Choose the Best Bidding Strategy for you (Without Going Broke)

Christopher Agron

February 19, 2019

Businesses typically don’t have employees with the specialized skills to handle the complexities of the Google Ads platform. It is crucial that SEMs make the right decisions regarding bidding strategies so that the small businesses can focus on what matters, their business.

So what is a bidding strategy?

A bidding strategy is a set of goal driven guidelines for how Google will regulate your bids in the Google search auction and whether or not Google automates or doesn’t automate your bidding.

If you choose the wrong strategy for your campaigns you can unintentionally be spending your budget while hurting your campaigns performance. Now, I’m sure you are wondering which bid strategy is right for my business?
That’s a great question, let’s dive into bidding strategies and how they are used so you can choose what makes most sense for you.

1. Manual CPC Bidding
2. ECPC
3. Maximize Clicks
4. CPM Bidding
5. vCPM Bidding
6. Maximize Conversions
7. Target CPA
8. Target ROAS
9. Target Outranking Share
10. Target Search Page Location
11. Pay for Conversions

Manual CPC bidding allows you to manually decide what your Maximum  Cost Per Click will be. By choosing what the max CPC is you gain more control over your bidding strategy, but unfortunately have to spend more time analyzing the results of your decisions to optimize your ads.

A perfect instance to use this setting is to A/B test or gather data on the performance of an ad prior to optimization. If you allow google to optimize your bidding without it already having a significant amount of data, it may choose to display an ad over another, based on incomplete information.

One change you can make to increase the performance of CPC Bidding is combine Manual Bidding with Enhanced Cost Per Click ECPC. Google has a wide range of identifiable attributes about a person and their context at the time of a particular auction called signals, which allow Google to increase and decrease bids based on the likelihood of the ads converting.

Enhanced Cost Per Click allows Google to increase or decrease your max bid amount based on the likelihood of the click driving a conversion. Bids will try to be averaged below your max cost per click settings. If a someone using Google is not likely to convert Google can assess this and react by decreasing your bid. Conversely, If you can win by increasing bids, and the signals show Google that this user is likely to convert, it will increase your bid. Though this type of bidding is restricted to the Search and Display networks, it is very effective at winning conversions and is suitable for most situations.

Maximize Clicks is an automatic bidding strategy that has Google attempt to drive the most clicks possible with your daily budget.

This bid strategy is effective for increasing brand awareness and generating as much traffic as possible when you have a capped budget.

Cost Per Thousand Impressions (CPM) is bidding solely based on impressions. It is only available on Display and YouTube campaigns. We typically do not use this strategy because it isn’t paying for intent (click) and Google will count impressions even if it the person was not able to view your ad.

A good use case for CPM Bidding is running new product campaigns with good creative for large brands. When brands are announcing new products like the Iphone for example, even if you don’t convert immediately, increasing the product’s awareness will build a attention and lead to conversions long term.

Like CPM, Cost Per Thousand Viewable Impressions (vCPM) is a bidding strategy best reserved for brand awareness campaigns. Similar to CPM, it is only available for Display and Youtube campaigns but this bidding strategy ensures that each person you are getting charged for actually viewed your ad, unlike CPM bidding.

Using the maximum daily budget that you set, Google will automatically run your bidding for you to get you the most conversions at that budget.

Using this strategy is very easy because you don’t have to enter many details upon setup (besides your daily budget, conversion tracking, and set volume of sales) but maximizing conversions does not necessarily mean it is maximizing return on ad spend.

Target Return on Ad Spend (ROAS)

Target Return on Ad Spend or (ROAS) allows you to tell Google how much profit relative to ad spend you want to earn.

Sales ÷ ad spend x 100% = Target ROAS

So if you hypothetically want Google to make you $10 for every $2 spent, you would set your ROAS to 500%.

$10 in sales from campaign ÷ $2 ad spend (clicks) x 100% = 500% target ROAS

This strategy will attempt to AVERAGE your campaign ROAS, so you may still see ad groups or keywords with a ROAS much higher or lower than your target, but blended together they should reach your target ROAS after several weeks of learning.

A good use case for this strategy is a service that has a set cost for the business, and a varying return such as real estate. Real estate will have service fees and time that has to be dedicated to the sale, but not all homes are the same price and se. This strategy would allow Google to bid higher on sales that would make more revenue.

Target Cost Per Acquisition (CPA) allows you to acquire as many conversions as possible at your target budget. This method sets Google to automatically set your bids on each campaign based on your CPA. In CPA some conversions may cost more, some may cost less but Google will ensure the average is your target as to align with your acquisition costs. This bidding strategy is most effective for e-commerce and digital products such as software and digital courses because in these cases it is clear what target CPA is going to be profitable.

Target Search Page Location is a bidding strategy of that let’s Google automatically adjust your bids to always show your ads either:

1. Anywhere in the first page results of Google (top or bottom)
2. At the top of the first page of Google (1-3)

Google has the disclaimer that this strategy “doesn’t guarantee placement,” but you will more than likely be placed at where you choose if your quality scores are high.

Target Outranking Share

Target Outranking Share is a strategy that allows you to choose a specific website or competitor that you want to outrank, and have Google increase your bids to outrank their ads when you and your competitors ads are both displaying. Google will also show your ads when your competitor isn’t showing up to give you better brand awareness for queries you are targeting.

Here are your options when selecting this bid strategy:

Though this looks complicated, it is actually very simple to set up.

1. First, select the domain name you want to outrank.
2. Then set the Target to outrank.
   Target to outrank is the percentage of times you want your bid to rank on top of them.

For instance, setting it at 90% would mean that you want to outrank them 9 out of 10 auctions.

Pay for conversion is a feature of TCPA, the same way that ECPC is a feature of CPC.

You can choose to pay for conversions, rather than clicks when using a Smart Display campaign or a standard display campaign. Paying for conversions means you only pay when customers convert on your website or app.

But there are several factors that can disqualify an ad from having this feature:

First, the option to pay for conversions is only available when you use Target CPA on Display campaigns or on Smart Display campaigns.

Second, advertisers cannot use pay for conversion and bid towards offline conversion types. Offline conversion types include ”Import from clicks” and “Store visits.” If you want to be eligible for pay for conversions, make sure these conversion types are not included.

Third, pay for conversions doesn’t work with shared budgets.

Lastly, advertisers cannot use Pay for Conversion unless the CID has a conversion delay (aka conversion lag, time between click and conversion) of fewer than 7 days.

For more information about the Pay for conversion bid strategy see Google’s help doc.

Pay For Conversion is very effective for businesses that are eligible. It allows you to choose the price for conversion thus ensuring that you get your desired ROI.

I hope this bid strategy overview was resourceful for you, and will allow you to make the best decision for your small business so that you don’t  unintentionally spend your budget on the wrong strategy.