What is Bidding in Google AdWords?
Bidding is one of the most essential features within Google AdWords. AdWords gives you several ways to bid for your ads, depending on what matters most to you and your business. Most advertisers focus on clicks, impressions, conversions, or views (for video ads). It plays a key role in ad rank and therefore, the visibility level of your ad to users. In this article, you will get to know how to choose the best Bidding Strategy for New Google AdWords?
Google AdWords runs on an auction system. Advertisers bid on actions they want their campaigns to produce, like clicks on their ads.
Unluckily, bidding is often an area in which advertisers fail to plan sufficiently. Bid amounts are often based on ‘gut feelings’ i.e. giving high bids to the apparently most important words and lower bids to less important and long-tail terms. Many bid amounts are made haphazardly or simply to meet AdWords’ recommended first-page bids.
When it comes to a successful PPC advertising strategy, there are many different components to visualize. Your targeting strategy, your quality score, your landing pages, and ad copy are all major considerations, yet without a high-quality bidding strategy, these other elements will not get very far.
Bidding to a high position should not be the sum of your AdWords bidding strategy. The true aim of your PPC advertising is not to be top of the page but to meet the objectives of your business goals.
Google created these strategies to help advertisers make more sense of their bidding and spend less time trying to figure out what to do. However, most are struggling to see what the benefits are, how and where to use them, and how to measure success.
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What are the main goals for a campaign?
Before you begin looking at any part of your bid strategy, you must first choose your campaign goal. By choosing an appropriate goal, advertisers will know which metrics matter most. When it comes to choosing a bidding strategy this can ultimately affect how you are charged, therefore goals must be carefully thought out.
These main goals which you need to focus on for a campaign:
Generate traffic to your website; focusing on clicks could be best for you. Cost-per-click (CPC) bidding may be right for your campaign.
Building interest and nurturing leads – At this stage of the conversion funnel advertisers may again wish to push impressions or traffic but also potentially engagement and micro conversions.
Driving conversions or take direct action to your site – By this stage in your audiences’ interest, they should be making a purchasing decision. Campaigns focused on conversions will look to increase conversion rate and potentially achieve a target CPA.
Developing positive ROI – For the majority of companies, high ROI is the ultimate goal. Campaigns focused here will look at conversion rates, CPA and final ROI, factoring in lead closure rates if necessary.
If you run video ads and want to increase views or interactions with your ads, you can use cost-per-view (CPV) or CPM or cost-per-thousand (CPM) bidding.
Once you have clearly identified your campaign goals, understood the metrics that matter most to you and what kind of traffic you will push (impressions, clicks, engagement or conversions), it is time to apply a bidding strategy.
Download e-book: How Google AdWords can grow your small business (AdWords Guidelines)
What are Manual Bidding and Automated Bidding?
Manual bidding gives you the flexibility to fine-tune your ad targeting for your business needs.
The benefits of manual bidding are that you can set bids at the ad group level, or for individual keywords or ad placements, so you know you’re bidding just what you want for the clicks that mean the most to you.
Under manual budding comes the Manual CPC Bidding.
1. Manual CPC Bidding
Manual CPC bidding means you get to choose your CPC (cost per click) for each keyword. It gives the advertiser maximum control. You pay only when someone clicks on your AdWords ad.
Manual CPC is particularly useful for experimental campaigns or the initial stages of a campaign, while you are gathering data and do not need to reach a target budget.
You can get good value with this bidding method because you pay only when a viewer is interested enough to click your ad and learn more. If 100 people view your ad and three clicks it, you pay for the 3 clicks, not for the other 97 views. You will never pay more than that bid on any ad.
This is useful if small groups of keywords within an Ad Group have differing values.
If you want to set a manual CPC bid strategy for your campaign, select ‘Manual CPC’ in the ‘Bidding’ tab. In the Budget tab, set your budget as the amount you are willing to spend per day.
Manual CPC gives a great deal of control and is helpful for gathering data, for many advertisers it will be an impractical strategy to maintain in the long run.
Automatic bidding automatically set bids to optimize for certain goals across set campaigns, ad groups, and keywords. It cut out a huge amount of management time as they work towards your goals while keeping within your budget.
The benefits of automated bidding are:
- It is the simplest way to bid your costs.
- Google optimizes your campaigns to give you the most clicks for your budget.
