How To Choose Effective Bidding Strategies in Google Ads
We’ve all been there: you’re setting up an advertising campaign in Google Ads and you’re faced with choosing a bid strategy. What do they all mean? Which will help you reach your campaign goals? There are 10 options available to digital advertisers and it’s difficult to tell one from another. For example, how does cost per mille (CPM) differ from viewable cost per mille (vCPM)? It’s an important differentiation to know, but it can be hard to figure out on your own.
Setting your Google Ads goals
Before getting into the gritty details of knowing which bid strategy is right for your ads, you’ll first need to decide if the goal of your campaign is to:
- generate conversions
- drive clicks
- create brand awareness
If your goal is conversions, you’ll want to use one of Google’s Smart Bidding strategies to help meet your goals. If you’re interested in driving traffic, perhaps to fuel a remarketing campaign, you’ll want to use a CPC (cost per click) strategy. Finally, if you’re looking to grow brand awareness, you’ll want to utilize an impression-based strategy.
To make it easier to find the right bid strategy for your goals, we’ve broken them into three categories:
When to use Google’s Smart Bidding strategies
- Target return on ad spend (ROAS)
- Target acquisition (CPA)
- Enhanced cost-per-click (eCPC)
- Maximize conversions
When to use cost-per-click strategies
When to use impression-focused strategies
When to use Google’s Smart Bidding Strategies
For campaigns that focus on generating conversions, you’ll want to use one of Google’s Smart Bidding strategies. If your Google Ads account is brand new, you may not be able to utilize Smart Bidding right away, as Google will need to take some time to learn about your brand, your ads, and your audience. Typically, once your campaign generates 15 conversions in a 30-day span, you’ll be able to use these bid strategies.
Depending on your budget, some of these strategies will work better than others. If you’d like help estimating your digital advertising ROI based on your budget, check out our digital advertising calculator.
1. Target return on ad spend (ROAS)
This strategy allows you to bid based on your target return on ad spend. Return on ad spend is the ratio of revenue to dollars spent. To use target ROAS bidding, your campaign must first have generated more than 15 conversions in the last 30 days, but Google recommends that you have at least 50 conversions to make the strategy worthwhile.
- What it’s best for: Retail or transactional accounts that generate a lot of sales through their advertising efforts and that want to increase the value of their sales.
- What it’s not good for: Business to business (B2B), lead generation, or other accounts that don’t track sales or revenue through Google Ads.
2. Target cost-per-acquisition (CPA)
This strategy allows you to set a target cost-per-acquisition, or the amount on average you want to pay for one conversion. The strategy automatically sets bids to give you the most conversions possible for your target CPA.
- What it’s best for: Lead generation or retail accounts looking to decrease their cost to acquire contacts, leads, or sales.
- What it’s not good for: B2B or transactional accounts whose goal is to increase traffic or leads, regardless of cost.
3. Enhanced cost-per-click (eCPC)
This strategy automatically adjusts your bids for leads that are more likely to make a conversion. It does not go over the maximum CPC you manually set. To use eCPC, you need to set up conversion tracking in your Google Ads account.
- What it’s best for: Accounts in any industry whose goal is to increase traffic and leads.
- What it’s not good for: Accounts in any industry focusing on brand awareness or maximizing profit/revenue from sales.
4. Maximize conversions
This strategy allows Google to automatically run your bidding in order to get the most possible conversions on your ads. It’s one of the Google Ads automated bidding strategies that helps marketers save time and energy.
- What it’s best for: Busy digital marketers who’d like to convert the most possible users based off budget.
- What it’s not good for: Marketers who want to generate leads, raise brand awareness, or have a goal unrelated to conversions.
When to use cost-per-click strategies
If you’re just looking to drive clicks from your search ads, one of the two CPC strategies below are probably ideal for your business. Manual cost-per-click will require a lot of oversight from your team members to keep bids competitive without overspending and minimizing the effectiveness of your budget. As a result, Raka only recommends this tactic for use by experienced search advertisers in only certain cases.
5. Maximize clicks
This straightforward strategy will set your bids to generate as many clicks as possible without going over budget. You’ll need to enter a daily budget that you’re willing to spend on all of the keywords with this strategy.
- What it’s best for: Accounts of any nature focused on demand generation and that want to earn the most clicks for their budget.
- What it’s not good for: Accounts in any industry focused on brand awareness or lead generation.
6. Manual cost-per-click
Digital advertisers use this strategy when they want more control over their bidding strategy. Manual cost-per-click requires you to spend more time in the Google Ads platform making adjustments and monitoring your spend.
- What it’s best for: Marketers who want the ability to quickly and easily spend more money on campaigns or ad groups that are performing better than others.
- What it’s not good for: Marketers who don’t have the time or resources to monitor their Google Ads account on a daily or bi-weekly basis.
When to use impression-focused strategies
There are four different bid strategies that can be used to help grow awareness of your brand. CPM is the typical model, but again it may require a lot of individual oversight to execute properly, so one of the other options may be a better fit for your business.
7. Target search page location
This approach is ideal for brands who are looking to get as much visibility on their ads as possible, even if generating traffic from those ads isn’t a priority.
- What it’s best for: Marketers whose goals are brand awareness (typically in the retail space) and who want their text ads to appear at the top of search results.
- What it’s not good for: B2B or lead generation accounts or marketers who are more focused on display advertising or increasing website traffic.
8. Target outranking share
This strategy aims to help you outrank your competitors’ position in search advertising. The difference between this strategy and the search page location strategy is that marketers using this approach may not necessarily be bidding for a first position placement.
- What it’s best for: Accounts of any type whose goal is to outrank a certain competitor or competitors in search marketing.
- What it’s not good for: Accounts whose goal is to earn a top ranking or whose focus is on demand or lead generation.
9. Cost-per-mille (CPM)
Cost-per-mille is one of the most traditional forms of advertising billing, dating back to print and radio placements where advertisers would be charged based on the anticipated reach of their ads. With CPM bidding, advertisers can set a cost they’re willing to pay for 1,000 impressions and can count on that being the maximum cost they pay for those 1,000 impressions.
- What it’s best for: Display (including video) advertising campaigns whose goal is maximizing impressions.
- What it’s not good for: CPM bidding is not available for search advertising campaigns.
10. Cost-per-viewable impression (vCPM)
Cost-per-viewable impression is similar to CPM, but it’s preferred by accounts whose goal is to generate more traffic from their impressions.
- What it’s best for: Display advertising whose goal is to generate traffic.
- What it’s not good for: vCPM bidding is not available for search advertising campaigns, and it’s not ideal for display campaigns whose main goal is just to create brand awareness or to compel a user to action on a site.
How to choose the right Google Ads bid strategy
Budget plays a huge role in most of these strategies so first and foremost, you’ll need to determine your advertising budget. For example, if your budget is small, you probably won’t want to choose target outranking share as a bid strategy, for obvious reasons. We always recommend starting with a smaller budget and increasing gradually as you become more accustomed to digital advertising and understand how your ads perform.
It’s also important to identify your campaign goals. Ask yourself what’s more important, generating leads or increasing awareness? What goal will help you meet your marketing objectives? If you have the time and budget, feel free to experiment with several bid strategies. This will help you find out which strategy works best for your business.
If you have any other questions about bidding in Google Ads, we’re always here to help. Also, be sure to download our digital advertising calculator for help estimating your ROI.