Google Ads provides multiple bidding strategies and a lot of flexibility for advertisers to reach the campaign goal. However, to reach the campaign goal efficiently with the least possible cost is tricky unless you understand different bidding strategies. As an advertiser, you also need to understand which bidding strategy is ideal for the campaign goal.
In this post, we will cover all the possible bidding strategies available on Google Ads available on the display network.
What is Target CPA Bidding?
Target CPA(Cost per Acquisition) is a part of automated bidding strategy which you could use either for a single campaign or can add it to portfolio strategy to use it for multiple campaigns. Target CPA bidding strategy is used in the campaigns where the conversions are the priority/goal. Ensure that the conversion tracking is set up before you use this bidding strategy.
To illustrate Target CPA, let us consider our friend Sam. Sam has a watch factory and would like to sell his watches online. To manufacture a watch it costs him 15 USD including labor, components, etc. Sam is selling this watch online for 40 USD. He uses the Target CPA strategy, he needs to set the max target CPA as (40USD -15 USD) 25 USD. This is the maximum price Sam is willing to pay for a purchase/conversions. Consultant Jimmy advises Sam to set Target CPA as 20USD in the beginning as Target CPA will decrease over time as Google learns from the historical data.
How does Target CPA Work?
The main goal of Google when an advertiser sets the campaign bidding strategy as Target CPA is to get as many conversions as possible while keeping the average CPA equal to the set Target CPA. This means that some conversions will have higher CPA than the others, but in the end, it will balance/average out to the Target CPA. Multiple factors influence the bid including competition, location, time of the day, device, browser, etc.
When should you use Target CPA?
The advertisers need to use Target CPA bidding strategies when the conversions are the primary campaign goal. However, ensure that all the incurring cost of the products are known to set the right Target CPA. It is recommended to use Target CPA when you have a good volume of conversions data in your account. This strategy is useful when there is a fixed cost of a product or to generate leads or email sign-ups.
What is Target ROAS
Target ROAS (Return on Ad Spend) is a smart bidding strategy that can be used for Google Display Ads. Like the Target CPA, you could use Target ROAS on a single campaign or as a portfolio strategy across multiple campaigns. Target ROAS uses conversion value that you get as a result of every dollar you spend on an advertising campaign.
Now let us see how Sam could use ROAS. Sam has spent $100 this week to promote this watch. This campaign has generated $800 in revenue. Thus, the ROAS is calculated as $800/$100 *100 which equals to 800% ROAS. Sam is unhappy, he observed that whenever there was 1100% ROAS, he registered a profit. Hence he decided to use Target ROAS bidding strategy to set the bid to 1100%. Now he is happy as his marketing efforts are profitable.
How does Target ROAS work?
Google’s algorithm bids in such a way that you get maximum conversions with your set Target ROAS. Although it is not possible to get the same ROAS for each conversion, the average ROAS will be equal to the set Target ROAS in the campaign period. Many factors out of Google’s control affect the bidding including competition, browser, location, time of the day, etc.
When Should You Use Target ROAS?
Target ROAS bidding strategy needs to be used to get max conversion value. Target ROAS bids on conversions to get more returns. It is recommended to use Target ROAS when the conversion value varies and you would like to get max conversion value possible with the given invest. Hence, Target ROAS works well for eCommerce campaigns where the product price varies from one product to another.
What is Maximize Clicks Bidding Strategy?
As the name suggests, Maximize clicks bidding strategy focusses on getting as many clicks as possible within the given budget. It is optional to set the bid and is not recommended by Google. But at the beginning of the campaign, it is advised to set a max CPC bid.
Let us consider Sam’s case here. Sam wants to promote his digital watch collection. He wants people to be aware of this brand. He creates a landing page featuring all the new collections. As he needs people to ‘check out’ his collections, he could use a display campaign with maximize clicks bid strategy to drive traffic to his digital watch landing page.
How Do Maximize Clicks Work?
Based on Google’s algorithm, your display ads are shown in the placements that are likely to be clicked. It is an automated bidding strategy wherein Google sets an automatic max CPC based on historical data and account performance. As the algorithm focuses on getting as many clicks as possible, the quality of traffic may sometimes be questionable.
When Should You Use Maximize Clicks Bidding Strategy?
