Last Modified on January 4, 2024
Do you want to maximize the return on your investment in ads?
Every time an ad space is available, Google Ads runs an auction to decide which ads will be shown and in which order. Unlike common auctions, the highest bidder does not always get the best position – the highest position can be attained even at a lower price.
If you don’t know what you’re doing, you can end up wasting your entire budget on just a few clicks that might not even bring conversions to your business.
As such, Google Ads offers several bidding strategies to assist you in setting bids for your ads. These bid strategies tailor to different types of campaigns, depending on whether you want to focus on getting clicks, impressions, conversions, or views.
In this post, we’ll show you which Google Ads bidding strategies yield great results, those that are good for specific goals, and which ones you should avoid.
🚨 Note: If you’re not sure how to optimize your Google Ads campaign, check out our handy guide.
Here’s an overview of what we’ll cover:
- Google Ads Types of Bidding
- Google Automated Bidding
- Which Bid Strategy Am I Using?
- Different Google Ads Bidding Strategies
Google Ads Types of Bidding
There are 2 types of bidding in Google Ads – manual bidding and automated bidding.
What’s the difference between these 2 types of bidding?
Manual bidding is where you, the advertiser, manually select the maximum price on the cost per click (CPC) that you’re willing to pay at a keyword level.
The appeal of this approach is that you pay for Google’s “billboard space” not for the number of views it receives, but for every click on your ad.
Let’s say that 100 users view your ad. You only need to pay for the 6 who click the ad, not the other 94 viewers.
In automated bidding, you essentially hand over the bidding reins to Google and let Google decide what you end up paying at a CPC level.
Google Ads automatically sets the bids for your ads based on their likelihood to result in a click or conversion. Of course, there are constraints that you can apply so that Google doesn’t go crazy on what they spend.
If you would like to set separate bids for individual keywords or placements, then a manual bidding strategy would work perfectly for you. However, this approach means you need to account for a myriad of signals like device type, location, time, and day of the week.
This is where the automated bid strategy comes in handy. It takes the heavy lifting and guesswork out of setting bids to meet your performance goals.
Now, let’s go a little more in-depth and explain Google Ads’ automated bid strategies.
Google Automated Bidding
How does Google’s automated bidding decide what to bid on a cost per click? Essentially, they use machine learning and artificial intelligence mechanisms to bid differently for different people.
If you think about it, Google is essentially a data company. They own Google Search, YouTube, Gmail, Google Chrome, Google Analytics, and Google Ads for business. So, they have the data across all these platforms which allows them to bid differently on each individual.
This is, of course, an oversimplified explanation. Nonetheless, it’s definitely worth experimenting with automated bidding strategies, especially the ones that I will recommend in this post as that will be the future of advertising in Google.
You really won’t have to mess around with changing bids every day. You can just rely on Google’s AI and machine learning to really optimize for what your goals are.
Which Bid Strategy Am I Using?
So, how do you find out which bid strategy you are currently using?
Maybe you want to try out these automated bidding strategies, but you’re unsure if you’re already using one of them. If you have a search campaign live, then simply follow these simple steps.
First, go into your campaign. Next, go to COLUMNS → Modify columns.
Next, go to Attributes and select Bid strategy type. Finally, click Apply.
Scrolling across to the end, you’ll see what bid strategy each ad group has implemented. Here, you can see that I have the Maximize conversions with Target CPA bidding.
Now, what are the automated bid strategies that Google Ads has to offer?
Different Google Ads Bidding Strategies
To view all of the available Google Ads bidding strategies, let’s go to one of my campaigns. Since I have already implemented a bidding strategy, the steps I will show also doubles as a guide on how to change your bid strategy.
Go to Settings → Bidding → Change bid strategy.
Click on Ok, select bid strategy directly (not recommended).
Here, you can see that all the bid strategies are grouped into Automated bid strategies and Manual bid strategies.
Since the manual bid strategy is self-explanatory, the main focus here will be to discuss the automated bid strategies Google Ads has to offer.
Now, let’s start with the first bidding strategy.
The maximize clicks bid strategy sets your bids to help you get as many clicks as possible for your budget. If you want to control the maximum amount you want to apply per click, there is the option of setting a maximum CPC bid limit.
There are some who do not like this bidding strategy because their goal for running a campaign is to get conversions, be it leads or sales. So, maximize clicks isn’t going to optimize their objective.
If your main goal is to get as much traffic as you can, then the maximize clicks bid strategy may be right for your campaign.
The maximize conversions bidding strategy is essentially saying to Google that you want them to get you as many leads or sales (whatever your conversion objective is) within the constraints of your budget.
🚨 Note: If you are curious about how to set up Google Ads conversion tracking, check out this article.
