Automated Bidding Strategies for Google Ads - When & How to Use Them

Google’s automated bidding strategies have simplified the bidding process but don’t be fooled by the name, despite being automated, most of them require targets or bid capping to be set. 

 

Bid strategies can be only implemented only at a campaign level, therefore all ad groups in the campaign will have the same bid strategy. You can have different strategies for different campaigns. It is also possible to set the campaign strategy at the account level and apply it to multiple campaigns. 

 

In this article, we will discuss the various types of automated bidding strategies. Some may work well for your campaigns others may not work for you, it’s important to understand each strategy to determine which ones are right for you. 

 

In this article you'll find out:  

What is automated bidding in Google Ads?

About Automated bidding strategies

What are the Pros&Cons of:

Smart bidding 

Enhanced CPC Bidding Strategy

Maximize Conversions

Target CPA

Maximize Conversion Value

Target ROAS

Maximize Clicks

Target Impression Share

 

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What is automated bidding in Google Ads?

Google’s Ads automated bidding strategies put Google in control of your bidding as opposed to manual bidding. Google can automate for the following: 

  1. Position on the SERP 
  2. Clicks 
  3. Conversions  
  4. Conversion value (Revenue) 
  5. Views
  6. Impressions
  7. Email Openings

Automated bidding is designed to maximize results by automatically setting a bid based on the likelihood that your ad will receive a click or a conversion. 

 

The system establishes this likelihood and decides on the bid by using Google’s machine learning to analyze users' data such as device, operating system, browser, previous search history, the time of day they are searching, location, and demographic data such as gender and age, as well as past data from the campaigns.

 

The main purpose of automated bidding is to solve the two issues that advertisers mostly have to face:

 

  • Whether their bids are high enough to compete with qualified buyers
  • Whether their bids are too high and they're likely to be shown to people who have no interest in buying

 

smart_bidding_funnel

 

 

Consider your goals

Google Ads offer a number of bidding options, depending on which campaign type you are using, not all bid strategies are available to all campaign types, which network you are targeting and whether you want to focus on getting clicks, impressions, conversions or views. 

 

Every automated strategy is suitable for a different type of campaign and goal. Google suggests  the following five basic types goals: 

 

  • If you want customers to take direct action on your site, then it’s best to focus on conversions, smart bidding will allow you to do that.
  • If you want to generate traffic to your website, then you will want to increase clicks, therefore, cost-per-click (CPC) bidding may be right for you.
  • If you want to increase brand awareness, it may be best to focus on impressions using target impression share.
  • If you are not limited by budget and focused on conversions, then target Cost Per Action or Target Return On Ad Spend bidding could be right for you.

 

A further consideration when choosing your bidding strategy is data. If you have a new conversions campaign, for example, Google doesn’t have data about what brings in conversions to efficiently automate the bidding process. Consider beginning with manual bidding initially to allow data to be gathered before choosing your bidding strategy.

 

When you know your goals and your campaigns have collected enough data, it’s time to choose your Automated Bidding Strategy. We will outline the pros and cons of the most common strategies.

 

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Automated bidding strategies

Automated bidding is a trade-off between efficiency and control. Automated bidding saves time and leverages Google’s technology and proprietary data to optimize campaigns towards your goals. On the other hand, with manual bidding, you maintain full control of your bids and you are able to customize them within the same campaign. For example, you can customize bids for individual search keywords or products in Shopping. You can also use bid adjustments for Location, Day & Hour, Device and Audience.

 

automated_bidding_pros_and_cons

 


 

Smart bidding

Google smart bidding is a conversion-focused automated bid strategy. If you want to get assisted in increasing or decreasing the bid in order to get more conversions or conversion value, you can use enhanced CPC. If you decide to use them, you’ll need to set up conversion tracking if you want this to be efficient.

 

What is Smart bidding?

Smart Bidding uses machine learning for optimizing your bids in order to maximize conversions and conversion value across your campaign or your bidding portfolio. 

 

According to Google, with Smart Bidding, you get 4 key benefits that can help you save time and money and improve your campaign performance. 

 

  • Advanced machine learning
  • Wide range of contextual signals
  • Flexible performance controls
  • Transparent performance reporting

 

Google ads smart bidding works for both large and small businesses and can be optimized with data from all your campaigns, so is suitable for new campaigns.

 

Smart Bidding Strategy - Pros & Cons

 

PROs:

 

  • Saves Time 

  • It’s in real-time - for every auction, i.e. when someone types a keyword, Google will decide the specific bid that it thinks will be most appropriate for your goal.
 
