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Are you tired of guessing your way through PPC bidding? Discover the various types of bidding strategies for Google Ads and how to make informed decisions with AI.
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Let’s discuss PPC bidding strategies. If you’ve ever felt like you’re shooting in the dark when choosing the right one, you’re not alone.
When I first started in Google Ads, the only bidding strategy available was Max CPC bidding, which meant everything was manual.
Today, there are numerous AI-driven bidding strategies to cater to your diverse campaign needs.
These strategies aren’t exactly one-size-fits-all solutions for your campaigns.
Not only are there more options than ever to achieve your goals, but the inputs you set at the campaign level are also crucial for success.
The reality is that selecting the appropriate bid strategy can be the difference between achieving your PPC goals or seeing your budget wasted.
Let’s delve into the specifics of AI-driven bid strategies, or Smart Bidding strategies, and how to maximize performance for each of your campaigns.
How Many PPC Bid Strategies Does Google Ads Have?
Google Ads provides multiple bidding strategies designed to meet the goals of all available campaign types
These strategies utilize Google AI to optimize every auction, commonly known as real-time bidding.
It considers numerous factors at the time of the auction outside of your bidding strategy, such as device, location, time of day, operating system, and more.
Google classifies its Smart Bidding strategies into three main goals:
- Conversions
- Clicks
- Viewability
It’s important to align your Google Ads bid strategies with the campaign’s specific advertising objectives.
If you’re uncertain about where to start with goals, consider these points when deciding on a bid strategy:
- Are you looking for users to take direct action on your website?
- Do you want to boost overall website traffic?
- How important is brand awareness to you?
- Are you aiming to increase video engagement and interaction?
Are you focused on product or brand consideration when users are actively shopping around?
Conversion-Based Bid Strategies
Currently, Google Ads offers these Smart Bidding strategies aimed at increasing conversions:
- Target Cost per Action (CPA)
- Target Return on Ad Spend (ROAS)
- Maximize Conversions
- Maximize Conversion Value
- Enhanced Cost per Click (eCPC)
Click-Based Bid Strategies
If your main objective is gaining website traction, the only automated bid strategy currently available is Maximize Clicks.
Manual CPC bidding is still an option, but we’ll cover that later in the article.
Visibility-Based Bid Strategies
Not all campaigns aim to capture the final conversion, and that’s okay!
You need some element of brand awareness, otherwise, the group of people who know about your product will continue to shrink.
If your campaign goals are focused on awareness, consider these automated PPC bidding strategies:
- Target Impression Share
- CPM
- tCPM
- vCPM
Next, we’ll examine the main AI-driven PPC bidding strategies more closely to understand each one better, as well as when it makes sense to choose that particular bid strategy.
Target Cost Per Action (CPA) Bidding
Target CPA allows you to set the amount you’re willing to pay for a conversion. Google Ads uses machine learning to get as many conversions as possible at or below your set CPA.
Google then takes your Target CPA to set bids based on the likelihood of conversion from that particular user.
While some conversions may cost more than your Target CPA, others may cost less, but overall, the Google Ads system aims to keep your cost per conversion at the level you set.
There are multiple scenarios for choosing Target CPA bidding:
- Historical conversion data is available. This bid strategy requires historical conversion data, so if you have ample campaign or account conversion data, this could be a good strategy for you.
- You need better budget control. It’s also beneficial if you need to manage your CPA to control the overall ROI of your PPC program.
- Conversion tracking is accurately set up. As long as there are no underlying issues with your conversion tracking, this bid strategy could be reliable for your campaigns.
For example, if you run an online boutique clothing website and know that acquiring a new customer at $50 is still profitable, you can choose the Target CPA bid strategy and set the limit to $50.
As you run your campaigns, the data shows you’ve consistently been acquiring new customers at $40. Because of this, the Google Ads system knows it can optimize bids further to get you more customers while staying within that $50 limit.
However, there are some limitations to Target CPA bidding:
- Limited budgets could reduce visibility. If you’ve set a competitive Target CPA, Google may limit your ad exposure or participation in the auction and reserve your budget for more expensive or competitive auctions. Essentially, you may see impressions and clicks decline as the system conserves budget expenditure for the most likely-to-purchase candidates.
