When it comes to Google ads bidding strategies, it can often feel confusing, especially if you are a newcomer to the marketing world and do not yet understand all the associated jargon. However, choosing the right bidding strategy for your business is crucial for campaign success.
This post is all about providing clarity and allowing you to choose the most optimal strategy for your company. This article will cover how bidding works, the different types of PPC bidding strategies and some useful best practices marketers can employ. Let’s jump in!
What is PPC Bidding in Google Ads?
PPC bidding is the process where you determine the budget that you are comfortable spending for each click you obtain. The way it works is that advertisers select specific keywords that are related to the products/services they sell and then bid on them. The reason they do this is because Google runs an auction for the advertising space they have available — both on the paid search engine result pages (SERPS) and the Google Display Network (GDN).
The marketer who has the highest bid will have a better chance of winning the auction. All of this is a quick process that occurs in real-time. That said, there are other factors at play that help determine who wins the auction — it’s not all about having the highest bid. Here’s a quick look at some of the components that Google considers:
Max CPC: The Max CPC (cost per click) is the bid amount and is one of the most important factors in determining the ad placement.
Quality score: The quality score is a rating based on the relevance of your ad, your expected CTR (Click-through rate) and your landing page experience. The better your ad aligns with these 3 elements, the higher its chances that it can win the auction.
Ad rank: Ad rank is a bit different from quality score. It focuses more on where your ad will appear in the auction. Ad rank looks at several factors such as bid amount, quality score and ad extension relevance — site links, callouts, etc.
Competition and search context: Google also looks at how competitive the keywords are as well as the search context to determine who wins the auction. For example, even if you had a higher max CPC, but your advert is not as relevant to the search context, you might not win the bid.
Types of Google Ads PPC Bidding Strategies
Now that you have a solid understanding of how bidding works, let’s look at some of the most common PPC bidding strategies. Here is a quick rundown:
Manual CPC (Cost-Per-Click)
As the name suggests, this bidding strategy evolves around giving the marketer full control allowing them to manually set their max CPC amount for each keyword. This strategy works especially well if you are running a smaller type of campaign or if you want to fine-tune your bids based on performance.
That said, alongside the full control this PPC bidding strategy provides also comes a few downsides that marketers need to keep in mind. Manually setting all your bids for all your keywords is often a long and time-consuming procedure. In addition, for larger organisations, this can present several challenges making it difficult to scale.
When to use it: Manual CPC works best for people who are looking to have full control over their bidding. Also works well for smaller type companies and individuals who have sufficient time to monitor and adjust their bids manually.
Main benefits: Provides the marketer with maximum control over their ad spend.
Drawbacks: Is a time-consuming process that is difficult to scale for larger brands. It also lacks any optimisation for optimising your bids.
Automatic CPC
This PPC bidding strategy works in the opposite way of manual CPC. It uses Google machine learning technologies to automatically set bids on your behalf. In other words, instead of you needing to manually declare your bid amount, this strategy automates the process for you.
With automated bidding, Google considers various factors such as the user’s location, device and search intent to determine the most effective bid for each auction. Thanks to the added level of automation, it saves time allowing organisations to focus on other essential marketing objectives.
When to use it: Automatic bidding works well for larger companies and those looking to automate the process. It is also a great choice if the company has a lot of historical data (conversion tracking) to allow Google to optimise the bids effectively.
Main benefits: By using Google’s machine learning to optimise bids based on your campaign goals in real-time, it ensures better performance and saves time.
Drawbacks: To get the most out of automatic bidding, it is dependent on conversion tracking data. In addition, without proper budgeting limits, automatic bidding could potentially exceed the amount the marketer is willing to spend. Another drawback you need to consider is that with automatic bidding, the marketer gives up all the control they would have compared to the manual bidding strategy.
Enhanced CPC
Enhanced CPC (eCPC) strikes a balance between automatic bidding and manual CPC bidding by providing marketers with the best of both worlds. To put it simply, eCPC essentially combines both PPC bidding strategies into one. The way it works is that the marketer sets a manual bid that Google’s machine learning automatically adjusts as the likelihood of a conversion increases.
In other words, if Google’s algorithm predicts a higher chance of conversion, it will automatically increase the bid to maximise the opportunity. This strategy is great as it provides the same benefits as automatic CPC but still provides you with some control. It is an excellent option for those looking to blend manual bidding with automation, offering a flexible solution for better campaign management as well as results.
When to use it: eCPC is a good choice if the campaign is focused on conversions and you still want to retain some control. It is also worthwhile to consider this bidding strategy if you are thinking of transitioning from Manual CPC to something that offers improved performance while still providing a bit of control.
Main benefits: It balances manual control with automated optimisation while helping to drive more conversions without significantly increasing costs.
Drawbacks: Like automatic bidding, to get the most out of eCPC, it will require proper conversion tracking.
Target CPA (Cost-Per-Acquisition)
On the surface, target CPA can look very similar to eCPC, but the two have quite a few differences between them. Instead of setting a manual bid, the marketer declares a target cost per acquisition. What this means is that the marketer is telling Google how much they are willing to spend for each conversion.
This allows Google to automatically adjust bids within the CPA limit based on the likelihood of a conversion taking place. It is a fully automated bidding strategy that works particularly well for advertisers who have clear conversion data and well-defined acquisition costs.
When to use it: Works well for lead generation or e-commerce campaigns focused on a specific cost-per-conversion goal.