  • Leverages Google's machine learning and proprietary data

- e.g. is this particular user, with his browsing history and interests and usual behaviours etc, likely to convert for this particular advertiser? Combined with data from the accounts conversion history. In addition, it adjusts for data that you can’t bid adjust for, such as language, browser, operating system.


Manual bidding will allow you to adjust for device, location, weekday and time, etc. however, these adjustments add up, for example, mobile +50% + Friday +20%. With Smart Bidding the system will decide what is the right bid for a mobile user on a Friday, taking into consideration all other factors also. 

 

  • “Set and Forget” - allows you to set up a campaign and not have to monitor as often, making it easier to run for small businesses. 

 

 

CONs 

  • Reduced budget control - with a Google Ads smart campaign you lose control of your bids and you have to trust the system with your budget. 

  • You have no visibility or control over the data being used - you depend on the quality of the conversion data, in addition to using Google’s broad data that might not reflect your target audience. 

  • Google’s interests are not the advertiser’s - Google’s interest is mostly in keeping the “ecosystem” balanced and of course to make money, not to make you, as the advertiser, money. For example, if some of your very common keywords never convert or if you never convert on mobile, it’s still likely that Google will get you some traffic, because if Google excludes, or bids very low, each time you are not likely to convert, it would decrease its income. 

  • It takes time for Google to “learn” your campaigns - Smart bidding has a learning phase when first implemented, usually, for around a week, the system will tell you for how long. Due to this learning phrase, smart campaigns are more fragile or delicate than manual bidding.

 

With manual bidding, if you make a mistake you can revert it and it’s ok, however, with smart bidding, if you make a mistake with a campaign or if you need to make a material change to the campaign, e.g. a significant change to the budget or targeting, keywords or products, the campaign will go back into the Learning Phase. This can affect the results causing an increase in spending with poorer results or a sudden decrease in spending.

 

  

Back to The Top or Scale Your Google Search Campaigns with Automated Text Ads 


 

Enhanced CPC Bidding Strategy (eCPC)

 

What is an enhanced CPC?

The Goal of eCPC is to increase conversions while staying in control of your keyword bids. 

 

Enhanced CPC, or eCPC, is a little different, it’s not a stand-alone bid strategy, rather it can be implemented with a manual bidding strategy when you want to take advantage of Google’s automated bidding.

 

enhanced_CPC

 

With enhanced CPC for Google will automatically adjust your manual bids to help to increase your conversion rate, without increasing your cost per conversion. By selecting eCPC, you allow the system to adjust the bid at each auction, with a “guarantee” that the average cost per click will remain around the same as your selected bid.

 

So, let’s say you bid $15 for [running shoes], the system could bid higher on an auction with a higher possibility of conversion, and lower on auctions with a lower chance of converting, even if both searches are the same. Google uses its machine learning to adjust the bid based on the user’s data and historical conversion data to determine if the searcher is a good prospect. 

 

When you set CPC to optimize for conversions:

 

  • eCPC adjusts your bid for each search that your ad is relevant for, and bids based on the likelihood that a click will lead to a conversion.

  • eCPC can help you get more conversions for your budget.

 

When you set eCPC to optimize for conversion value:

 

  • eCPC adjusts your bid for each search that your ad is relevant for, and bids based on the likelihood that a click is to lead to a conversion. Now you can optimize bids based on conversion or based on conversion value. 

Enhanced CPC Ads campaigns are the first step towards automation.

 

Enhanced_CPC _Algorithm

 

 

Enhanced CPC Bidding Strategy - Pros & Cons

 

PROs

  • You can retain a lot of control - your bid is not the same in each auction, but you know that the Avg. CPC will not exceed your bid in the long run. You can still do everything you’d normally do with Manual CPC, setting specific bids for every keyword or product, targeting on Display, using bid adjustments. 

  • Benefit from Machine Learning - while retaining control of your campaigns, you can still take advantage of a bit of Google’s smartness and play around with it. 

 

 

  • Stepping stone to automated bid strategy

 

 

Cons

  • It’s a compromise - Google is limited by your manual bids and bid adjustments. If your goal is conversions related, Google is pushing strongly towards more advanced automated bidding strategies to leverage advancing machine learning. 

 

  • Giving more control to Google - you need to trust in Google’s strategy.



Maximize Conversions

Introduced in 2021, Maximize Conversions and Maximize Conversion Value bid strategies, use Google Ads automatic Bidding to optimize for these goals.

 

Next Recommended Read: Understanding & Troubleshooting Google Ads Conversions 

 

 

What is Maximize Conversions in Google Ads?

