Google Adwords is an incredible investment for your digital marketing budget.
With the right Adwords Management strategy and investment, you can reap fantastic returns.
Advertisers make an average $2 in revenue from every $1 they spend on Adwords, according to Google.
So, what’s the secret formula? How do you unlock these results from your PPC budget?
It starts with choosing the right Google Ads bidding type.
Once you’ve got the right bidding strategy, you can optimise your bids to drive your ad costs down and conversions up.
That’s the sweet spot – the key to a strong Return On Ad Spend (ROAS).
In this article, we’ll delve into the full array of bidding strategies available on Adwords, so you can explore when to use each and work out what combination of strategies will get the best results.
If you're serious about generating high-quality leads and sales from Google Ads, read on…
Must-Know Google Ads Bidding Strategies For Skyrocketing Results
On Google Ads, there are currently 12 different types of bidding available. Choose your strategy based on the goal you're setting out to achieve.
Goal #1: To propel conversions
Use Smart Bidding strategies:
Goal #2: To drive clicks
Use cost-per-click (CPC) bidding
Manual CPC bidding
Goal #3: To maximise impressions
Use impressions bidding strategies:
Target Search Page Location
Target Outranking Share
CPM bidding CPM
Let’s break down each strategy.
1. Target CPA Bidding
Is driving conversions your primary campaign goal? Target Cost Per Acquisition (CPA) bidding is the strategy for you.
This strategy will focus on trying to convert users at a specific acquisition cost (CPA).
Here’s how it works: Google Ads will automatically set your bids on each campaign based on your CPA.
Your cost per acquisition is the dollar amount you can afford to spend on obtaining one customer.
Let's say you sell a product for $20. If you set your target CPA at $20, you won't be breaking even, let alone making a profit.
Based on your sales, operating costs and margins, you should have a good idea of what you want to pay per conversion.
CPA = Cost of Campaign / Conversions
But it always pays to shoot for a lower CPA.
Take a look at the average CPA per industry:
Image credit: Wordstream
Some conversions may cost more, but others may cost less to even out and align with your acquisition costs.
When not to use Target CPA bidding?
If you have no idea what your acquisition costs are OR if conversions aren't your primary goal.
Note: Based on the history of your Google Ads account and conversion volumes, CPA bidding requires at least 15 conversions over 30 days.
CPA bidding tends to be more effective on the Google Ads Display Network versus the Google Ads Search Network, where keyword intent can be very obvious and lead to a conversion.
2. Target ROAS
Want to optimise for conversion value?
Target Return On Ad Spend (ROAS) is the bidding strategy where Google Ads will set your bids to maximise conversion value based on the return you want from your ad spend.
This number is percentage-based.
Let's say you want to generate $10 for every $2 spent.
Follow this formula:
Target ROAS (%) = Sales / Ad Spend x 100
So, for the example:
$10 in sales / $2 ad spend (clicks) x 100 = 500%
That's how you would set your Target ROAS.
3. Maximise Conversions
This bidding strategy is super simple and is based on optimising for conversion value.
Google takes the maximum daily budget that you set and will automatically run your bidding for you to get the maximum conversions for your dollars.
So, if your daily budget is $100, Google will find the best way to spend that money and get maximum conversions.
Don’t select this bidding strategy until you’ve set your daily budget amount at a reasonable level, something you are comfortable spending.
4. Enhanced Cost Per Click (ECPC)
Enhanced CPC bidding is a popular smart bidding strategy that automatically adjusts your manual bids to try to maximise conversions.
It’s an optional feature that you can use with Manual CPC bidding.
How does it work?
Google can use Smart Bidding to increase or decrease your bids by up to 30% based on the likelihood of conversion.
How do they know?
Google uses historical conversion data and algorithms to predict which searchers are more likely to lead to a conversion, and which aren’t.
Where a conversion is likely to happen, Google increases your max CPC bid by up to 30%.
For example, if a search is too competitive and CPCs are ridiculously high, Google can decrease your bid because of the lower chances of converting.
Over your campaign, Google will try to average out your bids at your max cost per click settings.
The downside to this type of bidding? It's restricted to the Search and Display networks only.
“ECPC can help you get more conversions while maintaining or reducing your cost per conversion.”
Try ECPC on a smaller campaign as a tester. Measure the cost per conversion, conversion rate and conversion volume then see how this compares to other bidding strategies.
5. Maximise Clicks
Another simple one – Maximise Clicks is an automatic bidding strategy that aims to drive the most clicks possible within your maximum daily budget.
Just set a daily budget and Google Ads automatically manages ads to bring you the most clicks possible within your budget.
6. Manual CPC Bidding
Want more control over your Adwords bidding strategy? Go for Manual CPC bidding.
With Manual CPC bidding, YOU set the bids for different ad groups or at a keyword level.