Main benefits: Highly effective for keeping your costs predictable.
Drawbacks: Target CPA has two key disadvantages to consider. First, it requires sufficient conversion data for Google to make informed decisions. Second, without detailed conversion tracking, this strategy can’t work as Google won’t know how to optimise bids to meet the CPA target.
Target ROAS (Return on Ad Spend)
Target ROAS is an automated bidding strategy designed to maximise revenue from your advertising spend. In other words, instead of optimising bids based on your target CPA, this strategy adjusts it based on your preferred ROAS — a marketing metric that measures how much revenue you earn for every dollar spent on ads.
To put it simply, the marketer selects a return on ad spend target and then Google uses machine learning to automatically adjust bids to help reach that goal.
When to use it: Ideal for e-commerce businesses with clear revenue goals. Also works well for businesses that sell products or services with varying price points.
Main benefits: Target ROAS does not look at the number of conversions but rather focuses on their value. This is what makes it such a good choice for companies with varying product or service prices.
Drawbacks: Like many other PPC bidding strategies on this list, target ROAS requires accurate conversion values or sufficient historical data, otherwise it might not perform well. In addition, it has a higher CPC compared to other conversion-focused strategies such as Target CPA or Maximise conversion. Lastly, Target ROAS can be complex to set up. It is especially tricky for businesses that don’t know how much each action (like a lead or sale) is worth to their revenue.
Maximise Conversions
Maximise Conversions is a fully automated bidding strategy that employs Google’s machine learning to adjust your bids based on the likelihood of conversions. Now I know that sounds familiar, but instead of setting a max bid amount or target CPA, you declare a budget. Then, as the name would suggest, this PPC strategy will focus solely on helping you obtain the most conversions within the advertising budget you have set.
The algorithm looks at a variety of factors such as user behaviour, device type, location and time of day to help predict the probability of a conversion occurring. Then, depending on the probability, Google will increase or decrease your bids all while staying within your specified ads budget. In other words, it will bet more aggressively if the likelihood is high and bet more sparingly if the likelihood is low.
When to use it: Maximise Conversions is well-suited for Google ads campaigns that promote time-sensitive products or services, such as seasonal sales, limited-time offers or event registrations.
Main benefits: The algorithm is designed to maximise the number of conversions within your budget, ensuring you get the best possible return on investment for your allocated spend.
Drawbacks: The main drawbacks are its higher cost per conversion, lack of control and its requirement for accurate conversion tracking to function effectively.
Maximise Clicks
This PPC bidding strategy is very similar to the one mentioned above but instead of focusing on conversions, it prioritises obtaining the most amount of clicks. Its main goal is to drive as much traffic as it can within the budget you have set.
It does not look at conversion data but instead considers factors such as user intent, keyword relevance and competition to make smart bids that will generate the highest possible number of clicks. This makes it a great choice for businesses that want to run awareness campaigns and get the word out about their services/products.
When to use it: This strategy works well for testing broad keywords or for awareness campaigns where the goal is to just drive traffic and reach a lot of people.
Main benefits: Can quickly drive a lot of traffic while staying within your budget specifications and is easy to set up as it does not require historical conversion data.
Drawbacks: The main drawback of this strategy is that it prioritises the number of clicks rather than the quality of those clicks. This means the traffic may be less relevant or of a lower quality. Additionally, since this strategy focuses solely on clicks, it doesn’t account for conversions, which can lead to wasted ad spend on traffic that doesn’t lead to any meaningful actions.
4 Best Practices For PPC Bidding Strategies
While PPC campaigns typically deliver an average ROI of 200%, you can easily achieve or even exceed that with the right approach. Here are 4 best practices to help you get the most out of your Google Ads campaigns.
1. Use Proper Conversion Tracking With Smart Bidding Strategies
If you are gonna use smart bidding strategies, accurate conversion tracking is absolutely essential. This is especially true for strategies such as Maximise Conversions, Target CPA and Target ROAS. Without it, the algorithms can’t make informed decisions and optimise your PPC campaigns.
2. Set Clear Goals and KPIs
Before choosing a bidding strategy, clearly define what success would look like. Whether that is increasing your conversions, clicks or having a high return on ad spend. Setting clear objectives ensures that you choose the right strategy and measure your campaign success appropriately.
3. Test and Monitor Performance
While automated bidding strategies like Target CPA or Maximise Conversions handle the optimisation process for you, it’s still important to monitor your performance. Regularly look for areas where you can make strategic adjustments such as refining your targeting, testing new ad creatives or adjusting your conversion tracking settings to ensure the algorithms are working with accurate data.
4. Use Negative Keywords
Negative keywords are crucial for preventing wasted spend on irrelevant clicks. This is particularly important in strategies such as Maximise Clicks, Manual CPC and even automated strategies to keep your campaign focused on high-quality traffic. Without negative keywords, your ads might reach users who don’t take meaningful actions, leading to ineffective use of your budget.
Crafting Effective PPC Campaigns
Having a clear understanding of the different PPC strategies is crucial for creating effective campaigns that align with your business goals. While navigating the PPC bidding maze might seem like a daunting undertaking, with a few best practices you can streamline the entire process and maximise your return on investment.
By selecting the right bidding strategy for your campaign objectives, setting clear KPIs, using proper conversion tracking and continuously testing your ads, you’ll be well-equipped to drive meaningful results. If you are looking to level up your advertising campaigns, get in touch and let us help you get more out of your ad spend.