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If you’ve taken a look at Google Ads, you’ve probably already seen all those different bidding strategies that you can choose from. Each with a different focus and method. In this blog we will tell you more about the different bidding strategies of the Google Ads. Which bidding strategies are there and how do the different strategies work?
All bidding strategies of the Google Ads have one thing in common and that is that they depend on data. A lot of data is available within Google Ads, but not when you have created a new account. Then the data has to be built up first. In addition to building data, it is important for a number of bidding strategies that conversion actions are measured. This is important, for example, for the maximize conversions bidding strategy, but also for the target-cpa and target-roas strategies. More about how these strategies work later in this blog.
Before you can choose the right bidding strategy, it is important to have your goals in mind. Why are you going to use Google Ads? Do you want to increase your brand awareness by sending people to your website or do you have the goal to bring in customers. Each of these goals entails a different bidding strategy. For that reason, it is important to think carefully about your goals in advance and then choose the bidding strategy.
The smart bidding strategies are also known as the automatic bidding strategies. And are especially suitable when you focus on achieving conversions. With these strategies, much of the work within Google Ads is taken off your hands. By applying machine learning, Google helps you to get the most out of your Google Ads budget. With every auction (when someone uses a search term that may be relevant to you) the machine learning is applied to optimize the number of conversions or the conversion value. Also known as bidding during the auction. What actually happens is, that Google determines your bid during the auction. When the chance of a conversion is high, Google determines for you to bid more, so that the user clicks on your ad. Google automatically determines for you to offer less and not to be visible when the chance of a conversion is small. With the smart bidding strategies it is therefore important to have built up the data we discussed earlier. In addition, setting the conversions is important. If you do not do this or have not built up enough historical data, the machine (Google) will not know when the chance of a conversion is greater or less. The results of the campaigns are therefore less and that is of course not what you want. But what smart bidding strategies are there? Within the smart bidding strategies, there is a choice of five different bidding strategies. Below we will review them one by one.
The name of the bidding strategy actually indicates what you can use the strategy for. With this strategy, Google’s algorithm will set your bids in such a way that you can achieve the most conversions within your set daily budget. The set budget will then be drawn up daily by Google and an attempt will be made to achieve as many conversions as possible. A disadvantage of this strategy is that it does not take into account the maximum costs you are willing to pay per conversion or ROI. It is therefore possible that on some days you can achieve a conversion, but that you actually incur a loss. So pay attention when setting the daily budget that it is not far above your maximum cost per conversion.
A bidding strategy that does take your maximum cost per conversion into account is the target CPA strategy. In fact, this strategy is better than maximizing conversions. With target CPA you set a maximum cost per conversion. The algorithm then tries to ensure that your costs per conversion do not exceed your maximum set costs. There is a but, because the bidding strategy tries to achieve this and does not guarantee this. So if you set a target CPA of $5 per conversion, you may end up paying $7 per conversion over time. It is therefore advisable to build in a margin. Sometimes it’s simply not achievable to reach your set target CPA. As a note to this, we would also like to point out that with a new campaign it is not wise to immediately start with the target CPA bidding strategy. Firstly, there is not enough historical data available and it is also not yet known to you what a realistic target is to set. For that reason, it is best to start with a different bidding strategy first and only switch to a target CPA when there is enough data.
The maximize conversion value bid strategy is similar in operation to that of the maximize conversions strategy. However, there is one important difference between the two. Maximize conversion value tries to maximize the value of the conversions instead of the number of conversions. As a result, this strategy is mainly recommended for webshops where e-commerce transactions are measured. The bidding strategy can also be used for services, but here different values must be attached to the measured conversions. To give an example, it is important that a quote request has a different value than a contact form or email. When that is the case, this strategy is also useful for companies that sell services. Based on the data, it is then ensured that your conversions have as much value as possible within your budget. With this strategy, your ROI is taken into account a little more, because the value of the conversions is maximized. However, there is another strategy that takes your ROI into account even better.
The most difficult bidding strategy to understand is the target ROAS strategy. ROAS stands for return on ad spend and it is attempted to achieve your set target ROAS. This strategy is also particularly recommended for webshops where the value of e-commerce transactions is measured.
The operation of the bidding strategy is best explained by means of an example. When you set a target ROAS of 800%, Google will try to earn back €8 for every dollar you invest. With a target ROAS of 1000% that is € 10 and so on. Sounds simple doesn’t it. Just which target ROAS should you set? It is important here that you set a target ROAS that is realistic and also one that ensures that you earn back your investments at a minimum. Moreover, it is also crucial that your Google Ads account provides enough data to work with. Otherwise, it will be difficult to achieve your set target ROAS. Just what is enough data? That is difficult to say in advance and there is no fixed number for it. Sometimes it’s best to just test it.
Enhanced Cost Per Click (ECPC) is the simplest form of smart bidding. Here you set a cpc bid and check the optional function to enable improved cost per click. With this strategy, your bids are optimized during the auction to maximize the chance of conversion. It is very similar to the maximize conversions strategy, but it is different. Improved cost-per-click doesn’t optimize bids to maximize your budget. This makes the EPCP bidding strategy fundamentally different from maximizing conversions. In addition, this strategy has a maximum cpc that it will bid up to twice that during an auction when optimizing for conversions.
It is not necessarily the case that a Google Ads campaign has to be created to get conversions. You can also have a different objective for your Google Ads campaigns. If you want to get clicks to get more users to your website, there are other strategies available. When this is your goal, there are two bidding strategies to choose from:
Below we take a closer look at both strategies.
A bidding strategy whose name also betrays the operation of the strategy. Maximizing clicks ensures that you generate as many clicks as possible within your budget. This strategy does not look at what your visitors do on your website after they click on the ad. This strategy is therefore only suitable if your only goal is to get more visitors to your website.
It is not recommended to use maximize clicks when you want to generate sales or leads. The previously discussed bidding strategies are more appropriate about this. If you are planning to set up remarketing, it is a good idea to use the maximize clicks strategy. The strategy ensures a large group of users who can show you an advertisement again by using remarketing.
The strategy that gives you the most control is the manual cpc bid strategy. Here you set the maximum you want to pay per keyword or ad group. You will never pay more per click than what you have set yourself. If you want to keep full control on your bids, this is the most suitable strategy for you. Even when you have set up a new account and no historical data is available, it is recommended to start with manual cpc. When the data continues to grow, you can choose to make the switch to an automated strategy.
The last goal you can choose is that of generating visibility. For this purpose, you want to be featured with your ad when a user is searching for the products or services you offer. Within this goal there is not much to choose from in terms of strategy. There is only one strategy that you can use to achieve this goal. And that strategy is target impression share. Below we will dive deeper into this bidding strategy.
Target Impression Share is one of the strategies that is fully automated. This means that you cannot set manual bids, but you can set a maximum cpc bid. This allows you to indicate the absolute maximum for a click. As stated earlier, this strategy is aimed at achieving the greatest possible visibility within Google. Within this strategy you can indicate where your ads should be displayed. You can choose from three different options:
In addition to indicating the place where your advertisements should be displayed, you can also link a percentage to this. With that percentage you determine in what percentage of the cases you want to be visible in the indicated place. Suppose you want to be displayed at the top of the results page in half of the cases. Then you indicate the target percentage of 50%.
Do you not know where to start because of all this information? Don’t panic, our online marketers are happy to help you select the right bidding strategy. Or would you rather outsource the work in Google Ads because of all this information? Then let the experts at Convident manage your Google Ads account. Feel free to contact us or drop by the office for a cup of coffee. Our online marketers are happy to help you get the best results from your Google Ads activities.
