Three Basic Categories of Google Ads Bidding

My Post.pngThere are only two certain things in life: death and Google Ads updates. Google makes updates to its ads platform on a monthly basis and most of these are small changes or new features types to test out. However, every year or so Google loves to rock the boat with removing or adding a new bid strategy. Don’t worry, you haven’t missed any big news recently! However, given pivotal shifts in strategy all markets have undoubtedly had to make in these uncertain times, let’s take some time to review our current bidding strategy options and how best to use them!

Profitability-Focused Bid Strategies

If you or your client is primarily concerned with profitability, Google offers two types of bidding strategies that will allow you to up your PPC game while working within a pre-set KPI.

Target Cost Per Action (CPA) Bidding

Target CPA bidding is a smart bidding strategy that gives Google almost total control over your bids, leaving your hands free to focus on other aspects of your account. Target CPA bidding allows you to set a specific cost per action that you do not want to go over, ensuring you are not going after “unaffordable” conversions. So, for example, if you are selling a pair of shoes for $60 it wouldn’t make sense for you to pay $60 for a conversion, as it would completely wipe out your revenue. Instead, you’d want to set a much lower CPA goal, maybe $10, to ensure you are going after the most profitable converters. Setting this CPA goal tells Google’s algorithm to only bid on searches by customers that it identified as likely to convert within this $10 restriction. If you or your client is highly focused on efficient spend and revenue, this is a great bid strategy to leverage.

Target Return On Ad Spend (ROAS)

Much like Target CPA bidding, Target ROAS is super valuable to the revenue-focused client, particularly in the e-commerce realm. One benefit of eCommerce businesses is that we can easily quantify sales or assign value to them. Therefore, it is easy to calculate a return on investment, or in PPC terms, return on ad spend. Of course, all brands want to see a return. However, because eCommerce clients have a set dollar value assigned to each product, we can optimize ad spend to stay within a margin of return. Therefore, if you have a brand that wants to generate 5x the revenue from the cost it takes to generate a conversion in PPC, your ROAS goal is going to be 500%. Google’s Target ROAS smart bid strategy allows you to input that goal then tells its algorithm to only go into auctions it deems as likely to convert at or above that 5x margin. Again, this is a great option for clients with KPIs heavily centered on return, however, it is best suited for eCommerce clients with specific product values. This is because in eCommerce businesses product values differ. For example, one pair of shoes may cost $60, while another costs $120. If our KPI is 5x ROAS then we are willing to pay only $12 for the $60 conversion but $24 for the $120 conversion. Target ROAS bidding gives Google’s algorithm room to adjust based on product price, unlike Target CPA.

Maximum Leads or Revenue Bidding

If your brand is less concerned about ROI, but is primarily focused on maximizing conversions or conversion value as is possible with the given budget, then choose one of these bid strategies.

Maximize Conversions

This is another smart bidding strategy that gives Google total control at auction time. However, this strategy is tailored to spend your entire budget and bring in as many conversions as possible. That’s it, pretty straight forward. The one caveat to this is that you can set a max. CPC to ensure you aren’t paying an outrageous amount for a click. However, be careful in setting this. You will want to be generous with your CPCs to ensure Google’s algorithm can work its magic, if you set a low CPC, you will be restricting yourself just as you would with manual bidding!

Maximize Conversion Value

Just as with Target CPA and Target ROAS, there is a very subtle difference with Max. Conversion and Max. Conversion Value bidding. Maximize Conversion Value bidding is, again, a smart bid strategy but is more tailored for ecommerce clients. Like Target ROAS, Max. Conversion Value operates based on a product dollar value. With this bid strategy, Google’s algorithm is going to go after conversions likely to bring in the most dollars. This strategy will maximize the revenue from sales generated through PPC.

If handing over the reigns to Google seems like a scary prospect, or if you’ve tested out smart bidding with less-than-desirable results and would prefer to stick with manual bidding but with a liiitttle bit of help from Google then this next bidding strategy may be for you:

Enhanced Cost Per Click (ECPC)

ECPC bidding allows you to set and adjust your bids manually, which admittedly takes some time. However, this setting gives Google some leeway in changing those bids at auction time. Basically, if you’ve set your bid cap at $10, but Google’s algorithm feels certain that you can win a particular auction at $10.05, it will adjust your bids accordingly.

Brand Awareness Bidding

Finally, if your campaign goals are not based on driving conversions or revenue, but rather you are wanting to drive awareness and get your brand name out there, then none of the above strategies matter to you! Instead, you will want to focus on showing in the SERP and traffic to the website, which can be done with the final two bid strategies. – Read more