggle with showing up often for an ad, or if you just want to create ads that show at the top of the page, target impression share could be a good choice. This strategy will take your overall budget into account, and it should be noted that depending on what exactly you’re advertising, this strategy can be one of the more costly strategies.

3. Target CPA

CPA stands for cost-per-acquisition. If you have consistent data on your average cost-per-acquisition, this strategy is optimal for controlling exactly how much you pay per new customer acquired. This strategy is the best option for businesses focused on generating a consistent number of leads at a set cost. 

Keep in mind that ambitious cost-per-acquisition targets will harm your account. You should take advantage of the data within your account to create reasonable targets. Best practice for implementing target CPA is to define your goal CPA and slowly work towards it. If you work specifically with a Google Ads specialist, they should be able to give you more tailored advice depending on your goals. 

4. Target ROAS

ROAS stands for return on ad spend. Generally speaking, this is the metric most advertisers use to measure ad performance and justify paid spend. Similar to target CPA bidding, if you have consistent data on your average ROAS, this strategy is optimal for setting ROAS goals, controlling return, and scaling your campaigns. This strategy is the best option for businesses that are focused on optimizing their revenue through Google Ads. Google will provide a recommended ROAS goal based on historical performance — it is recommended to start with this goal and work with your specialist to scale appropriately as the campaign matures. 

5. Maximize Conversions

Conversions are the end-all goal for many advertisers. You choose what to define as a conversion goal, or goals, in your account, and this strategy optimizes to achieve them in a cost-effective manner. While this may seem like an easy strategy to pick and automate, it is equally important to define your goals from micro to macro such as a Button Click to Form Fill. 

This strategy is used by advertisers who want to generate a higher volume of conversions while staying within your campaign’s budget. This is an excellent strategy for many advertisers, and is the most widely used automated strategy across all advertising using Google Ads to grow their business.

6. Maximize Conversion Value

This bidding strategy is a variation of the Maximize Conversions strategy. While maximizing conversions is focused on generating a raw number of conversions, this is focused on generating the highest conversion value with respect to your budget. This strategy is best utilized when tested for at least three months or more giving you enough conversion value data in each campaign you implement this strategy in. Many advertisers use this to help scale the overall amount they are generating from campaigns. 

As you can tell by the options above, there are many strategies a business can use in order to achieve their goals on Google Ads. As Google Ads becomes more automated, it is important to be able to master each strategy and understand the specific scenarios they should be implemented in. A properly built Google Ads account typically has a mix of manual bidding, and a number of different automated strategies based on the campaign.

Conducting Tests

A properly built Google Ads account typically has a mix of manual bidding, and a number of different automated strategies based on the campaign. In order to understand what works best for your business, you must test each strategy you are interested in. 

To begin a test, go into the specific campaign, create a draft, choose the specific bidding strategy for your draft, and launch an experiment based on that strategy. At Pinckney, we suggest you run the experiment for at least three months, with a 50 / 50 split (meaning split the budget between the original campaign, and the experiment gets split 50 / 50 in order to determine the highest performing option). 

After three months, you can evaluate performance based on the metrics that you determined to be most important when beginning your test. Let’s say you chose Maximize Conversions and tested against a manual cost-per-click strategy for three months. 

Did your number of conversions in your experiment campaign increase significantly compared to the control campaign? How about your cost-per-click, did that stay within a reasonable amount? These are just a few of the questions you should consider when reviewing the performance of your experiments. Keeping a constant flow of experiments in the mix is important when optimizing your account. You never know what your winning bid strategy will be until you test it.

Evaluating Success

Once you have enough data from your experiments, you are good to launch them! As a rule of thumb, review performance on a three month rolling basis and always look to implement more experiments as mentioned above. Get creative with your efforts and don’t be afraid to test variations of your keyword matches, ad copy or headlines. The best accounts are ones that mix analysis with a healthy amount of creativity. 
At Pinckney Marketing, we believe marketing is always evolving, similar to how Google is releasing and optimizing additions to Google Ads on a quarterly basis. Want us to build awesome Google Ads campaigns for you? Check out our paid search services and get in contact with us today.