How to choose the right AdWords bidding strategy
When it comes to a successful PPC advertising strategy there are many different components to envisage. 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 won’t get very far.
Having the right bids for the correct keywords in each AdWords auction can make or break your strategy, so it is vital to have a plan.
Bidding is one of the most essential features within AdWords. It plays a key role in ad rank and therefore, the visibility level of your ad to users. Ironically, 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 supposedly most important words and lower bids to less important and long tail terms. Many bid amounts are made arbitrarily or simply to meet AdWords recommended first page bids.
While a host of factors influence ad rank, including quality score and landing page relevancy, bid amount is essential, especially when we take into account the competitive nature of AdWords bids.
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 page but to meet the objectives of your business goals. By appropriately matching clever bidding strategies to your campaign objectives, you can be a big step closer to PPC success.
Understand your objectives
PPC experts talk about campaign objectives frequently. In fact, most advice you will encounter will be about matching parts of your strategy or audience type to an objective. At Paid Traffic we are no exception. This is because having a clear campaign objective is vital to being able to plan a strategy that makes sense. If you don’t understand how your campaign fits into your business goal, you cannot make sound decisions with any meaning or gain value from your data.
Before you begin looking at any part of your PPC advertising strategy, you must first choose your campaign goal and how this will further your ultimate business goals.
By choosing an appropriate goal, advertisers will know what KPIs to look out for and which metrics matter most. When it comes to choosing a bidding strategy this can ultimately affect how you are charged, therefore objectives must be carefully thought out.
There are 4 main objectives which businesses will focus on for a campaign:
Driving awareness – To increase awareness advertisers may focus on increased impressions or traffic.
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 – 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.
Awareness, interest and nurturing objectives are necessary campaign goals to feed audience numbers and prepare them psychology to be targeted for conversion campaigns.
Most AdWords campaigns are charged on a CPC basis. After all, we could not call it pay per click advertising otherwise. However, as this kind of advertising has evolved, it has come to incorporate other cost choices, such as vCPM (cost per thousand impressions), CPV (cost per view), CPE (cost per engagement) and CPA (cost per acquisition). These various charging methods suit differing objectives, so we can easily see why the chosen bidding tactics will have a significant impact on how you are charged and how the strategy feeds your overall goals.
Once you have clearly identified your campaign objectives, understood the KPIs and 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.
There are many options to choose from when it comes to achieving your goals and all have their merits. For advertisers who are looking for the most control, manual bidding is usually their first choice.
Manual CPC bidding
Manual CPC gives the advertiser maximum control. You can individually set the bid for every keyword, while setting an overall maximum CPC for your AdGroup.
This is useful if small groups of keywords within an AdGroup have differing value.
Manual CPC is particularly useful for experimental campaigns or the initial stages of a campaign, while you are gathering data and don’t need to reach a target budget.
To change manual bids, you must have manual CPC as your bid strategy. To enable this, head to the settings tab.
Scroll down to bid strategy and click edit.
If your campaign is not set to manual CPC, click change bid strategy.
The drop down will reveal a variety of optional bid strategies.
Select manual CPC and click save.
To set and tweak manual bids, head over to your keywords tab.
Select the keywords whose bids you wish to alter. Look under the Max CPC column. Click the current bid price to change it.
If you are setting bids manually, you need to look back at all your keyword data yourself e.g. which are producing best traffic, impressions or conversions. Take care to look back at a large enough window of time, rather than making snap decisions based on insufficient data.
Looking at a small window can lead to overly aggressive bids, while looking at too long a period can result in overly conservative bids. Manual bidding takes a great deal of finesse.
Manual CPC bids override your maximum CPC at AdGroup levels, so if one or two keywords are proving more competitive or yielding better results than the others, this is very useful.
While 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.
Since you must review all your data and make changes manually, the management time for your campaign is going to be very high. If you have a large number of keywords and/or AdGroups, this is going to become nearly impossible. The human brain can only hold so much information and is liable to forget details. This will eventually lead to imperfect bidding decisions and wasted time.
For small campaigns, very early data gathering, experiments and those new to AdWords, manual CPC can be invaluable but soon your strategy will have to evolve to meet the needs of your objective. Many advertisers are fond of the level of control manual bidding offers but there are strategies that allow a combination of automation and granular control.
