Google offers an ever-growing list of bidding strategies. Unless you’re a seasoned pro it can be difficult to understand why or where you should use one over the other. All things being equal, don’t we all want to “maximize our conversions?” The answer is, not exactly.
In today’s article, I’ll run through all available (and one upcoming) bidding strategy, explain how they work, and when you should consider it for your campaign.
Manual CPC Bidding
Just as it sounds, manual (cost per click) bidding allows you to set maximum bids for your search keywords (placements/targets for display). Any bid adjustments you set for devices, audiences, demographics, ad schedule, locations, and calls, get applied at auction time. Google will adhere to your manual bids + adjustments, never bidding more than the maximum you’re willing to pay. One major consideration with manual bids is that your cumulative adjustments can add up to a lot more than your base max bid if you’re not careful. For this reason, you should also try to use offsetting bid adjustments.
Manual bidding is ideal for experts that want full control over the campaigns. Manual bidding is also appropriate as a starting point for a new campaign without any click or conversion data. If your goal is conversions and you exceed about 25 conversions per month it’s a good idea to consider ECPC bidding.
While Google hasn’t made a formal announcement yet, some insiders have said that Google will make ECPC bidding mandatory sometime later in 2019.
Best For: Experts managing search campaigns with clicks or conversion goals
ECPC (Enhanced Cost Per Click) bidding uses your manual bids and automatically applies adjustments at auction time based on predictive modelling. Put simply, Google analyzes previous performance for a keyword, user information, location/time, and other variables, and bids up or down based on the likelihood of a conversion. Despite the adjustments, Google will try to average out your bids to not exceed your manual bid plus any manual adjustments you’ve set up.
Important to note here is that this bidding method makes its own adjustments for everything except audiences and devices. You should monitor and set adjustments for these yourself. If you set adjustments elsewhere, such as for locations, Google will apply those on top of its own adjustments. Therefore, if you migrate from manual bidding to ECPC, it’s a good idea to scale back any adjustments you have that Google will already take care of.
ECPC bidding is a great solution for when you want to retain control over your bids but get the benefits of automation. It usually works beautifully for campaigns that have over 25 conversions per month. Google claims it works well with any number of conversions, but we haven’t seen much of a benefit when there’s little data to optimize for.
If you plan to migrate from manual to ECPC consider creating an experiment splitting 50% of your traffic and test it for a month or so. And this applies to any time you are going to switch bidding methods.
Best For: Search and display campaigns where there’s a conversion goal and is generating 25+ conversions per month
tCPA (formally CPA) Bidding
Target CPA (Target Cost Per Action) bidding is a “Smart” bidding strategy that attempts to generate as many conversions as possible at a target CPA within your budget. The bidding method works with search, display, and video campaigns. When activated Google manages all bids and bid adjustments automatically. You can, however, optionally set minimum and maximum bids (generally not recommend).
tCPA bidding automates one of the most time-consuming parts of campaign management (optimizing bids and bid adjustments). Furthermore, it can deliver leads or sales at a consistent CPA, meaning you don’t have to worry about your cost per client acquisition going up and down. But, if market demand or competition changes frequently, you will find that your conversion volume can vary substantially from month to month. This isn’t great if you depend on getting a steady volume of leads or sales for your business.
This is often characterised by advertisers as the bottom suddenly dropping out, i.e. you had 50 conversions one week and 2 with virtually no ad spend the following week. So, while tCPA bidding is “automatic” diligence is required to monitor performance and consideration must be given to lowering tCPA if/when things slow down in your campaign.
tCPA bidding works best for campaigns that have stable conversion performance and turn in 200+ conversions per month.
Google has recently rolled out conversion sets. This can be very helpful for more accurately measuring campaign performance, and in particular for all smart bidding methods. Say you have a request for quote form conversion and a join mailing list conversion. You probably don’t want to pay the same CPA for both conversions. You can create a conversion set for the quote form conversion and apply it to your tCPA campaign.