By default, this means you will get as many conversions as possible at any cost. However, if you are constrained with how much you are willing to pay for a lead or sale, then I would definitely recommend that you set a target cost per action (CPA) value.
Maximize Conversions with Target CPA
Your target CPA is the average amount you wish to pay for a conversion. Enabling this feature makes Google try to get as many conversions as possible at the target CPA that you set. They seem good at reaching this goal.
Given this constraint, the number of impressions you get will be affected. This will then also impact the amount of traffic that you get because of the clickthrough rate, conversion rate, etc.
If you find that when you set a target CPA, you’re not getting any impressions and clicks, you may need to increase your target CPA amount to give Google more freedom in what it is willing to bid.
However, it is recommended that you check a few things before using the maximize conversions with the target CPA bidding strategy. For one, you need to set up conversion tracking.
While it is not required to have data in your account, it is ideal to have data for 30 to 40 or even 50 conversions in a 30-day period before setting a target CPA value.
Google Ads might even recommend a target CPA value based on your actual CPA performance over the last few weeks if you have enough conversion data.
If you don’t have that amount of data in your account or have as much conversion data, then maybe you should deselect this for now, and just do maximize conversions as a starting point.
First, get as many conversions under your belt, even if they’re unprofitable. Then with the conversion data you have gathered, you can then set a target CPA constraint.
Maximize conversions with target CPA is definitely among my favorite bidding strategies.
Maximize Conversion Value
The next bid strategy, maximize conversion value, is very similar to the previous one. Both center on the idea of obtaining as many conversions as possible within the set budget.
The difference lies in this strategy assigning a value to each conversion that varies based on its type. This approach is good for people running eCommerce stores, as you can set the revenue to be equal to the value of a conversion.
Like maximize conversions, you can also enable an optional setting of having a target return on ad spend (ROAS) value, expressed in percent.
Maximize Conversion Value with Target ROAS
Your target ROAS is the average conversion value you’d like to get for each dollar you spend on ads. Let’s say you want to gain $3 worth of sales for every $1 you spend on ads, then you should set a target ROAS of 300%.
To use this type of bidding, you should have conversion tracking already set up, which enables you to set conversion values. It can either be dynamic, where the conversion value is set as the price of your products, or you can assign a specific value to certain conversions.
Another requirement is that you must have at least 15 conversions in the past 30 days.
Maximize conversion value with target ROAS is definitely a candidate for the best bid strategy for Google Ads. For a lot of eCommerce people who implement this strategy, Google is good at achieving it.
You might look at this and think, I want to significantly increase my profits and set my target ROAS to 500%. The risk of setting this too high is that you can miss out on valuable sales because Google is constrained in trying to achieve a certain level of profitability.
Therefore, there should always be a balance of where you set the target ROAS amount.
Target Impression Share
The last strategy we will discuss is the target impression share bid strategy.
If the goal of your campaign is to increase your brand visibility, then this bidding strategy is perfect for you. Google will try to optimize your bids for you to get a certain number of impressions.
Here, you have three placement options for the target impression share strategy, depending on where you want your ads to show: Anywhere on the results page, Top of the results page, or at the Absolute top of the results page, which is the number one ad spot.
After setting your ad location, you can also provide the Percent impression share to the target and the Maximum CPC bid limit.
If you target an impression share of 75% anywhere on the results page, Google Ads will automatically set your CPC bids to help show your ads anywhere on the results page 75% of the total possible amount of times they could show.
This strategy will not work for you if your goals are conversion-focused.
So, my two recommended bid strategies are Maximize Conversions with Target CPA and Maximize Conversion Value with Target ROAS.
What is the difference between manual bidding and automated bidding?
Manual bidding allows advertisers to set separate bids for individual keywords or placements, while automated bidding relies on Google’s AI and machine learning to optimize bids based on performance goals.
How can I find out which bid strategy I am currently using?
To find out your current bid strategy, go to your campaign settings, modify the columns, select “Bid strategy type” under attributes, and see the bid strategy listed for each ad group.
Which bid strategies are recommended for Google Ads?
The recommended bid strategies are “Maximize Conversions with Target CPA” and “Maximize Conversion Value with Target ROAS” for achieving specific conversion goals while maintaining profitability.
These are the different Google Ads bidding strategies that you can use. With automated bid strategies, you can let Google handle setting the right bid for each ad auction so that you can focus your time on other strategic efforts.
If you’re interested in tracking bookings, we’d recommend our guide on LatePoint booking conversion tracking in Google Ads.
If you’re a retailer, utilize these 5 tips for optimizing Google shopping campaigns to promote your online and local inventory.
What bid strategy is your preferred one? Do you agree with my recommendations for the best bid strategies? Let us know in the comments below!