Rule based bidding
If you want the control of manual CPC but a degree of greater automation to aid performance and reduce management time, then rule based bidding could be right for you.
Rule based bidding allows you to set automated bid changes when certain criteria are met by the campaign, within a max CPC of your choice. Rule based bidding is extremely flexible and can be applied to entire AdGroups, several AdGroups or selections of keywords within AdGroups. They can also apply to the ads themselves, rather than just bids and the criteria can cover a huge range of options.
If you wish to control detailed minutia of your campaign, rather than letting AdWords automated bidding fully take over to achieve your objectives, rule based bidding is a blessing. You can decide how your bids should change and to which areas of the campaign you deem fit. This is especially useful for campaigns focused on micro conversions or, like manual CPC, during the data gathering stage of your campaign.
Rule based bidding provides granular control to help you achieve a crafted bidding strategy to suit your objective, for example you could have bids rise if CPA is less than $30 or entire AdGroups pause if CTR is less than 3%.
To set up your first rule based bid, select your chosen campaign and head to the AdGroups tab.
Tick your chosen AdGroup or groups to which you wish to apply your rule based bid strategy. Then select Automate.
From here you can choose rule types from the drop down. Remember you can apply rules to AdGroups or to selected keywords or the ads themselves or just receive email notifications when certain criteria are met. Rule based bidding is highly flexible and easy to control.
Setting up a rule is simple. Select the rule you desire e.g. bidding to the top of page.
Now you will be taken to the area to apply your variables. You can target all keywords or select some specific terms.
It is recommended you set a max CPC to give greater control over your spend. Then you can select your criteria e.g. when conversions are below 15.
Criteria can be applied to a wide array of variables such as CTR, quality score, bid simulator estimates, by AdGroup name and much more.
Check how often you want the rule to run per day and if you wish for an email notification to be sent. Finally click save to apply the rule based bid strategy.
This method is ideal if you wish to automate bidding to streamline your account management, yet still wish to retain a great detail of control and apply various rules to different keywords to achieve your goals.
Watch the following video for more information on rule based bid strategies and a step by step guide on applying them:
Naturally, rule based bidding may not go far enough with its automation for large accounts. To set up enough rules for the various sections of your campaign can be almost as time consuming as manual bidding. You also need to trust that you understand your data enough to know what criteria will enable your objective. This is why rule based bidding is a good method for experiments. However, for large campaigns, advertisers may want to automate all bidding, based on a specific goal for the campaign.
Automated bidding strategies
Rule based bidding can become complicated and put too much trust in the human mind. Automated bidding strategies aim to simplify the process and make achieving your PPC advertising objectives as easy as possible.
Automated bidding strategies cut out a huge amount of management time as they work towards your goals while keeping within your budget.
The best reasons to use an automated bidding system in AdWords are:
- To precisely target the best bids for your campaign objective automatically
- To reach a target budget consistently
- To save a large amount of time on campaign management
- To have automated bids run while still keeping control of spend with optional max CPC
All of these reasons are perfect for an objective focused campaign, which is why automated bidding strategies are so popular.
In addition to manual bidding and rule based bidding, advertisers can choose between the following automated bidding strategies:
- Target search page location
- Target outranking share
- Maximise clicks
- Maximise conversions
- Target CPA
- Target ROAS
Target search page location – This bidding strategy focuses on ad position and visibility. It is therefore appropriate for awareness objectives.
AdWords will help your ad rank, which in turns means more eyes on your ads and the top positions have better CTR, so traffic is likely to be increased.
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 genre of keywords or push out competitors.
This strategy has its merits but advertisers should bear their awareness goal in mind. Bidding to top of page alone is not a good strategy for healthy profits. The system will automatically increase your keyword bids to maintain a position, either top of page or anywhere on the first page of search results. Bidding to top of page and first page can be expensive but on the other hand the value of visibility is very influential. We all know how significantly CTR drops after the first page of search results.
One strategy this bidding method is useful for is branded campaigns for large companies. In this scenario, securing the top positions is a necessity and should be automated for best results.
This strategy would not be suitable for advertisers primarily concerned with CPA or ROI, as it can be very costly. It is advised that advertisers still set a maximum CPC to avoid spend getting out of control in competitive markets.