Google has also recently introduced “pay-per-conversion” CPA display and smart display campaigns. There are a number of prerequisites such as having 100 conversions in the past 30-days to qualify for these. If/when you do qualify, you can choose to pay for conversions rather than clicks. Google will serve your ads and only charge you if/when you receive a conversion. In practice, you typically need to pay at least a 30% higher than average “search” CPA for these to work. And for many advertisers, they simply don’t generate any conversions at all.
Best For: High conversion volume (200+/month) stable campaigns – good for search, display, and video
Target ROAS Bidding
ROAS (Return on Ad Spend) bidding works similarly to tCPA. All bids and adjustments are set automatically.
But instead of setting a target cost per action you set a target return on ad spend. For those that don’t know, ROAS = revenue/advertising spend. In Google’s terminology, that’s Conv. Value / Cost. To achieve a 400% ROAS, you would need to generate $4 in sales for every $1 spent on advertising. Note that ROAS can be express as a % such as 325% or a decimal, 3.25.
ROAS bidding can be set up for any campaign where you track conversion value. It is most often used for shopping campaigns, due to the fact that the return varies by product purchased. But it can be used equally well if you can track variable revenue per conversion.
Before you consider using ROAS you must know what a profitable target ROAS is for your business. Set this too low and you’ll be losing money on every sale. Set this too high and you will not get as many sales as possible.
ROAS bidding works best when you have a high volume of sales. In the case of shopping specifically, having a high ratio of SKUs to conversions will make it more difficult for automated bidding to deliver consistent results. This can be partially mitigated by ensuring you have a healthy budget for your campaign.
Best For: Shopping campaigns or variable conversion value campaigns where you have 200+ conversions per month
Maximize Conversions Bidding
Maximize Conversions bidding often gets confused with tCPA bidding. After all, both bidding methods try to deliver as many conversions as possible. However, while tCPA will attempt to adhere to your max target CPA, maximize conversions has no such restriction. Due to this maximize conversions will burn through your budget at virtually any CPC and any CPA.
For this reason, you need to be very careful about how much your budget. If you do want to give this a go, I recommend setting a small budget to start and then grow it over time. You should also pay very close attention to any keywords that are getting high bids and not yielding conversions.
Indeed, maximize conversions is a very aggressive smart bidding method. If you’re not sensitive to CPA and have a large budget to play with it can be worth a shot.
Best For: Filling your ad budget while getting as many conversions as possible at any CPA
Maximize Conversion Value Bidding
Maximize Conversion bidding (announced May 2019) works identically to maximize conversions bidding, except that instead of maximizing conversion volume, it maximizes conversion value. To use it, you will, of course, need one or more conversion goals that include variable or fixed values.
Just as with maximize conversions, you need to be somewhat careful with this bidding strategy. To mitigate risk, start with a small budget and then scale up over time.
Best For: Filling your ad budget while driving as much conversion value as possible at any ROAS
Maximize Clicks Bidding
We are now moving out of the conversion-oriented bidding methods into other options. If your main goal is conversions, stick with the options above, otherwise, keep reading.
Maximize clicks bidding will simply generate as many clicks as possible within your set budget. As you might expect, this means Google will tend to focus on lower-cost keywords. Instead of serving your $10 CPC keyword 10x and filling your $100/day budget, Google will attempt to serve your $1 CPC keyword 100x. That’s an oversimplification, but you get the point. This is fine if you just want to get more clicks to your site.
But the problem with this is you will tend to get less valuable clicks. Interestingly, you can set a maximum CPC bid which will cap high-value keywords.
Best For: Getting as many clicks as possible for your budget without regard for the value of those clicks
Target Search Page Location Bidding
Note: This bidding method is obsolete. If you are still using it, consider switching to Target Impression Share bidding.
Target Search Page Location Bidding has effectively two options. Option #1, attempt to display your ads at the top of page #1 (ad positions #1-4). Option #2, attempt to display your ads anywhere on page #1 (ad positions #1-7).