- Precisely target the best bids for your campaign goal automatically
- Save a large amount of time on campaign management
- Have automated bids run while still keeping control of spend with optional max CPC
Each type of automated bid strategy is designed to help you achieve a specific goal for your business. Under automated bid strategy comes the following:
- Target CPA
- Target ROAS
- Maximize clicks
- Maximize conversions
- Target search page location
- Target outranking share
- Enhanced CPC
1. Target CPA
Target CPA (cost per acquisition) is an effective strategy for increasing conversions within a campaign or Ad Group. You cost out your ads based on target CPA that you are willing to pay for a specified ad conversion. With this approach, some conversions may cost more than the target and some may cost less, but overall AdWords will try to keep your cost-per-conversion equal to the target.
By means of historical data about your campaign and assessing the related signals present at auction-time, Target CPA bidding automatically finds an optimal CPC bid for your ad each time it is eligible to appear. AdWords sets these bids to achieve an average CPA equal to your target across all campaigns using this strategy.
To help improve your performance in every ad auction, this strategy adjusts bids using real-time signals like device, browser, location, time of day, remarketing list, and more.
Before you can set up a Target CPA bid strategy, you will need to set up conversion tracking.
To set ‘Target CPA’ as your bidding strategy, in the ‘Bidding’ section select ‘Target CPA’ and then enter the amount you want to set as your target CPA. Moreover, Target CPA is available as a standard strategy either in a single campaign or as a portfolio strategy across multiple campaigns.
2. Target ROAS
Target ROAS (return on ad spend) is the bidding strategy for advertisers ready to focus on increasing conversions, so long as they increase profit. It helps you get more conversion value at target ROAS you set. Some conversions may have a higher or lower return than your target.
To use this strategy your campaign must already meet a minimum of conversions: 15 in a month. It also helps if your campaign has received conversion values at a similar rate for at least a few days.
According to Google AdWords, use Target ROAS with different Campaign Types:
- For Search Network and Search Network with Display Select campaigns, AdWords will try to achieve an average ROAS equal to your target across all campaigns using this strategy.
- For Display Network campaigns, AdWords will achieve an average ROAS equal to your target across all campaigns using this strategy.
- Also, for Shopping campaigns, AdWords will try to achieve an average ROAS equal to your target across all campaigns using this strategy.
- For Universal App campaigns, AdWords will try to achieve an average ROAS for your campaign based on installs or in-app events you selected.
Some conversions may return a higher ROAS and some may return a lower ROAS, but altogether AdWords will try to keep your conversion value per cost equal to the target ROAS you set.
Before you can apply a Target ROAS bid strategy to your campaigns, you will need to set values for the conversions you are tracking.
You can set ‘Target ROAS’ in the bidding section under the bid strategy. Target ROAS is available as either a standard strategy for a single campaign or a portfolio strategy across multiple campaigns.
3. Maximize Clicks
Maximize Clicks is a strategy that will focus on increasing clicks while spending a target amount. The target spends amount is essentially the budget you are setting for any campaign/ad group/keyword that is utilizing this strategy.
This automated bidding strategy does aim to keep within your overall daily budget but we recommend setting maximum CPC, for a little extra control. If you do not enter a target spend amount, AdWords attempts to meet your bid automation goals while staying within your daily budget. If your target spends amount is set higher than your daily budget then your total spends on each campaign will be considered by daily budget.
To set this strategy you need to select ‘Maximize Clicks’ in the ‘Bidding’ tab under ‘bid strategy’. You can also set maximize CPC bid limit to control your budget. You can use Maximize clicks for a single campaign, or you can set it up as a portfolio strategy. Portfolio strategies group together multiple campaigns into a single strategy.
4. Maximize Conversions
Maximize Conversions is a strategy, which automatically sets bids to increase conversions for your campaign while spending your target budget. This makes it a great option for new product launches or businesses looking to shift left overstock. AdWords will automatically increase your bids when a search is likely to result in a conversion. It is based on an excess of historical data factors about your campaign.
Maximize conversions bidding automatically finds an optimal CPC bid for your ad each time it is eligible to appear. AdWords sets these bids to help get the most conversions for your campaign while spending your budget.
Before you can set up a Maximize conversions bid strategy, you will need to set up conversion tracking.
In the ‘Bidding’ tab under bid strategy, select ‘Maximize Conversions’ to set as your preferred strategy.
5. Target Search Page Location
Target search page location is a portfolio bid strategy that focuses on ad position and visibility. It automates bidding across multiple campaigns to show your ad on the top of the page or on the first page of Google search results.
