Google Ads has shifted more toward automated bidding in the past few years and the system has gotten significantly better. While we used to focus more on manual bidding strategies, we almost always recommend automated bidding now.
Google Ads bidding is still confusing on a number of levels, and because bidding has such a huge impact on performance, understanding what the different bidding strategies are, and how to deploy them becomes very important.
In this article we break down each of the different bidding strategies, and share what we’ve found is the best approach for deploying each one.
How Bidding Works
Here’s a quick and dirty explanation of bidding.
Google Ads is an auction, and your bid (in addition to other factors like quality score) determines how competitive you are in that auction, and ultimately where your ads appear on the SERP (search engine results page). Bidding influences if your ad is going to show up when someone searches on a keyword in your account, and where on the page it shows up.
The auction is based on a second-price auction system. Meaning that if you win a click, you only pay $0.01 more than the second-highest bid.
Google Ads uses sophisticated algorithms that take into account many factors when deciding when to show an advertiser’s ads, and where on the page. This includes inputs directly on the Google Ads platform side from any advertiser in the auction (keyword, ad, budget, bid amount, bid type and more.)
Bid Types
Here we’ll go into what each bidding type is, how it works when to use it, and its pros and cons.
Manual CPC bidding
What is it:
The original bidding type where you set the exact maximum amount you want to pay for a click.
Bids are set at the keyword level, or the ad group level.
Pros:
High level of control over exactly how much you want to bid at the keyword level.
Can make it easier to control individual keywords and ad group CPCs, and prevent you from paying more than you want to for traffic.
Cons:
Can be tedious to manage, especially at scale.
May not perform as well when trying to win conversions.
When to use it:
We typically use manual bidding/enhanced CPC bidding when launching new campaigns to test the waters, and control ad costs.
After some data has been collected, we’ll often shift to an automated bidding strategy.
Enhanced CPC bidding (AKA ECPC):
What is it:
The same as manual CPC but also gives Google the ability to adjust bids at the auction based on whether or not they think it will lead to a conversion or not.
The increased bid amount used to be capped at 30% but since 2017 the cap has been removed.
Pros:
Can get more conversions than manual CPC, and impact CPA.
Cons:
Google might bid more than you’re wanting to pay for a click.
You may pay higher amounts than manual CPC for clicks that do not lead to a conversion.
When to use it:
If you’re running lower daily budget campaigns, and/or don’t have enough conversion volume to justify the use of a fully-automated bidding strategy, this type of bidding can work well.
Make sure to keep a close eye on the search terms report to review the quality of keywords and add negatives for anything that is irrelevant.
ECPC bidding example. With manual CPC and ECPC you should see Avg. CPC match closely to the bid you set (shown here in the Max. CPC column).
Maximize Clicks
What is it:
An automated bidding strategy where Google will bid to get as many clicks as possible from within your budget.
Pros:
You can set a maximum CPC bid, and you won’t pay a higher CPC
Easy to manage daily budget because this will typically spend whatever daily budget you set.
Cons:
This strategy should be taken very literally.
Clicks are just that, clicks, and without any consideration of what happens after someone clicks on the ad, and lands on your website or landing page, that traffic might be a complete waste of ad budget if they don’t take any further action
When to use it:
If you’re an advertiser who literally only cares about the clicks you are receiving from your ads and are not interested in what happens after they get to your website.
You need to hit a goal number of clicks, or traffic to the website.
You have a brand new campaign, business, or website and just want to run some ad traffic.
Rarely would we ever recommend this bidding strategy as a long-term solution.
Maximize Conversions
What is it:
This bidding strategy will try to get as many conversions for the campaign for the budget as possible, using signals at auction time.
Example of the signals Google is using to adjust bids up and down using the Maximize Conversions bidding strategy.
Pros:
Generally does perform better than manual or enhanced CPC bidding to get conversions.
Easy to manage daily budget/ad spend.
Cons:
Can’t set a maximum CPC bid.
Typically drives a higher cost-per-click, as Google has the flexibility to bid higher if the system thinks it can gain a conversion.
Doesn’t work well with low conversion volume and may either not spend the full budget, or waste the budget by spending too much (sometimes ridiculous amounts) on single clicks.
When to use it:
When you want to maximize the number of conversions you get from a campaign, and are less budget and/or target CPA-focused.
Maximize Conversions Bidding Example. Notice that CPC (cost-per-click) tends to increase with maximize conversions, but also the conversion rate increased enough to offset this and still lead to a lower cost-per-conversion.
Maximize Conversions with a Target Cost-per-action (tCPA)
What is it:
This bidding strategy is focused on maximizing conversions while achieving the target CPA that you set.
Pros:
With enough budget and conversion volume, tCPA tends to be a reliable way to achieve conversions at a certain CPA or lower.
Easy to manage once established.
Can test reducing tCPA bids over time as a means of reducing CPA.
Cons:
Needs a consistent level of conversions to maintain.
If you have a wide fluctuation in cost-per-conversions, you may find that this strategy doesn’t suit your campaign goals.
May be harder to manage with seasonal ups and downs.
When to use it:
This is a great bidding strategy to use after you have run a campaign for enough time and have a stable number of conversions.
Maximize Conversions with Target CPA Example. Here we set the target CPA at $4, but have been able to achieve a lower CPA at $3.19. The system has enough conversion data, budget and time to reliably deliver conversions at or under the set target.
Target Return-on-ad-spend (ROAS)
What is it:
This is just the same at TCPA but incorporates the ‘value’ of conversion into the equation.
For advertisers who sell products with different values (eCommerce for example)
Pros:
Same as tCPA above. Target ROAS can be a reliable way to get conversions that return a certain conversion volume and order value.
Cons:
Not suitable unless you are tracking order value with sales. I.e if you’re not an eCommerce company, and you don’t assign a specific value to each conversion (eg. lead, trial start).
When to use it:
As above, test this bidding strategy once you have a stable amount of conversions with values.
Portfolio Bidding:
What is it:
Allows you to group campaigns, ad groups, and keywords under the same bidding strategy.
Works with all of the automated bidding strategies.
Pros:
By grouping multiple campaigns under the same bidding strategy, the system is able to pool data and may be able to improve performance beyond bidding at the individual campaign level.
Cons:
Campaigns need to have similar goals, and performance in order to be grouped together.
BONUS - Using Experiments to Test Bidding Strategies Head-to-head
The only way to really, truly know which bidding strategy will perform the best for you, is to test them head-to-head.
Google Ads Experiments make it easy to run an A/B test where you split traffic between two campaigns, using different bid strategies, and then you can directly compare the performance of each one.
Happy Bidding!