How Different Bid Types Work

gravel

by Ash Smith

December 1, 2019

While there are many factors that go into running a successful Google Ads account for search, to achieve your business goals at the lowest bid price, you’ll need to consider your bid strategy.

Without a solid bid strategy, it’s going to hurt your advertising budget fast.

But don’t stress – deciding the right bid strategy for your campaigns isn’t as daunting or difficult as it may seem. With a little bit of planning around your business goals, we’re confident you’ll find the right strategy for you – and remember, you can always change your bid strategy in the future if you’re not seeing the results you were hoping for.

Another reason why we’re so confident you’ll find the right search bid strategy for you is because of the number of strategies Google Ads has available. There’s seven of them – and we’re going to go through each.

  1. Target CPA (Target Cost Per Acquisition)
  2. Target ROAS (Target Return on Ad Spend)
  3. Maximise Conversions
  4. Maximise Conversion value
  5. Maximize Clicks
  6. Manual CPC Bidding
  7. Target impression share

1. Target Cost Per Acquisition

If your primary business goal is to drive direct interactions with customers, tracked as conversions, then target CPA is a great bidding strategy to consider.

Target CPA is an automated bid strategy that seeks to bid for your ad to show at a price that you are willing to spend for acquiring one new customer. You’ll be ask to set this number when you’re choosing this bid type, so consider the monetary value of a new customer. Make sure you’re not using the value of the product or service as your TCPA – that won’t see you make a profit.

If you’ve only recently built out your first campaigns, you’ll need to hold off on using target CPA for a minimum of 30 days in order for Google’s machine learning to have enough conversion data available to optimise your bids automatically. Before making the switch, we recommend using a bid strategy like maximise clicks in order to drive traffic and hopefully conversion data.

To choose this bidding strategy, select the check box next to the campaign that you want to apply it to, click on ‘edit’ and choose ‘change bid strategy’. From the drop down options, choose ‘target CPA’ under the automated bid strategies, enter your target CPA and hit ‘apply’.

2. Target ROAS

Keeping on conversion based goals, if you’re highly driven to maximise ROI from ads, the target return on ad spend (ROAS) bid strategy is ideal.

With target ROAS, Google will set your maximum conversion value based on the return you want to achieve from your ad spend, expressed as a percentage.

For example, if you want to generate $10 from every $2 dollars spent on advertising the maths will be:

Sales / ad spend X 100% = Target ROAS

So $10 in sales / $2 ad spend X 100% = 500% ROAS

To get set up, in the bidding strategies screen, choose ‘target ROAS’ and enter the percentage you want to target.

3. Maximise conversions

For most advertisers, conversion numbers are critical to performance. If you’re looking to increase conversions, and aren’t as concerned about working to a target cost per acquisition or return on ad spend, this is the automated bid strategy for you.

The maximise conversions bid strategy automatically adjusts bids to get you the most conversions for your campaigns while spending your budget wisely.

Like target CPA and ROAS, you’ll need to have historical conversion data for Google Ads to work off. Based on your daily budget, Google will determine whether it’s a good idea for you to bid – for example, if your daily budget was $20, and a click costs $20, Google won’t let your ad show.

To set up, simply follow the same steps for changing your bid strategy under settings and choosing maximise conversions.

4. Maximise conversion value

If you’ve set up conversions with transaction specific values, maximise conversion value is a good automated bid strategy to consider.

Using historical data and machine learning, maximise conversion value bidding automatically finds the best CPC bid for your ad each time it’s eligible to appear. Google sets these bids to help get conversions that are the most valuable for your campaign while spending your budget.
Before switching to maximise conversion value bidding, Google recommends the following:

 

  • Check your daily budget amount. Maximise conversion value will try to fully spend your daily budget, so if you’re currently spending much less than your budget, maximise conversion value could increase spend significantly.
  • Check your return on investment (ROI) goals. If you have an ROI goal for your campaign, such as a target return on ad spend (ROAS), you may want to add a target ROAS to your bid strategy.
    To set up this bid strategy, select ‘maximise conversion value’ from the bid strategy options.

5. Maximise Clicks

This bid strategy doesn’t need much of an introduction – it does what it says on the label – it will maximise clicks based on your daily budget.

This is a good strategy if your business goal is to drive traffic to your website as quickly as possible, regardless of whether this traffic will convert.

If you’re interested in conversions, choosing to maximise clicks can be used as a first stage to getting conversion data quickly, before switching to a conversion focused bid strategy later.

To set up, select ‘maximise clicks’ from the bid strategies. We recommend assigning a maximum cost per click as well to ensure you don’t exhaust your budget.

6. Manual CPC bidding

For those of you that are looking for complete control over your bids, manual CPC bidding is as controlled as you can get.

While this strategy lets you get into the nitty gritty and set individual bids for different ad groups, this ultimately requires close monitoring to ensure you are optimising for the best price, which is a demanding job, especially if you’re managing a large account, or multiple accounts.

However, Google does offer some automated assistance by letting you opt into combining manual bidding with enhanced CPC. This will let Google change your bid cost if it suspects a click will result in a conversion.

If this is your first time using Google Ads, we recommend choosing an automated bid strategy first. It will save you a lot of time, and once you get more experienced, you can always switch to manual CPC in the future.

To set up, select ‘manual CPC’ from the bid strategies. You’ll see a check box to opt into enhanced CPC – selecting this will give you the option to optimise for conversions or conversion value.

7. Target impression share

It’s a competitive game when it comes to PPC advertising, especially if the keywords your bidding on are highly trafficked. The more competitive the keyword, the higher the bid cost.

If you’re looking to drive awareness or gain a larger share of the market in a competitive space, target search page location is an automated bid strategy that can keep your visibility up (as long as your keyword quality scores are strong).

To set up, on the bid strategies settings, under ‘what do you want to focus on’, choose ‘impression share’. You’ll have the option to choose where your ads appear on page by choosing from anywhere on the search results page (this can include at the bottom of the organic search results as well), at the top of the search results (this can include 2nd or 3rd position above search results), or at the absolute top of page (first position).

You’ll also be asked to set a target impression share and a maximum CPC to ensure your budget doesn’t get exhausted quickly.

We hope you’ve found the right bid strategy for your business goals. While these are bid strategies for search campaigns, if you are running a display campaign, there are separate bid strategies available that suit goals that are focused more on impressions, rather than driving engagement. Stay tuned for our article on display bid strategies coming soon!

Was that helpful? Here are some other articles