Maximize conversions automatically sets bids to help get the most conversions for your campaign while spending your budget. It uses advanced machine learning to automatically optimize bids and offers auction-time bidding capabilities that tailor bids for each and every auction.

 

Maximize Conversions is a fully automated Smart Bidding strategy. Meaning that this strategy doesn’t allow you any type of capping, limitation or targeting when it comes to bidding. It aims to bring you the most conversions for your budget. Maximize strategies aim to use the full spending budget.

 

According to Google this works by implementing historical information about your campaign and assessing the additional information present at the time of the auction. Maximize conversion value bidding automatically finds the best CPC bid for your ad in each auction. 

 

While Google doesn’t actually require or suggest waiting for a number of historical conversions to be recorded before switching to this Ads automated bidding strategy, many experts advise assessing the budget spending and collecting some conversion data before implementing a maximizing conversion strategy.

 

Maximize Conversions - Pros & Cons

 

PROs

  • It’s very simple to set up

 

  • It leverages the full smart bidding machine learning. 

 

  • Generate more conversions without exceeding your budget - it’s a great choice for campaigns already limited by budget and consistently spending the daily budget.
 
CONs
  • It will spend the budget with no consideration for ROAS (Return On Ad Spend) 

 

  • No Control - you can end up paying a very high CPC. For example, you set a campaign targeting the keyword [running shoes fluorescent strings] with a budget of $100 and set it to Maximize Conversions to focus on sales, however, the system will think "ok, there's just a couple of searches on this, so my best chance to get the most conversions within the budget is bidding 50$ per click!”



 

Target CPA

Target CPA (tCPA) is a Smart Bidding strategy for Google Ads that uses Google advanced machine learning to automatically set the bid for each auction, with the aim to maximize the number of conversions at or below the target cost per action (CPA) you have set. It uses Google advanced machine learning to automatically set the bid for each auction.

 

 

What is Target CPA?

Target CPA is the older sister of Maximize Conversions, rolled out in 2007 with the name “Conversion optimizer” and then re-released in 2013 as Target CPA, along with Target ROAS. 

 

What is the difference between max conversion, and Target CPA? Target CPA (tCPA) adds your desired “target” CPA into the equation.(CPA =Cost per Action, literally means Cost per Conversion... but CPC was already taken by Cost per Click).

 

Google will try to get you conversions at a certain CPA. You will pay per click, but the system will try to have you spending while getting conversions at your desired cost. For example, if your target CPA is $20, the system will try to have you pay for $20 in clicks before getting a conversion. As it’s just a target, it doesn’t guarantee results.

 

Google is not required to set a minimum number of conversions before using this bidding strategy, however,  you will need to have a lot of conversion data for the system to be reliable. Google itself says "in order to evaluate it properly you should consider a period with at least 30 conversions, of a month or longer". Once you have at least 30 conversions, change the bidding strategy to Target CPA and test it. Monitor the campaign for 30 days and compare it with the last month to see if your cost/conversion is better.

 

target_CPA

 

Target CPA - Pros & Cons

 

PROs

  •  It is a strategy that in some cases can allow a pay per conversion scenario

 

  •  Automates your bidding to hit CPA targets

 

  • Good for Scaling Campaigns - It works well with an uncapped budget strategy. Meaning that the advertiser doesn’t mind how much is spent as long as the conversions
 

CONs

  • Requires good historical data - to effectively use the target CPA strategy.  As we were saying, at least 30 conversions per month to "evaluate properly". Since you input your Target CPA manually, there's a big risk that you'll input an unrealistic goal... if you do, the system will most often end up "giving up" and the campaign can even stop serving altogether, or perform erratically. 

 

  • It's a very delicate strategy - if you make drastic changes to the campaign or the target CPA itself, performances can be affected greatly.

 

Back to The Top or Scale Your Google Search Campaigns with Automated Text Ads 


 

Maximize Conversion Value

Using Google Ads automated bidding strategy to maximize the total conversion value of your campaigns for your specific budget.

 

 

What is Maximize Conversion Value?

Launched together with Smart Shopping Campaigns in 2018, this revolutionary type of campaign was running on a new and unique bidding strategy. In 2019 Max Conversion Value was also released for search campaigns. 

 

The bid strategy focuses on conversion value, meaning, Google’s machine learning system factors is another important variable, conversion value. Now the system is not only looking at how likely the click is to bring conversion, as with Max Conversions, but also the likely value that the conversion is likely to have. 

 

This automatic bidding strategy is therefore crucial to e-commerce. In standard shopping campaigns, max conversions and tCPA are not available, while on Smart Shopping campaigns, only the conversion value focussed bidding strategies, Max conversion value and tROAS, are available.