- Misalignment of daily budget and Target CPA can reduce results. For instance, if you have a daily budget of $50 for your campaign, but your Target CPA is set at $25, your impressions may be significantly reduced because, in this scenario, you’d need to have a stellar conversion rate for the number of clicks you get to stay within that $25 CPA.
Target Return On Ad Spend (ROAS) Bidding
Target ROAS aims to achieve a specific return on ad spend. You set the desired ROAS, and Google Ads optimizes bids to maximize conversion value while meeting your target.
Similar to Target CPA, Google then takes your ROAS inputs to set bids based on the likelihood of conversion from that particular user.
Some good scenarios for using Target ROAS bidding for campaigns include:
- Your goals are revenue-driven. Target ROAS is great for e-commerce businesses where goals are revenue-based.
- You have high-value transactions. This PPC bidding strategy can be especially effective for high-revenue transactions or a high volume of conversions.
- Proper conversion tracking is set up. Similar to Target CPA bidding, this strategy requires accurate conversion tracking. As long as tracking is accurate and validated, this can be a good choice for your campaigns.
The Target ROAS bid strategy is a great choice when you need to balance the cost of your PPC campaigns versus the revenue coming in.
Ultimately, it helps generate more revenue for every dollar spent.
For example, if you have an online store that sells running shoes, and your average order value is $150, you may aim for a 300% ROAS.
This means for every $1 you spend, you get back $3 in revenue. By setting a Target ROAS, Google optimizes campaign bids to focus on the specific conversions that are likely to meet or exceed that 300% ROAS goal.
As your campaigns gain more historical sales data, you’ll notice that more of your dollars are going to those higher revenue-generating sales because of the goal setting.
With Target ROAS settings, remember that if you have an overall goal of 300% ROAS, that doesn’t mean every campaign you set should have that 300% goal.
When it comes to search campaigns, brand terms and non-brand terms are not created equal. Brand terms will likely have the highest ROAS because someone is actively searching for your brand, signaling a higher likelihood of purchase.
Non-brand terms, on the other hand, will be more competitive and costly, and likely won’t have the same ROAS as brand terms. So, be sure to set your ROAS goals at the campaign level accordingly.
Maximize Conversions Bidding
Maximize Conversions automatically sets bids to help you get the most conversions within your budget.
This strategy aims to spend your entire campaign budget without having any ROAS or CPA limitations.
Maximize Conversions can be an ideal bid strategy if:
- You have more budget flexibility. As mentioned above, this strategy is not constrained by CPA or ROAS targets. If you’re looking to drive as many conversions as possible and have the budget to do so, this strategy is right for you.
- You’re looking for quick wins. If you just launched a new product and conversion expectations are high, this is an ideal strategy.
- A broader audience is targeted. This strategy can be effective with a broader audience because there’s more likelihood for your ads to show as the system learns what a valuable customer looks like.
For example, if your company just launched a new fitness app and needs to acquire users quickly,
By having a flexible budget, Maximize Conversions is chosen to drive as many downloads and signups as possible. Google will automatically adjust those bids to find the users most likely to convert.
This bid strategy is not for the faint of heart, especially for advertisers who have limited budgets or need to stay within certain performance constraints.
Maximize Conversion Value Bidding
Similar to Maximize Conversions, the Maximize Conversion Value strategy sets bids to help you get the most conversion value within your budget.
This strategy aims to optimize for conversion value while spending your entire campaign budget without having any ROAS or CPA limitations.
Maximize Conversions can be an ideal bid strategy if:
- Conversion value is prioritized over volume. This bid strategy is suitable when the goal is to prioritize high-value conversions instead of the volume of conversions.
- Campaigns are revenue-focused. Maximize Conversion Value is great when maximizing revenue is important.
- Your products have multiple price points. This is an effective bid strategy when you have different products that vary in price. The system will learn to focus on the high-value transactions from users.
For example, if you run an online wedding invitations company with higher price points, and your site also sells accessories that cost much less than the invitations,
Using the Maximize Conversion Value bidding strategy helps focus on those high-value transactions, like wedding invitations, to boost your revenue while spending your campaign budget.
As with each bidding strategy, there are some limitations to using the Maximize Conversions (and Value) strategies:
Performance is dependent on campaign budget. If the campaign budget is set too low, it will be difficult for Google Ads to effectively learn and optimize towards high-value conversions.