Then, if you find that some campaigns are more profitable than others, you can adjust budgets to add or remove money from other campaigns.
If you bid at a keyword level, it overrides Ad Group-level manual bids and allows the highest level of control.
On the other hand, Ad Group level bids give the same bid to all the keywords or placements within that group.
You need to be ready to invest a LOT of time monitoring costs and adjusting your bids. So, if you're not yet a Google Ads whizz or don't have resources on hand, this probably isn't the strategy for you.
But it does let you keep a close eye on performance and make sure that none of your ads are overspending.
7. Target Search Page Location
TSPL (Target Search Page Location) bidding lets Google automatically adjust your bids to always show your ads either:
Anywhere on the first page of Google’s search results
At the top of the first page of Google
Naturally, Google gives the disclaimer that this strategy "doesn't guarantee placement." But if you have a high quality score for your ads, you won't have any dramas.
8. Target Outranking Share
This automated bidding strategy is all about targeting your competitors.
Choose a website or competitor that you want to outrank. Then, when your ads and your competitor’s ads are both displayed, Google will increase your bid so you outrank their ads.
And it doesn’t stop there.
Google will also show your ads when your competitor is NOT showing, so you benefit from stronger brand awareness.
A few hot tips to get the best of the bidding strategy:
Focus on your biggest competitor - especially the ones who turn up in the Google Ad results.
Set the percentage of times you want to bid to rank on top of them. For example, 90% means you want to outrank them 9 out of 10 auctions. The higher your percentage, the more you pay per click.
9. CPM Bidding
CPM stands for Cost Per Thousand Impressions, so CPM bidding is all about impressions. It allows you to set target bids that accumulate after 1,000 impressions.
This option is only available for Google’s Display Network (GDN) campaigns, including remarketing, and YouTube campaigns like TrueView, not for the Search Network.
The difference is that CPM bidding doesn't charge you per click, but for your ad impressions - even if they're shown below the fold where searchers won't see them.
10. vCPM bidding
This strategy focuses on Viewable Cost Per Thousand Impressions. You set your maximum costs on a viewable 1,000 impressions.
It’s a manual bidding strategy mainly used for brand awareness campaigns.
Like CPM bidding, it is only for the Display Network.
11. CPV Bidding
Cost Per View (CPV) bidding is only for video advertising on Google Ads, and can be used on the TrueView video platform.
You pay for video views or interactions.
With CPV bidding, a "view" is when someone watches at least 30 seconds of your ad, or if they decide to engage with your call to action.
On the TrueView platform, interactions could be:
Call to action clicks
This bidding tactic is the default setting on TrueView advertising.
Enter the highest bid you are prepared to pay for a view or interaction –your maximum cost-per-view.
So, if you set your maximum CPV to $0.50, you would pay a maximum of 50 cents when a user watches your ad or interacts with your call to action.
12. Target Impression Share Bidding
This smart bidding strategy is a new tactic introduced by Google in late 2018. It focuses on brand awareness so you can reach as many people as possible.
Say you are looking to dominate impressions for specific keyword searches.
You can set your target impression share as 100%. This will ensure your ads show up 100% of the time on the search engine results pages for that keyword.
If you want to build brand awareness,this is exceptionally effective.
However, there are some downsides:
First, if you select 100% on your targets, your Google Ads campaigns can get expensive FAST.
Instead, set a maximum limit for this type of bidding.
Likewise, if you want to show your ads at the top of the page, you will pay more.
So, only use this bidding type for low-cost keywords and brand awareness goals.
Which bidding option is best for you?
It all depends on your campaign goals.
Reverse engineer your Adwords strategy based on what you want to achieve.
Want customers to take a direct action on your site? Focus on conversions with Smart Bidding.
Want to generate traffic to your website? Focus on clicks with cost-per-click (CPC) bidding.
Need to boost brand awareness? Focus on impressions with cost per thousand viewable impressions (vCPM) bidding or Target Search Page Location to maximise.
Never fall into the trap of selecting the default bidding type and hoping it will work.
But not every bidding strategy will be right first time.
The trick is to test different bidding strategies and track performance metrics, like conversions, conversion rate, cost per conversion, return on ad spend, and more.
Again, measure the key metrics that matter to your goal. The most important Adwords KPIs are:
Average Click-Through Rate (CTR)
Average Cost-Per-Click (CPC)
Average Conversion Rate
Average Cost-Per-Action (CPA)
Over to you
Now you know the ad bidding strategies to try, all you need to do is get started!
Remember, whatever strategy you try, the right Adwords marketing campaign comes from continually refining and optimising to improve your results.
If you’re not sure what goal to aim for, download your FREE Digital Marketing Game Plan.
This guide is packed with proven strategies and insights from real marketers who have created impact for their brands.