Don’t forget these bidding strategies are not magic spells. You should still endeavour to maintain high quality scores for a good ad rank at the lowest cost possible.
Target outranking share – Much like target to search page location, this bidding strategy is best suited to awareness campaigns. It is a unique strategy in its highly competitive nature. It allows automated bids targeted at outranking a specific competitor.
You can enter a domain that you wish to automatically outbid. While the strategy does not mean you will outrank them all the time, it will help to raise your outranking share for auctions you both participate in.
This strategy certainly lends itself to the competitive mentality of businesses in search but it is usually not the best strategy for achieving your goals. Unless your business finds itself a severely niche market with only a tiny handful of competitors, this strategy is ill advised. For ultra-niche PPC advertising, it could be the key to success but other advertisers should stick to more end objective focused strategies, such as increasing impressions, traffic or conversions.
Maximize clicks – This bidding strategy is ideal for those early and middle of funnel campaigns. It is all about maximising your traffic.
This tactic works well for awareness but also for increasing interest and nurturing leads. By pushing people to your website, you can gather leads or encourage users further down the funnel with increased familiarity. It is a great strategy if you are looking to push interesting content or micro conversions, like newsletter sign ups, as well.
This automated bidding strategy does aim to keep within your overall daily budget but again we recommend setting maximum CPC too, for a little extra control, since this strategy does not take targeted CPA or ROI into account, which can be expensive.
Maximise conversions – A relatively new addition to the automated bidding strategy roster is maximise conversions. This bidding option was only just added in May 2017 but is already proving popular with advertisers and for good reason. New adopters of this strategy are reporting rapid conversion rate increases. Google has recently cited the Trex company as an early success story. The luxury decking company saw its conversion volume increase by an impressive 73% after switching to this bidding strategy.
This bidding strategy is perfect for advertisers looking to quickly increase conversion numbers regardless of cost (it does not aim for a target CPA). This makes it a great option for new product launches or businesses looking to shift left over stock. AdWords will automatically increase your bids when a search is likely to result in a conversion. It bases this on a plethora of historical data factors.
If you employ this strategy, be sure to keep an eye on your costs and use separate budgets for your campaigns. This strategy does not work with shared budgets.
Target CPA – For businesses who are at the stage to focus on profits, there are two primary bidding options: target CPA and target ROAS. Both of these are beneficial for increasing conversions while limiting costs.
Target CPA is an effective strategy for increasing conversions within a campaign or AdGroup. You can set a desired CPA and the system will work to increase bids when conversions are likely but in keeping with your cost per acquisition targets.
Advertisers who have engaged with AdWords PPC advertising before may remember this bidding strategy as ‘conversion optimiser’. Recent updates have seen its named changed for greater clarity.
To use this strategy your campaign must already meet a minimum threshold of conversions: 15 in a month. This strategy is cost focused but it is still a good idea to set a maximum CPC. This is good advice for all strategies, as automation does remove a layer of control on your spend and you will want to limit the scope of automated bid spending.
If you are unsure of what your CPA should be, AdWords does offer a suggestion, when you first implement this strategy, however you should only be using this automated bidding strategy when you have a good idea of the value of your conversions. It should not be selected arbitrarily but based on historical AdWords data experience. This way you can use the strategy to try to lower your average CPA, while maintaining conversion volume.
If your sales regularly take place offline, for example when you use AdWords for lead generation and phone call generation, then this bidding strategy is not a good tactic. Targeting CPA automatically cannot account for lead closure rates outside of AdWords and could, therefore, push the wrong type of conversions.
Target ROAS – ROAS stands for return on ad spend and so it is the same as ROI (return on investment). This is the bidding strategy for advertisers ready to focus on increasing conversions, so long as they increase profit.
If you choose this option you need to already have a good idea of what your ROI has been so far, so that you can enter an increased estimate to work towards.
Interestingly, for this bidding strategy, AdWords advises against setting the maximum CPC. Supposedly this can limit performance, however we recommend testing the bidding strategy with and without the maximum CPC over a period of time to see which yields the best results for your business.
This may seem like the best bidding strategy for your end goal of achieving profit but do not forget the importance of generating new audiences and moving those users down the funnel. Not everyone is ready to convert straight away. If you need to increase conversions sharply in a short period of time you should choose the maximise conversions strategy instead of target ROAS, as the conversion rate may not increase as much as you hope.