 

This doesn’t mean that the max conversion strategy is only used by e-commerce or businesses with online transactions, such as hospitality. The strategy can also be used in other types of business, for example, if you have a website with two goals, such as contact form completed and case study download, they are both conversions, but they have different values. Assuming the contact form submission is a lot more valuable, if you use max conversion or tCPA bidding, they will see these conversions equally.

 

However, if you assign a different value to your conversion, say $100 for a form complete and $15 for a case study download, you can use the max conversion value smart bidding to incorporate this data and the system will give weight to the more valuable conversions, which should result in more contact form submissions.

 

Max Conv Value - Pros & Cons

 

PROs
  • It’s very simple to set up

 

  • It leverages the full smart bidding machine learning, 

 

  • Generate more conversion value without exceeding your budget - it’s a great choice for campaigns already limited by budget and consistently spending the daily budget,
 
  • Increase value of conversions

CONs
  • It will spend the budget with no consideration for ROAS (Return On Ad Spend) 

 

  • No Control - you can end up paying a very high CPC. For example, you set a campaign targeting the keyword [running shoes fluorescent strings] with a budget of $100 and set it to Maximize Conversions to focus on sales, however, the system will think "ok, there's just a couple of searches on this, so my best chance to get the most conversions within the budget is bidding 50$ per click!”

 

  • Requires a lot of data to work efficiently - since it takes into account value data beyond just conversion data, this bid strategies need even more data than its counterparts to work efficiently.




 

Target ROAS

Launched in 2013, Target ROAS (tROAS) is similar to Target CPA (tCPA), except it is not just on conversions but the conversion value.

 

 

What is Target ROAS?

ROAS stands for return on ad spend—a marketing metric that measures the amount of revenue your business earns for each dollar it spends on advertising.

 

Essentially, ROAS is advertisings equivalent of the common business metric, Return on Investment, ROI. The higher your campaigns ROAS the more effective your campaign is.

 

ROAS is calculated by dividing conversion value by cost. This can either be expressed as a number or multiplied by 100 to be expressed as a percentage. For example, if your Revenue is 500 and your ad spend is 100, your ROAS is 5, 5x or 500%, however, you prefer to express it. In Google Ads, the target ROAS as a strategy is expressed as a percentage, but in the metrics columns you have “Cost Value/Cost”, which is essentially the same as ROAS, and here it’s expressed as a number.

 

ROAS

 

As a strategy, tROAS says to Google “please bring me x$ for every $ I spend” (as opposed to tCPA which says to Google “please bring me 1 conversion for every x$ spent). Of course, your target ROAS needs to be realistic and could be eventually raised, but only gradually and by 10-15% max to avoid volatile performance or going back to the Learning Phase.

 

tROAS requires a lot of data to perform effectively, even more than tCPA, to allow the results to be calculated accurately. tROAS should have at least 50 conversions in the last month before considering this strategy. Google needs to be able to calculate not only the likelihood of conversion but also the likely conversion value.

 

Target ROAS - Pros & Cons

The Pros & Cons for tROAS are the same as those for tCPA.

 

This strategy is particularly useful for Conversion Value focused advertisers, where the campaign is receiving more than 50 conversions per month and has been running for a few months at least.

 


 

Maximize Clicks

Maximize clicks is another automated bidding strategy that utilizes Google’s machine learning to automatically set your bids, this time to help get as many clicks as possible for your budget. It’s the easiest way to increase clicks, you set the budget and the system does the rest. 

 

 

What is Maximize Clicks in Google Ads?

Similar to the Maximize strategies above, this strategy is “trying to bring you the most X while spending your budget", this time X is clicks. It has been around for a while now and is available in Standard Shopping, Search and Standard Display. Maximize Clicks was previously referred to as “Automatic bidding”.

 

Maximize Clicks is not a real-time auction bid strategy, instead, Google is setting a static bid on your behalf, by looking at your budget, potential auctions available and competition level.

 

The system is able to update your bid every time the landscape changes, (i.e. weekly). The actual bis selection is not visible to the advertiser, nor are any changes that occur. The system sets the same bid across all keywords, products, display targeting, that will aim to get you the most clicks for your budget. 

 

The automated maximize clicks still support all the bid adjustments, which are applied to the static bid chosen by the system in the same way they would be applied to a manual bid strategy.

 

When using this strategy you are able to set a cap on bids allowing you to control the maximum amount you spend for each click. If you don’t set a max CPC, Google will automatically adjust our bids to get as many clicks as possible, spending all your budget.