Both bidding options ensure getting a high impression share. The first option also ensures relatively high CTRs, i.e. more clicks. The second option is more affordable, in terms of average CPC, but you will get fewer clicks and a lower CTR.
The thinking behind this method is to ensure you’re getting good coverage for your keywords. However, this doesn’t take into account profitability or the value that different keywords may deliver for your business. Also, if you have a limited budget, you will invariably buy fewer clicks than you could using other bidding methods.
Best For: Getting maximum impression share/exposure for your search ads
Target Outranking Share Bidding
Note: This bidding method is obsolete. If you are still using it, consider switching to Target Impression Share bidding.
Target Outranking Share Bidding works by trying to display your ads above a specific competitor (domain) of your choosing. The idea here is to get more exposure than your target competitor, and thus get more clicks.
If you are facing a particularly aggressive competitor, this may not be a wise choice. You can imagine how competing against a large competitor could turn out. And, as with target search location bidding, it’s easy to burn through your budget overspending for clicks.
Best For: Getting more impressions and clicks than a specific competitor
Target Impression Share Bidding
Google has replaced both bidding methods above with this little gem (available since November 2018).
Instead of just bidding to a place on the page, this bidding strategy allows you to choose absolute top of page (position #1), top of page (positions #1-4), or page one (positions #1-7). And, in conjunction with this, you can choose an impression share target, such as 80%.
This provides much finer control than the old Page Location bidding. However, the same issue of keywords not being created equal applies. Is having “how to train your cat” just as valuable as “cat training service” for your business? Probably not, right? So would you really want these to show up as frequently and in similar positions?
Best For: Showing your ads in particular places on the page and achieving specific impression share goals
Google’s vCPM (Viewable Cost Per Thousand) is specifically for display and video campaigns. Generally, this bidding method is used when your goal is branding. You pay a maximum fee per thousand ad impressions. This makes it easy for branding types to achieve specific target reach (number of people that see the ads) and frequency (number of times an individual sees the ads – on average) numbers for a given campaign.
The “viewable” is a new concept Google came up with a few years ago. In the past, and still with many display networks, you pay each time a display ad loads, period. This includes times when a user visits a page with your ad but doesn’t scroll down to see the ad below the fold. With “viewable” impressions you only pay when the entire ad becomes visible on the users’ screen.
If your goal is clicks or conversions, this is not the right bidding strategy for you.
Best For: Display campaigns with frequency and reach goals for branding
Google’s CPV (Cost Per View) bidding is specifically for skippable “TrueView” video ads. In this strategy, you pay for views of your video of at least 30-seconds, or your entire video if your video is <30 seconds long. Importantly, your video will always run for at least 5-seconds, after which users may skip it or continue watching.
This video format is hugely popular, although Google has recently released more options for bumper ads – unskippable video ads that run for up to 15 seconds.
While “TrueView” ads are good for raising brand awareness, influencing decision making, and conversions (to a lesser degree), bumper ads are really more about pure branding reinforcement.
Best For: YouTube TrueView video ads – most useful for influencing decision making
I am bundling all UAC (Universal App Campaign) bidding methods into one section for simplicity. UAC’s only offer automated bid strategies. I’ll cover all three here.
The most common bidding method for UAC is CPI (Cost Per Install). As you might guess, you set a target CPI, and Google will try to get you as many app installs within your budget.
Another bidding option is CPA (Cost Per Action). With this option, you set a target amount you’re willing to pay when somebody installs your app and performs a specific in-app action such as a purchase. While it would seem this is a more sensible bidding strategy, you can end up paying a lot more for these conversions.
Which of the two options you choose will mainly depend on the average ratio of app purchases to installs.
Google has recently launched a beta that allows you to use ROAS bidding. This works exactly like ROAS bidding for search and other campaign types.
Best For: UACs – Choose CPI to pay for installs, CPA to pay for purchases, or ROAS to pay for a target return on ad spend
Google offers a myriad of different bidding strategies. Choosing the right strategy will often make or break your campaign. Always ensure your strategy makes sense based on your campaign goals, and consider running an experiment if you’re making a change.