As you can see, AdWords has devised an automated strategy for every phase of the conversion funnel. There is a great deal of choice but various strategies can work together. Automated bidding options look to apply bids for macro conversions, whereas rule based bidding could still be used for detailed micro conversions e.g. exploring the value of new long-tail terms to increase traffic to a new content piece.
To avoid confusion, advertisers should be aware that in February 2016 flexible strategies, like target ROAS and target CPA, became known as portfolio bidding strategies but many PPC experts still use the old terminology.
How to implement an automated bidding strategy
You can apply any of the automated bid strategies in the settings tab, just as you would for manual CPC.
Alternatively, if you do not wish to apply them to the whole campaign but to an AdGroup then head to your AdGroup tab.
Select your chosen AdGroups and then bid strategy.
Select change bid strategy and choose your desired option.
Bid strategies can also be applied in the shared library.
Select bid strategies.
Choose your strategy from the drop down.
In some accounts, you may notice maximise conversions is not present in the shared library but it is present in the settings tab. There is really little need to enter the shared library for your bidding strategies now that all are also located in the settings section. It used to be that most of the automated options were kept only within the shared library and known as ‘flexible bidding strategies’ but improvements have since relocated all bidding strategies together in settings, to make choosing between them and applying them easier for advertisers.
The eCPC bidding strategy
In addition to these automated bidding options, advertisers do have a choice of strategy which is half way between manual and automated bidding. As well as rule based bidding, advertisers can choose eCPC bidding. This is enhanced manual cost per click.
Rather than writing individual rules or using complete automation, it allows full manual control but with an element of automation for a strong emphasis on pushing conversions. You can set all your bids manually but if the AdWords system believes a search is more likely to result in a conversion, based on your historical data, it will increase the bid amount.
Google AdWords increases 50% of your keyword bids in these scenarios and uses the other 50% as a control group, so it can provide balance and accuracy.
Previously, the eCPC bidding strategy only allowed AdWords to increase manual bids by 30% if it deemed a conversion probable. As of June 2017, this cap has been removed, giving more automated control to the AdWords system. This change has troubled many advertisers who fear an increased lack of control over spend, however eCPC can also save you money by lowering bids by as much as 100%, when conversion is deemed unlikely. The system also aims to keep within your overall daily budget and max CPC over time, reducing the chance for significant overspending.
It is a good bidding strategy if you wish to maximize conversions while retaining a large degree of bid control for your campaign. It is especially suited to high volume converting businesses like e-commerce, as this gives more data for the strategy to function at its best.
Smart bidding strategies
Not all of the automated bidding strategies were created equal and some contain greater levels of sophistication. Smart bidding means that these strategies incorporate a degree of machine learning.
Target CPA, Target ROAS, Maximise Conversions and eCPC are all Smart Bidding strategies.
Programmatic advertising is becoming popular within PPC advertising because it allows machine learning to use historic behavioral analysis of users to make real time bidding decisions for each auction instantaneously. Smart bidding strategies are AdWords’ first attempt to incorporate programmatic style bidding.
While not as advanced as programmatic advertising systems, AdWords’ smart bidding strategies do use a huge range of signals to help provide the best bids on search, display or shopping campaigns, including:
- Automated bidding signals
- Physical location
- Location intent
- Day of week and time of day
- Remarketing list
- Ad characteristics
- Interface language
- Operating system
- Demographics (Search and Display)
- Actual search query (Search and Shopping)
- Search Network partner (Search only)
- Web placement (Display only)
- Site behaviour (Display only)
- Product attributes (Shopping only)
- Mobile app ratings (coming soon)
- Price competitiveness (coming soon for Shopping)
- Seasonality (coming soon for Shopping)
To discover more about the significance of smart bidding, have a read of our previous article on automation and smart bidding strategies. These smart bidding strategies are perfect for advertisers looking for more sophisticated targeting of users in real time to find the best convertors.
Campaigns like target CPA, target ROAS, eCPC and target conversions are portfolio bid strategies. This means you can target entire campaigns with this strategy or even use different CPA or ROAS values for different AdGroups. This makes them powerful bidding strategies for businesses where you might have one type of product e.g. dresses, in a campaign but divided by AdGroup to reflect different pricing levels.
