Are you using the right bidding strategies?
So, you want to use Google Ads bidding strategies to boost your sales and save you time. You’ve probably heard of the term automation, but are you aware of all the automated bidding strategies available to you? Choosing the right bidding strategy for you depends on your goals, your budget and the historical data on your Google Ads account.
Over the next few weeks, we’ll be explaining the different bidding strategies available to you on search, shopping and display network campaigns.
Firstly, let’s take a look at your options when using search ads.
- Manual CPC
- Maximize conversions
- Maximize clicks
Manual CPC (cost-per-click) is the most basic bidding strategy that Google has to offer. This type of bidding strategy does require more monitoring than many of the other options on this list, but it allows for more accurate control of your account’s bidding structure.
With manual CPC, you can set a maximum cost-per-click (the absolute maximum that you’re willing to pay for a click through to your landing page) on an ad-group or even on specific keywords. When you start to collect data, you can amend your bids based on which ads are more successful. This is great on small to medium accounts, but on large scale accounts, it is more time-intensive.
In summary, manual CPC allows for accurate budget control and additional flexibility, but it is a pretty hands-on approach.
|Pros ✅||Cons ❌|
|Gives you complete control over your bids.||Can be more time consuming than alternative options.|
ECPC stands for enhanced-cost-per-click. This bidding option uses smart bidding, a soft form of automation. You set your bids, but Google can adjust these if it thinks there is an opportunity to generate a conversion.
When using ECPC, Google looks at the time of day, demographics of the user and location, which all contribute to the likelihood of a conversion. Using their algorithms, Google selects searches that are most likely to lead to a conversion. You might set a bid of $0.50, but if Google thinks your ad is likely to bring you a conversion, it could raise your max CPC to $0.80, for example. Equally, if it feels that a particular search isn’t very likely to lead to a conversion, it can choose to lower your bids. In the past, Google would only increase your bid by up to 20%, but this has now been removed, so there’s always a risk of overbidding on occassion.
Because Google adjusts your bids for you, there’s less manual adjustment necessary. You might save yourself some time, but you will have to relinquish some control of your bids to Google.
|Pros ✅||Cons ❌|
|When used effectively, ECPC can lead to an increased click-through-rate and more conversions||Google is able to adjust your bids, but increased sales aren’t guaranteed.|
This bidding strategy strives to achieve exactly what it says on the tin – maximize conversions! This is another automated bidding strategy, where Google spends your budget in the way that it feels is most likely to bring you conversions.
It bases the decisions based on previous performance, so if your account is fairly new, you might not have amassed enough data for Google’s algorithms to make informed decisions. This can be a stumbling block with all smart bidding strategies, so bear this in mind if you don’t have much experience with Google Ads. Another aspect to consider is that Google’s algorithms are trying to maximize the number of conversions within your budget. As a result, the cost per acquisition can be an afterthought.
|Pros ✅||Cons ❌|
|Distributes your budget with the goal of generating more conversions.||Works more efficiently for accounts with large amounts of historical data.
Forfeit control over your cost per click.
Maximize clicks is an automated bidding option in the same vein as maximizing conversions, and previously was known only as ‘automated bidding’. Within your budget, Google will try to deliver as many clicks as possible. You can set a maximum cost per click, which will help you to keep a handle on your bid spend.
Remember, more web visitors don’t necessarily mean more sales.
|Pros ✅||Cons ❌|
|Can help increase traffic to your website.
Lets you select a bid cap.
|More clicks don’t guarantee conversions – to ensure clean traffic, you’ll have to use negative keywords.|
This bidding strategy aims to bring you the best return on your investment (ad spend). ROAS (return-on-ad-spend) is displayed as a percentage, so for example, a 200% ROAS would mean you receive $2 for every $1 spent. You can work this out using:
Sales ÷ ad spend x 100 = ROAS (%)
Google will try to use your budget in a way that will achieve your target ROAS. But how can you decipher what a realistic figure is? Take a look at the conv. value/cost of your current campaigns. Conv. value/cost is the return you are generating on your Google Ad spend, or your ROI. It’s displayed as a decimal figure, and is the total value of your conversions divided by total ad spend.
For example, your highest performing campaign has a conv. value/cost of 7.3. So, for every $1 you invest into Google Ads, you’re generating $7.30 income. If you were to set your target ROAS as 730%, you would be aiming to achieve similar results to your best performing ad.
It’s worthwhile taking a look at your conv. value/cost before setting your target ROAS, so you can ensure that the results you’re striving for are realistic. If you’re typically achieving a conv. value/cost of around 2.0 across your campaigns, you’re unlikely to achieve a ROAS of 700%. By setting an incredibly high ROAS, you will confuse Google’s algorithms, which will have an undesired effect on results. You should aim to creep this up gradually to your desired ROI over a period of time. One aspect to be aware of is that you will need to change the guide ROAS depending on seasonality. You won’t have the same ROI in winter for swimming pools as you would in summer, for example. So, this has to be adjusted and monitored very carefully.
|Pros ✅||Cons ❌|
|With enough account data, this bidding strategy can help meet ROI targets – saving you time with manual strategies.||Requires accurate conversion tracking.
Must have a suitable amount of account history on which Google can base its decisions.
CPA (Cost Per Acquisition) allows you to bid based on how much you want to pay for a conversion. This might be an online purchase or a phone call, it all depends on your product or service. When you’re setting your budget, think about the average value that this action brings, as well as how much it costs to bring them in at this particular moment before experimenting with automation. If your average online sale is $50, then you obviously won’t be willing to spend $60 on an acquisition. Consider your profit margin and how much of this you can dedicate to ads. To consider CPA as a bidding option, you ideally need a minimum of 15 conversions in the last 30 days for the campaign you want to try it on. However, we always recommend that a figure of 50 conversions is actually going to give you better results, as it is a bigger data set for Google’s algorithms to learn from.
For a service based campaign, a conversion is usually counted when a user contacts you. Therefore, you’ll need to work out how many of these users become customers, and the value these customers usually bring.
This strategy uses smart bidding, and bases its decisions on how users have converted in the past. If you set a CPA of $100, Google will adjust the cost-per-click based on how likely the user is to convert, so that the CPA averages at (or as near to) your chosen cost per acquisition. If you select this option, you will have to put some trust in Google’s algorithms!
|Pros ✅||Cons ❌|
|With enough conversion data, CPA provides an efficient means of data management on larger-scale accounts.||Requires at least 15 conversions in the last 30 days to work.|
Experimenting with automated bidding strategies
In Google Search ads, there is the option to experiment with automation before committing to it fully. When you create a campaign, you can divide your budget between automated and manual strategies. You can divide your budget however you choose, so if you’re feeling skeptical about automation, you might only apply 20% of your budget to it.
For completely fair, side-by-side comparison between automation and manual bidding, you can split your budget 50/50. If there’s a clear winner, you can convert the campaign to use 100% automated strategies, or 100% manual CPC. If you’re currently using manual bidding strategies, but you’re considering automation, the experiment feature can be a very useful tool.
As you can see, there’s a wide range of bidding options available in search. Choosing the right one is tricky when you’re just starting out, and a little bit scary for a longstanding campaign! The main factor to consider is whether all of your data is correct and you have enough of it for Google to make informed decisions when optimizing bids.
Are you using the best strategies for you? For a free review of your Google Ads, contact us using the form below.