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Google Ads, Choosing the right bid strategy for your goals

Rob Perry, Digital Marketing Manager

Bid Strategy Overview

If you’re new to PPC advertising, it can take a while to familiarise yourself with the various bidding strategies that Google Ads offers its advertisers. In this article, we’ll explain the key use cases for each bid strategy and when each of them should be considered.

I like to think of the bid strategy as the brains behind the campaign auction, controlling when an ad gets shown and how much is spent when it gets clicked. Up until 2010, Google only gave advertisers one choice of how to control their bidding process – Manual CPC. This is often the strategy most people use when launching a new campaign for the first time, since it’s simple to use, requires no data thresholds and gives you full control over how much you’re prepared to spend at the keyword level.

In the last decade, the amount of information available to advertisers has increased dramatically and while we’ve seen a similar trend in privacy concerns, it looks like the platform’s insights are here to stay. In fact, Google recently announced they’re working on two new features to improve conversion reporting in the post-cookie world.

The advertising giant holds vast amounts of useful information and making use of this alongside your own first-party data is key to winning in today’s competitive PPC landscape. While Google limits the type and amount of performance data we have access to, smart bidding strategies allow us to make use of a number of signals that we couldn’t otherwise use to our advantage.

Strategy Options

At the time of writing, Google Ads offers the following bid strategy options for Search and Shopping campaigns:

  • • Manual CPC
  • • Enhanced CPC
  • • Maximise Clicks
  • • Target Impression Share
  • • Maximise Conversions
  • • Maximise Conversion Value
  • • Target ROAS

Click-Based Strategies

The Manual CPC, Enhanced CPC and Maximise Clicks bid strategies all give advertisers a different level of control over their ad auctions.

Like manual bidding, the enhanced alternative works from a fixed keyword bid but gives the platform the flexibility to increase this if the conversion intent seems higher than in other auctions. Think of it as a hybrid approach, the campaign will get access to some of the behind-the-scenes user signals but will also try to stay within range of your stated bids. For this to be possible, you’ll need to ensure accurate conversion tracking is set up in the account and that any relevant conversions are listed in the ‘Include in Conversions’ setting.

For advertisers looking to get as many clicks as possible for their budget, the Maximise Clicks option can often be worth considering as part of a wider account strategy. With this approach, you’re asking the system to find you as many clicks as possible from any of the keywords in the campaign, for a set budget. This can be useful if you’re looking to generate as much traffic as possible and you’re not too concerned about which keywords the traffic comes from. Bear in mind, this campaign will ignore all conversion activity, so if conversions are a consideration within the campaign you might want to investigate other options.

Visibility-Based Strategies

Google Ads currently offers one option for anyone looking to gain a specific level of impression share from a campaign – Target Impression Share. To know when to use this type of strategy, it’s important to understand how impression share is calculated and what it means.

 

 

Impression share is the proportion of eligible auctions where an ad was served. As an example, if there were 10 eligible auctions and an ad was served in 7 of those, we would see an impression share figure of 70%.

Just like Maximise Clicks, campaigns using this bidding method will ignore all conversion data for the purpose of determining auction bids. This strategy can be useful when an advertiser is looking to gain maximum visibility for a set of keywords that are outperforming, or when gaining visibility over competitor ads is key.

Conversion-Based Strategies

Although the three conversion-based bid strategies all use conversion events as the foundation for optimisation, each actually works quite differently in practice. Often, the type of conversion and/or the availability of data is what determines the choice of one over the other since both Maximise Conversion Value and Target ROAS need accurate conversion value data in order to work effectively.

If the business is an e-commerce store or can attach a monetary value to different conversions, you’re likely to see better results by starting with a strategy that can interpret this data and provide insights based on profitability rather than volume alone. This is especially true if there’s a wide margin between the least and most expensive products or services.

Optimising for ROAS is generally best practice when you’re looking to keep an eye on profitability as well as aiming for growth targets. By adopting ROAS into your campaign strategy, you can take both cost and revenue into consideration when deciding to increase budgets or make internal changes. At an advanced level, it’s possible to achieve a stronger return through segmentation of the account according to different ROAS targets.

Determining ROAS

Revenue-On-Ad-Spend is the numerical, percentage or monetary metric which compares campaign spend with the attributable revenue generated. It’s calculated by taking the total attributable revenue from the campaign activity and dividing it by the total cost.

 

 

In its simplest form, any ROAS figure above 1 is a positive return and anything below 1 is a negative return. To determine the actual profitability, it’s important to take margins into consideration. If a business has a 50% profit margin, take 50% of the conversion value and run the same calculation again using the new figure.
To work out the break-even ROAS, divide 1 by your profit margin. For example, a business with a 50% profit margin would have a break-even ROAS of 2.

 

Summary

Selecting the most appropriate bid strategy is the first building block in creating a great campaign foundation; we’re still a long way from campaigns being able to run themselves but having the platform on your side when optimising for a specific goal is never a bad thing.

It’s also worth remembering that campaign goals can change over time, what starts out as an awareness-building effort could soon uncover new areas of high profitability and growth, in which case it may be worth considering if a different strategy could help achieve that goal sooner.

If you want to get a free review of your Google Ads account, contact us at hello@chalkward.com.

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