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Selecting the right bidding strategy is key to successful PPC management and campaign building. Google strongly boasts the AI capabilities of its automated bidding strategies and promises that they make the life of a PPC advertiser easier.
However, some marketing professionals argue that automated bidding strategies cause more harm than good.
These two sides create a lot of confusion and misconceptions regarding automated bidding strategies. Newer marketers often ask, “When should you use automated bidding?”
The goal of this article is to delve deep into the topic of automated bidding strategies on Google Ads. You will learn how automated bidding works, how these bidding strategies are categorized and how each type of automated bidding strategy works and when it should be used.
Google’s automated bidding strategies use sophisticated machine learning and data processing capabilities to analyze search users for indicators that signal a high likelihood of converting. When these algorithms detect a user that is likely to convert, Google adjusts bids at the time of auction to secure ad spots in front of these high-priority users. Following are the bidding strategies that fall under the category of Automated Bidding Strategies.
Google uses your budget and the advertising goal you’ve set to maximize the potential results for the desired spend. In theory, this stretches your ad budget to the absolute furthest.
Automated bidding strategies exist for
While discussing when to use automated bidding, the term ‘Smart Bidding’ appears a lot. Some resources even use the term interchangeably with automated bidding. The reason behind this confusion is that Smart Bidding is an automated bidding category. These types of automated bidding strategies are focused on conversions.
For example, all of the following automated bidding strategies fall under the category of Smart Bidding:
Essentially, all Smart Bidding options are automated bidding strategies, but not all automated bidding strategies fall under the Smart Bidding category.
Another term that appears frequently while discussing automated bidding is ‘Portfolio bid strategy.’ This is another category of automated bidding options, but with a slight twist.
The Portfolio bid option combines multiple campaigns, ad groups and keywords within a single automated bidding goal. These goals include:
This is great for marketers that want to use the same automated bidding strategy across different levels.
Now that you have a more complete grasp on the concepts regarding automated bidding, it is time to look at each individual option available to PPC marketers and explain what it is and when it should be used.
Target CPA is designed to get the most amount of conversions possible for your target spend. If you tell Google that you want to spend $5 on each conversion, Target CPA will optimize your bids to ensure that you maximize the number of possible conversions at that cost.
When using this bidding strategy, it is wise to set your Target CPA a little higher than normal. This will give Google some wiggle room. After all, you don’t want to miss out on a valuable conversion that costs just a little higher than your CPA!
Target CPA is available for search, display and app campaigns. You cannot use this bidding option on the Google Shopping Campaigns.
Not all conversions are created equal. The Target ROAS option aims to ensure that your ad budget is spent on conversions of a certain value. For example, you want to receive at least a $8 return on every $3 spent.
Google will use these numbers to attract conversions valued within that range. It’s important that you have accurate conversion values in place when choosing this strategy. That means paying particular attention to revenue and CPC amounts.
Target ROAS is available for search, display and shopping campaigns, but it can’t be used with app campaigns.
As the name suggests, the purpose of this bidding strategy is to generate as many clicks as possible within your budget. Google will adjust your bids at each auction to ensure that clicks come at a reasonable cost.
This is a great strategy to use when you are determined to drive more traffic to your site. You can use it with any campaign type, except for an app campaign.
When you set your budget, the Maximize Clicks strategy will aim to use all of it each day. This means that some clicks may be more expensive than others because it is trying to exhaust all of your available ad spend for the day.
Again, this strategy has a very straightforward approach – get as many conversions as possible for the set budget. It is great for marketers with large budgets that want to ensure lots of conversions.
Unfortunately, Maximize Conversions carries the same danger as the Maximize Clicks strategy in that Google will always aim to use your entire budget. At times, this will cause the algorithm to overspend on conversions, just to use the entirety of your daily budget.
Thus, it is imperative that you have accurate conversion tracking enabled and you understand the value of each conversion. It’s really easy to damage your profits by using the Maximize Conversions bidding strategy without taking these precautions.
This strategy is only available on the Google Search and Display Networks. It isn’t available for use with app or shopping campaigns.
When should you use automated bidding with the Maximize Conversion Value goal? If profits are a main focus of your PPC marketing, then the Maximize Conversion Value strategy is a wise option.
Rather than adjusting bids to maximize the number of conversions, this automated bidding option looks at potential revenue and profit margins and aims to only produce conversions that promise a certain threshold of value.
In other words, this bid strategy prioritizes conversions based on profits to be gained from that action. It is only available on the Google Search Network. It can also be used with a local PPC campaign to stimulate in-store visits.
Not all PPC campaigns are built around conversions, profits and clicks. Sometimes, you should want to put your brand in front of audiences to stimulate brand awareness. The goal of these campaigns is to drive impressions. Impressions are how many people “see” your ad.
The Target Impression Share option is also useful for ensuring that your ad messages are always visible for certain searches. For example, you can set your impression share to 100%, which means that your ads will always appear for a specific keyword search. This tactic can be used to dominate search results for high-priority keywords.
The drawback is that 100% impression share is extremely costly. If you’re operating on a tight budget, you may want to opt for a low percentage and monitor the costs closely. Otherwise, you could end up spending a lot more than you anticipated.
The Target Impression Share option can only be enabled on the Google Search Network.
You can think of Enhanced CPC bidding as a safer means to increase conversions without putting your entire budget in the hands of Google. This is almost a hybrid option between manual and automated bidding because you’re still responsible for setting your CPC bid.
The difference with Enhanced CPC is that Google will sometimes moderately increase your bid to ensure placement. For example, if your max bid is set to $2, but Google notices that a relevant ad auction has a minimum bid of $2.5, it will adjust your bid to $2.6 to guarantee that your ad enters the rotation.
Essentially, Enhanced CPC ensures that you don’t miss out on any auctions where your ad content is expected to perform well. Some marketers claim that this type of automated bidding strategy improves ROAS by a whopping 70%!
Enhanced CPC can be used with every type of campaign, with the exception of app campaigns.
This is a Display Network-only bidding strategy that is focused on maximizing impressions and ad views. It’s best used for campaigns that want to generate brand awareness.
vCPM is also known as cost-per-thousand viewable impressions. When selected as an automated bidding strategy, Google will maximize the number of ad views based on your budget.
Viewable impressions mean that the user has to actually see the ad on their screen. For example, if your ad is displayed as a banner at the bottom of the website and the user never scrolls that far, then it is not counted as a viewable impression.
Thus, vCPM ensures that your ads appear frequently and are placed in locations that will be viewed.
Automated bidding strategies can save time and alleviate some of the headaches that come with manual bidding. However, in relinquishing bid control to Google, you’re giving up a lot of your own options. And, the results of an automated bidding strategy may not be what you anticipated.
If you want to use an automated bidding option make sure you already have historical data, it is best to do so slowly. Create a very modest budget and see what Google does with it. Then, compare those results to what you achieve with manual bids.
This is the best way to determine if and when you should use automated bidding.
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