Maximize clicks bidding is used for branding campaign where the primary goal is to drive traffic to a landing page. Although there is no need to set up conversion tracking for this bidding type, it is still recommended to do so as it helps in campaign optimization. Unless your primary KPI is clicks /CPC, it is not recommended to use this bidding strategy for your campaigns.
What is Maximize Conversions Bidding Strategy?
Maximize Conversions is an automated bidding strategy that is available for display campaigns in Google Ads. Conversion tracking setup is mandatory to use the above bidding strategy. The main goal of this bidding strategy is to get as many conversions as possible within a given budget.
Back to our friend Sam. Sam has appointed Mark to be his marketing manager to promote his digital watches and he has given him a budget of $40 a day for conversion campaign. Mark uses maximize conversions strategy to exhaust the budget every day while getting a maximum number of conversions.
How does Maximize Conversions work?
Google’s algorithm modifies bids based on past performance to get maximum conversions possible within the given daily budget. Based on the search terms, audience targeting, time of the day, historical data on performance, remarketing lists, etc the bidding may be affected. Due to the testing period in the beginning, if you switch the campaign bidding strategy to maximize conversions, the performance may slow down in the beginning but will catch up within 30 days.
When to Use Maximize Conversions Bidding Strategy?
If you would like to get maximum conversions without exceeding daily budget, use maximize conversions bidding. However, it is recommended to have at least 30 conversions in the past 30 days to get started so that Google has enough data volume to work with. Test, test and test multiple bidding strategies and see what works the best for your campaigns.
What is Viewable CPM Bidding Strategy?
Using Viewable CPM bid strategy, you only pay for the viewable impressions. This bid strategy is available for display campaigns in Google Ads. If the ad was viewed for one second and at least 50% of the ad was visible to the user, then the ad is classified as a viewable ad.
Time for a session with Sam. Sam is hosting a watch fair at his offline store where he is giving away his unsold watches at a 60% discount. He would like to promote his fair online so that a lot of people attend this fair. He uses location targeting to target people around his store. In the meeting room, Mark advises Sam to use Viewable CPM bidding as this builds awareness and you pay for only impressions that were viewed by the user.
When to Use Viewable CPM?
This bidding strategy works well for branding campaigns to promote your brand or event. As the main KPI would be impressions/reach for such campaigns, it is a good idea to pay only for viewable impressions to ensure that you pay for only the ads that were viewed. The viewable CPM commands higher budget and you would pay higher CPM for viewable ads as compared to the regular CPM bidding.
Manual CPC Bidding Strategy
Manual CPC is a bidding strategy wherein advertisers can set their own limit on maximum cost per click they would like to pay. As the name suggests, it is not an automated bidding strategy and it is not recommended unless you have a small budget. With the introduction of smart bidding strategies that optimize bids for every auction, it would be futile to use manual CPC bidding for display campaigns.
Enhanced CPC Bidding
ECPC is often paired up with manual bidding to optimize conversions. It adjusts the cost per click in such a way that your average CPC is well below your max CPC while you get a good volume of conversions in the given budget. Enhanced CPC option is checked in by default in the campaign settings.
The algorithm raises the bid (up to 30%) when the ad click is likely to lead to a conversion. It works the other way around as well. The ads that are likely to not convert, Google Ads lowers the bid. There is no hard and fast rule as to when you need to use enhanced CPC. But it is good to test manual CPC bidding with enhanced CPC option to get optimized results for your campaign.
Cost per Engagement Bidding
This type of bidding is available for lightbox display ads where the users have to interact with the ad format. This means that you only pay for the ad when users engage with your ad. CPE bidding option is available only when you select “Product and brand consideration” as the campaign goal.
If the users hover over the ad, clicks on it or expands the ad, it qualifies as user engagement. It is a good idea to use this ad to promote a particular product on a large scale which is generally a typical branding campaign.
There is no one size fits all. Choose the bidding strategy based on your campaign goals. If you have chosen an automated bidding strategy, ensure that you do regular checks and monitor the campaigns closely. While automated bidding strategy is recommended for all campaigns, it is a good idea to use manual bidding for small budget campaigns. No matter the size, have a testing period of at least 2 weeks although 30 days is ideal. Test, test, optimize and test. Your optimization is never over until your campaign ends. Being proactive and smart is the key to get the best results.