This bid strategy only works for the campaigns targeting the Search Network. If you are building awareness and money is not a chief concern for your campaign, this strategy can be effective, especially if your campaign is trying to corner the market for a particular category of keywords or push out competitors.
This strategy does not guarantee to achieve your target location, but final placement is going to be decided by the results of the ad auction. Your bid will be updated several times a day to show your ads in your target location.
To choose this strategy you need to go to the ‘Bidding’ section, under-bid strategy select ‘Target search page location’. If you have not created a portfolio, then create a new portfolio strategy. Now you will be asked – where do you want your ads to appear?
- Top of the first search results page: Google AdWords will raise or lower your bid to fit the top-of-page bid estimate.
- Anywhere on the first search results page: Google AdWords will raise or lower bid to meet first-page bid adjustment.
This bidding method is useful for is branded campaigns for large companies. In this situation, securing the top positions is a necessity and should be automated for the best results.
6. Target Outranking Share
Target outranking share is a portfolio bid strategy, which is best suited to awareness campaigns. It helps your ads outrank ads from another competitor. This bid strategy works with campaigns targeting the Search Network only.
You can target one domain in each bidding strategy that you wish to outrank. This strategy does not improve your ad rank, but only raise your outranking in comparison to another domain’s ad. The final placement is based on ad auction you both participate in.
To use this strategy, in the ‘Bidding’ tab under bid strategy select ‘Target outranking share’. Next, enter or create new portfolio strategy details. Under this, fill the following details:
- The domain name to outrank: Fill the domain whose ads you would like to outrank in search results.
- Target to outrank: Enter the percentage of auctions that you would like to outrank the selected domain.
- Bid limit: Fill the highest max. CPC bid that you want AdWords to set for any keywords, ad groups, or campaigns using Target outranking share.
7. Enhanced CPC
Enhanced CPC (cost per click) is a bid strategy that adjusts your bids to maximize conversions. It automatically adjusts you manual CPC cost-per-clicks depending on what it believes is the likelihood of the click leading to a conversion on your website.
ECPC can be used for Search, Display and Shopping Campaigns. The system also aims to keep within your overall daily budget and max CPC over time, reducing the chance for significant overspending.
To use Enhanced CPC with Search or Shopping campaigns, you will need to set up conversion tracking.
From the ‘Bidding’ tab under the bid strategy select ‘Enhanced CPC’ to use it. After that, you have to enter a portfolio strategy.
8. Maximum CPV (Cost Per View)
Maximum Cost per view – CPV is a bidding strategy to set the amount you want to pay for video ads. You will pay only when someone views or interacts with your video ad. A view is counted when someone watches 30 seconds of your video ad.
While setting up a video campaign you need to set a Maximum CPV (cost per view) amount, which is the highest amount you want to pay per view for your video ad.
Maximum CPV is only applicable to video ads. While creating a campaign, in the ‘Bidding Strategy’ tab select ‘Maximum CPV’.
9. Maximum CPM
Maximum CPM (cost-per-thousand impressions) is a bidding strategy in which your bid amount is the most you want to pay each time your ad is shown 1,000 times.
For campaign goals like Brand awareness and reach, in the ‘Bidding strategy’ section; you can select ‘Maximum CPM’.
10. Viewable CPM
Viewable CPM (cost-per-thousand impressions) is a bidding strategy in which your bid amount is the most you want to pay for 1,000 viewable impressions of your ad.
An ad is counted as “viewable” when 50 percent of your ad shows on screen for:
- One second or longer for display ads.
- Two seconds or longer for video ads.
You do not pay for impressions that were not viewable.
Moreover, you can use the viewable CPM bid strategy for the Display Ad campaigns and Video Ad campaigns. To implement this, simply go to the ‘Bidding strategy’ section, and select ‘Viewable CPM’.
Here are Google AdWords Bidding mistakes that you should avoid:
- Not monitoring your campaigns.
- Using one bid across all campaigns.
- Making bid adjustments too quickly.
- Not split testing. A/B testing tools are very useful.
The right bid strategy can make a difference by making and wasting money. You should definitely always set different bids for the search network, display network, and shopping network.
Now that you have some powerful bidding strategy knowledge in your resource, it will be easy to choose the right one for your goal, your data collection stage, and your audience. It is time to get out there and bid your way to success.
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