 

maximise_clicks

 

 

 

Maximize Clicks in Google Ads - Pros & Cons

 

PROs 
  • Effective for campaigns limited by budget - Max clicks tends to be the strategy with the lowest CPC, therefore it’s very good if you don’t want to start with Smart Bidding yet, but are not sure which bids to choose manually, if you want to save time, or you don’t want to focus on particular keywords or products. 

 

  • Can work with manual CPC bidding to ensure budgets are spent

 

  • The most effective way to drive traffic to your website

 

CONs
  • No control over traffic quality

 

  • Less meaningful results - the system will set the same bid for every KW (search), Product (shopping), Targeting method (display), and it doesn’t differentiate, therefore if you have more expensive KWs/products, it will prioritize the cheaper auction, however, these may be the less effective for conversions. The goal is clicks, the quality of those clicks is not considered. 

Maximize clicks is, for most, a  "temporary" bid strategy, especially if your ultimate goal is not just traffic but conversions.

 

Back to The Top or Scale Your Google Search Campaigns with Automated Text Ads 


 

Target Impression Share

This strategy is only available to Seah campaigns, the goal is not clicks or conversions, but a certain occupation of the SERP, therefore targeting position and visibility.

 

What is Target Impression Share?

Introduced in 2018, it replaced Target Search Page Location and Target Outranking Share. As a reminder, impression share = impressions / total eligible impressions. 

 

Google looks at the ad auctions over the day and uses internal data, such as quality, of your ads and those of other advertisers, in the same ad auctions.

 

Target Impressions Share is a real-time bidding strategy, where the system will set a bid for you in every action. The system sets a bit based on 3 inputs you are asked to provide.

 

target_impression

  1. Your goal position -Anywhere on the SERP, Top of the SERP = above organic , Absolute Top of the SERP = first position. 
  2. How often you would like to hit our position goal - how many times, in %, you want to hit your goal position. Essentially, what is your Target Impression Share for your goal positions. For example, imagine 100 people searching for your KWs, and you get 80 impressions out of the 100 searches, 60 were at the top of the page, 20 were in the 1st positions, you would get 80% impression share, 60% Top Impression Share and 20% Abs. Top Impression Share

  3. Max Bid cap - you have to state a Max Bid Cap as it’s mandatory here. Without this, if you wanted to be 1st 100% of the time, which is way too optimistic, you could end up paying ridiculously high CPC without realizing what you were doing. On the other hand, if you have ambitious positioning goals but you set a low max bid cap (and too low a budget) your target will be unobtainable. 

 

Target Impression Share - Pros & Cons

 

PROs
  • Works well for campaigns requiring a high impression share, i.e. a Brand campaign

 

  • Helps mobile-oriented campaigns secure ideal placements (#1 spot).

 

  • The only automated strategy that helps to secure the top spots on Google’s SERP. It can be great for advertisers not interested in immediate returns (traffic, CPA, ROAS) but more interested in strategic occupation of the SERP, without the need for manual bid adjustments.

CONs
  • No focus on clicks or conversions if your goal is to get direct returns from your ads, and be cost-effective, this is not the right strategy for you. Occupying a certain position at all costs can lead to higher Cost Per Click (CPC). The system also doesn’t take into consideration the likelihood of a conversion, resulting in poor traffic.

 


 

When should you use automated bidding?

In general, automated bidding strategies are perfect for filling the gaps you may have as in experience or time. More often than not, it’s just not possible to compete with the system’s machine learning, even if you are an expert, due to its computing capabilities and also its access to Google's proprietary data in real auction time. 

 

The important thing to remember is that you do not just have to pick one automated bid strategy for your whole account, but you can pick and choose which ones to use for which campaigns. Your strategy can be set either at the ad group, campaign, or portfolio level, depending on the strategy you choose. 

 

When choosing your strategy, it’s essential to bear in mind your goals and if you have enough data to make your chosen strategy work.

 

Each of the strategies mentioned above can be used, as long as it’s the right fit for your account and what you are looking to achieve. It’s important to evaluate your account regularly in order to identify which bid strategy could be useful, for example, are you now receiving conversions to implement a tCPA or tROAS campaign, that you may not have had previously. 

 

Once you have implemented a Smart Bidding strategy, check it regularly to ensure that it’s the right strategy and it achieves the goals you set out to meet.

 

In addition to your chosen automated bidding strategy, DataFeedWatch can also help to maximize your results by automating your product feed, to find out more about optimizing your data feeds, read 4 Reasons Why You Should Optimize Your Data Feed or Contact Us

 

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