I hope you are doing well. My name is Lars and today I am going to tell you about bidding strategies for Google Ads.
So what exactly is our goal when picking our bidding strategy?
- Profitability, we need to be able to make the campaigns as profitable as possible
- Scaling capability, we need to be able to scale the campaigns as much as possible
To achieve both of them reliably and repeatedly, we need to have control over our campaigns. At the same time, we also want to leverage Google’s algorithm and data for the highest profits possible. However, Google’s algorithm only has actual power with at the bare minimum 20 conversions in the past 45 days. And the more conversions the better.
- Manual CPC
This bidding strategy is one of my favorites, it’s the one we always use for our own and for clients’ campaigns when we start off with a new campaign. This bidding strategy gives you complete control over your bidding and how Google spends your ad budget. Especially to get profitable quickly, this strategy is great. You can start off with a low CPC of around 10-20 cents and already start generating clicks to your website. Once you start optimizing your ads more and more, you gradually increase your bid to expand the reach of this campaign more.
This strategy is basically the same thing as manual CPC, but with an added option that Google can bid up to 30% higher than your Max CPC and bid 100% lower than your Max CPC in the auction, with the purpose of generating more revenue. Like I said in the beginning, we’re really looking for that control over our campaigns to reach that profitability and to have that scaling ability. Using enhanced CPC is giving this away for no apparent reason.
- Target CPA
Target cost per acquisition is already explained in the name of the bidding strategy, it’s a strategy where you can set a target budget for Google to generate one customer acquisition for you. This might sound very nice, but I only see this being a useful tool in very few situations. The only times we use it is if we’re dealing with a store which has only products in the same price range. Because, let’s say you have products ranging in price from €50 all the way to €200, your Target CPA should be different for all these products. It can be useful for a business looking to generate leads.
- Target ROAS
Here we have an amazing strategy that we use constantly and have great results with. Target ROAS is a strategy where you can tell Google the ROAS that a certain campaign needs to generate for you, and Google will go ahead and try its best to achieve that. For this to work, you have to have at least 20 conversions in the last 45 days, ideally you have more than that so Google has sufficient conversion data to base its future decisions on. I’d recommend doing this minimum times 3 before you put it on Target ROAS. The reason is because we simply see better ROAS’s by waiting a bit longer before making the switch. Just keep it on manual CPC a bit longer before changing the bid strategy. If you do it too quickly, this can make you end up frustrated and with a campaign which was first working fine and now doesn’t deliver good profits anymore. Another thing with Target ROAS is that you should never put it too high. I recommend sticking to about the same ROAS you were getting with that same campaign when it was still on Manual CPC. This way, you’ll keep generating the same results.
I love the target ROAS strategy because it leverages Google’s algorithm and data very well, while we still keep a lot of control over the campaign. We can determine the actual Target ROAS, we can add negative keywords, do device bidding, add custom audiences, add certain times and days. We can still do all of that. The only downside I know is that we see if we put too many products in such a campaign, Google often only generates many clicks for the products it already generated many clicks and sales for in the past because it knows it can generate sales for it. Therefore, for these situations I always recommend to split up the products into multiple campaigns. For example, per product category, or per price range or per price margin. Just keep in mind that you still need to be able to generate enough conversions for Google to have enough data to optimize the campaign. This is always a bit tricky.
- Maximize clicks
Maximise clicks is a good strategy if you want to drive traffic for branding and list building. For example, when you’re doing a good product launch, it could be interesting to turn it on and get as many people as possible in your funnel, which you can then remarket and retarget to in many ways and get them on your email list. It’s not useful if you are focussed on direct conversions and having a reliable ROAS on your campaigns.
- Maximize conversions
Maximize conversions will spend your full budget and get as many conversions for you in the process of doing so. I’m not a big fan of this, because again, you’re not having any control over how your ad budget is spent.
- Maximise conversion value
Maximize conversion value will spend your full budget and get you as much revenue as possible by focusing on the actual conversion value of your customers. This also doesn’t give you much control about where your ad spend is going. It can be useful though if you don’t have the time to spend on optimizing and monitoring your campaigns.
- Smart shopping
Smart shopping is an automated bidding strategy where you give all control to Google, except for a few things. You can control the products that the campaign advertises, you can control the ROAS it needs to generate for you, you can control the budget and some other small things. Other than that, everything is being done automatically, with the two biggest things being the search terms you’re showing up for and the platforms your ads are being placed on. And moreover, you’re not getting insights in what’s happening. You can’t see the search terms that conversions came from, and you can’t see which platforms your conversions came from. This is all extremely valuable data. Now, this may all sound quite negative, but I actually think there’s some real value to this. Let’s say you’re a local business owner and you’re busy running your own offline business already, this is the perfect solution for expanding his business to online. You only set up the ads once and monitor them a bit in the beginning. Once it’s working, everything goes automatically and results will keep coming in. Of course, if you’re an advanced marketer and you dive deep into your ads to optimize them and squeeze out every possible euro in profit, this is not the right thing for you.
The best bidding strategy
It depends on the situation. But I think if you’re reading this you’re likely a guy like myself who loves advertising and invests a lot of time into it. Then I always recommend picking manual cpc, and after about 60 conversions in the last 45 days, switch it to target ROAS and scale it from there.
A bidding strategy is very important, but when a regular bidding strategy like manual cpc is not working for you, it has probably to do with your entire funnel. Maybe your landing page is not good yet, maybe the ad is not enticing enough, maybe your product is just not a winner. A change of bidding strategy is not going to fix your broken funnel. I am writing this post with the sole purpose of explaining exactly all of the options that you have with regards to the bidding strategies that Google offers you when running Google Ads.
I hope you got a lot of value from this post, if you have more questions about the types of Google Ads bidding strategies let me know in the comments. I will reach out to you in my next post. Stay safe!