May 9, 2022 10:58:00 AM | Marketing Shoplazza | 2021 Guide: Google Ads Bidding Strategies

Walk through the different types of Google Ads bidding strategies and make the best of them to your interest.

Estimated reading time: 20 minutes.

Table of content:

  • 11 Google Ads bidding strategies.
  • Choosing the Right Bidding Strategies for Your Campaign

It is critical to get to know the right Google Ads bidding type and draw a viable strategy for adjusting bids in order to achieve a more efficient Ads cost. In many cases, we are strangled by all these fancy terminologies and descriptions and having no idea what you are doing. At the beginning of my career as a digital marketing consultant, I often ended up wasting some portions of my marketing budget on just a few clicks.

Until I met my early career mentor, a Google Ads campaign expert, I was instructed to just modify a few of the bidding strategies, so that that change led to an increase in conversion of up to over 123.78% than my previous records.

In this article, I will walk you through the different types of Google Ads bidding strategies and make the best of them to your interest.

Smart campaign or manually in control?

Before we begin the topic, there is always a dilemma regarding a frequently asked question, should I choose automated (Smart Ads Campaign) or do it manually?

Most of merchants opt for smart automated campaign because no everyone has the time and energy to learn, grasp, create, maintain, and adjust all these bidding attributes. It is no doubt time consuming. We just want to start to cash in your PayPal accounts from conversions generated from Google Ads Sales.

There are totally 11 different bidding strategies available, they all have their unique traits and functions. So, take a deep breathe, let us dive in with courage.

The 11 Google Ads Bidding Strategies of 2021

There are currently 11 different bidding options that we use to apply for most of the Ads campaign scenarios.

Google Ads Bidding Strategies

  • Target CPA (cost per acquisition)
  • Target ROAS (return on Ad spend)
  • Maximize conversions
  • New: Maximize conversion value
  • Enhanced cost per click (ECPC)
  • Maximize clicks
  • Manual CPC Bidding
  • CPM bidding (cost per thousand impressions)
  • CPM bidding (cost per viewable thousand impressions)
  • CPV bidding (cost per view)
  • Target impression share bidding

Option #1: Target Cost Per Acquisition (CPA)

Target CPA bidding is a bidding strategy you can use if you want to optimize conversions. If driving conversions are your primary goal for the campaign, selecting Target CPA bidding will focus on trying to convert users at a specific acquisition cost.

With this method, Google Ads will automatically set your bids on each campaign based on your CPA. While some conversions may cost more, others may cost less to even out and align with your acquisition costs.

Target CPA bidding can be complicated if you don’t know what your acquisition costs are. Your Cost per Acquisition is simply the amount of money you can afford to spend on acquiring one customer. For example, if you sell a product for $50, you don’t want to set your target CPA at $50. That would be breaking even when the goal is to profit. When selecting this bidding method, you can enter your target CPA, and you’re good to go!

Option #2: Target Return on Ad Spend (ROAS)

Target Return on Ad Spend is a bidding strategy that throws most for a loop. Because it requires some math. Yes, math, the dreaded, awful subject that most marketers run from.

Unfortunately, math is important on this one. Target ROAS is the bidding strategy where Google Ads will set your bids to maximize conversion value based on the return you want from your ad spend. This number is percentage-based.

Let us do a basic calculation:

On your next Google Ads campaign, you want to generate $20 for every $4 spent. To do the math, you follow this formula:

Sales ÷ ad spend x 100% = Target ROAS

Doing the math for the example above, here’s what the Target ROAS would look like:

$20 in sales from campaign ÷ $4 ad spend (clicks) x 100% = 500% target ROAS

Easy enough, right?

Here’s what the Target ROAS bidding strategy looks like when creating a new campaign:

If you still aren’t sure what to set as your percentage, you can navigate to a previous campaign on Google Ads and modify your columns.

Add the following metric to your columns: Conv. value/cost

Option #3: Maximize Conversions

Maximize Conversions is one of the simplest bidding strategies that Google Ads offers. Using the maximum daily budget that you set, Google will automatically run your bidding for you to get you the most conversions for your money. For example, if your daily budget is $50, Google will spend it wisely to find the most conversions.

If a single conversion costs $50, Google won’t bid on it for you.

Before selecting this bidding method, be sure to check that you set your daily budget amount at a reasonable level that you’re willing to spend. At the end of a campaign, check your return on investment to see if maximizing conversions lead to profitable sales. Using this strategy, you don’t have to enter any details upon setup (aside from your daily budget).

Option #4: Maximize Conversion Value

The maximize conversion value strategy was added in August 2019 and is the newest bidding strategy on the platform. It works essentially like Target ROAS, with the Google Ads algorithm trying to maximize the return on your ad spend. The difference is that you don’t have to specify a target ROI, you just let the algorithm try to maximize all your ad spend to the best of its ability.

Option #5: Enhanced Cost Per Click (ECPC)

In a few words, it’s a mix of manual and smart bidding. You set the basic CPC for your ad groups and keywords, but the algorithm gets to optimize them.

Google has the right to increase or decrease your bid amount based on the likelihood of driving the sale. Bids will try to be averaged out at your max cost per click settings. If a search is too competitive and CPCs are outrageously high, Google can lower your bid to cost less due to decreased chances of converting. If it’s an easy steal by increasing bids, Google will make the call. This type of bidding is available on both the Search and Display networks.

You can choose whether you want the algorithm to enhance your set bids based on a flat number of conversions, or to optimize for the value of the conversions.

This will only work if you’ve created different Ads Conversions with different values, or if you have dynamic conversion events that track the total value of a sale. You can set up dynamic conversion tracking with most ecommerce solutions like Shoplazza.

Option #6: Maximize Clicks

Maximize Clicks is an automatic bidding strategy based on your maximum daily budget.

Google Ads will attempt to drive the most clicks possible with your daily budget. It doesn’t consider the quality or relevance of the traffic and isn’t ideal for driving sales or other conversions. Maximize clicks is the best option if you have a very limited budget or limited search volume for the keywords in your campaign.

If you have a varied campaign with a lot of ad groups and keywords, manual CPC is a lot of work. You can also end up bidding for a lot of clicks that are unlikely to convert. Google has the enhanced CPC check-marked by default, so you need to uncheck it to truly select manual CPC.

You’ll see a warning that the campaign may result in low performance, but if your campaign has no data to go on or a very limited budget, it can be the best option.

Option #8: Cost Per Thousand Impressions (CPM)

Cost per Thousand Impressions, otherwise known as CPM, is bidding solely based on impressions. This option is reserved for the Display Network or YouTube Ads isn’t for use on the Search Network (for obvious reasons).

Option #9: Cost Per Thousand Viewable Impressions (vCPM)

vCPM bidding is a tactic of manual bidding best reserved for brand awareness campaigns.

Again, like CPM bidding, it is reserved for the Display Network and YouTube Ads. This bidding type is setting your maximum costs on a viewable 1,000 impressions. It counts as a viewable impression after 2 seconds of a video ad is played on YouTube, or 1 second of a display ad is shown on the Display Network.

Option #10: Cost-Per-View Bidding (CPV)

Cost-per-view bidding is strictly reserved for video advertising on Google Ads and can be used on the YouTube Ads platform. Using CPV bidding, you pay for video views or interactions.

Interactions on YouTube could be any of the following:

  • Call to action clicks
  • Overlay clicks
  • Cards
  • Companion banners

A “view” is determined by how long someone watches your video ad for, otherwise known as the duration. In this case, with CPV bidding, a view is counted when someone watches 30 seconds of your ad, your full ad if it’s less than 30 seconds, or whenever they engage with your ad!

CPV is currently the default bid setting for YouTube Ads. Let me give you a quick example of how it works.

For CPV bidding, you start by entering the highest bid you’re willing to pay for a view or interaction. This is known as your maximum cost-per-view.

For instance, if you set your max CPV to $0.25, you’d pay a maximum of 25 cents when a user watches your ad or engages with your call to action.

So, how do you know what to set as your CPV?

  • Start low and adjust based on your results.
  • Focus on first maxing out your quality scores and ad rank, these will drive down the cost-per-view on your ads, allowing you to pay less for better results.
  • Slowly bump up your CPV to increase your audience reach.

Option #11: Target Impression Share Bidding

Target Impression Share is a new bidding strategy released in late 2018 by Google Ads.

This smart bidding strategy is focused on brand awareness and helping you reach as many people as possible. As an example, if you’re looking to dominate impressions for specific keyword searches, like basketball shoes.

Enter your goal percentage of impressions.

Keep in mind that the % impression share is a goal and is affected not just by your bids, but also by the quality score of each individual Google ad group and ad. So even if you aim for 90% or 100%, you’re unlikely to reach that goal without horribly overbidding for views and clicks.

The impressions also don’t guarantee that your ad is seen or clicked, since it can appear in a lower ad position. Target Impression Share is mostly an option for your own branded search campaigns and a limited number of key search terms for your brand.

Choosing the Right Bidding Strategies for Your Campaign

You may know the basics of each bidding type on Google Ads, but where do you even start with figuring out which bidding option is best for you? It all depends on your campaign goals, budget, and volume. Every campaign you choose should carefully select a bidding strategy based on desired outcomes. For instance, if you want to drive sales on the Display Network, picking the CPM is not a great choice. That’s meant to secure views rather than sales on your site. Let’s break down a few common goals on Google Ads and the top bidding tactics you can use for each.

Goal: Conversions

If your goal on a specific Google Ads campaign is conversions, or driving traffic to your website or store with the sole purpose of turning them into a sale, consider the following bid types:

  • Maximize Conversions
  • Target CPA
  • Target ROAS
  • Target Outranking Share (steal competitors’ sales!)
  • Manual CPC (with enhanced CPC enabled)

Goal: Website traffic

If you want to concentrate on driving more traffic to your site with goals other than merely converting, here are a few great bid types to choose from.

  • Maximize Clicks
  • Target Search Page Location
  • Manual CPC Bidding

Goal: Brand awareness

While brand awareness alone is a less common goal on the search network, there are a few great bidding tactics to use for maximum branding.

  • Target Impression Share Bidding
  • Target Search Page Location
  • Target Outranking Share
  • CPM and vCPM for YouTube and Display Networks

When to Use Manual Bidding vs. Smart Bidding

Should you use automated bidding, or stick to painstakingly setting and updating bids manually to the best of your ability? Unfortunately, there’s no right option for every single campaign or advertiser.

Two main factors determine if smart or automated bidding will be a viable option:

  • The quality and detail of your conversion data.
  • The volume of your campaign (in terms of traffic and conversions, not ad spend).

Smart bidding options focused on conversions (target CPA, target ROAS, maximize conversions, and maximize conversion value) rely on the Google Ads conversion data. If you set up your conversions incorrectly, like including a conversion tag on every page, this can have catastrophic results. You can end up overbidding 10x for clicks (consistently $20+ for a $2 keyword) because the algorithm thinks you’re landing multiple conversions per visit.

This can lead to you wasting hundreds, if not thousands of dollars in just a few days.

I guess we’ve covered enough topics today, stay tuned with SHOPLAZZA blog! We will go further on Google Ads strategies.

Written By: Luk.Chan

Read articles written by Luk.Chan and learn the essentials about developing eCommerce businesses on Shoplazza.