Some of these strategies can even be applied right down to the keyword level for more control.
For strategies like CPA, eCPC and ROAS you need conversion tracking enabled and previous conversions (at least 15 a month) to help the algorithm find searches that will likely bring more conversions. It requires historical data to work effectively.
For conversion focused bidding strategies your attribution models will also have an impact. Chosen attribution models are taken into consideration for how AdWords records your conversions and will therefore impact automated bidding options focused on obtaining future conversions. It is, therefore, necessary to carefully consider the type of conversion you are looking to push with your bidding strategy when you select attribution models. Have a read of our previous article on attribution models to make sure you have set up your conversion correctly for the most accurate data.
Shopping and display campaign bidding options
Automated bidding strategies are not delegated to the search network alone. Your display and shopping campaign ads can change bids automatically as well to meet your goals. Some options will not be available but you will also find an additional bidding strategy for the display network.
On the display network, you can choose between target CPA, maximise clicks, target ROAS, manual CPC, eCPC and vCPM. The vCPM bidding strategy will raise bids to maximise impressions. This makes it perfect if your objective is brand awareness, yet not a good option if you need to push traffic or conversions.
Currently only maximize clicks, eCPC and target ROAS are available for shopping campaigns.
Automated bidding strategies are effective but most work off historic data. This is why it is best to run a campaign for a while with manual CPC or rule based bidding strategies first. This allows a greater understanding of your data and gives time to accumulate traffic and conversions. Automated bidding works better when you have a very clear objective in mind and sufficient historical data to work with.
Landing page relevancy, ad copy, audience targeting and quality scores still need to be perfected as well, so have patience. Adding very specific bidding strategies too early can be poor for your overall performance.
CPV and CPE bidding options
CPC, CPA, ROAS and vCPM are the only charging formats available within the automated bidding strategies, however they are not the only charging options within AdWords. Automated bidding strategies may make bidding simpler but advertisers should not choose automated bidding if it does not suit their campaign style.
Some awareness and interest objectives can be different from others. You may have determined that video or rich media ads work well with your target audience. You should therefore prioritise campaign styles that work for you. Cost per view campaigns and cost per engagement campaigns can be very useful for awareness and nurturing interest.
These bidding options should not be neglected because they do not have an automated bidding strategy. These types of campaigns do not need keywords and so they have less complex bidding structures. It may be that AdWords will introduce automated and smart bidding strategies for these bid types in the future. This could help target the best YouTube and display network placements automatically for your cost per view and cost per engagement goals. AdWords is improving its bidding strategy capabilities all the time, so advertisers should keep an eye out for more flexible options in the future and stick to bidding styles that work for their audience and campaign objective.
Once you have chosen an objective and a bidding strategy you may still be struggling with the right bid amount. If you are using a manual CPC strategy, eCPC or rule based bidding strategy you may want to gauge how increasing bids could change performance before making the adjustments.
By using the bid simulator, you can get a better idea of how much to increase or lower bids to generate the performance you want.
To view your bid simulator head to your keywords tab and look for the graph symbol next to your current bids. Click it. If it does not open a report this means you have yet to gather enough performance data. If you have enough data the report should open revealing performance estimates if the bid were to be increased at various levels or lowered.
Bid simulators can even help you make decisions for some automated bidding strategies like target CPA.
If you are using a bidding strategy, don’t forget to review your performance in the bid strategy report.
It is easy to view your bid strategy report. Simply head to the campaigns tab. Select your desired campaign, then click bid strategies. From the drop down select bid strategy report.
More clever bidding strategies
You should now have a wealth of knowledge on bidding options for your PPC advertising in AdWords. Of course, choosing between manual, rule based and automated bidding techniques is not the culmination of bidding strategies.
1) Don’t forget other manual bid modifications
You also have options to make a whole host of other manual bid modifications beyond keywords.
While your overall objective may be conversions or clicks, you might know that different locations, devices or times of day generate better results for your campaign or AdGroup. By adjusting bids for these criteria, you can better prioritise your strategy to suit your audience.
The automated bidding strategies also take this performance criteria into account but we recommend you do your own tests on these variables first, so you understand your audience and can better plan future strategies. Remember, you understand the nuances within your objectives better than a machine.
Mobile bid adjustments work well for generating phone calls and this is perfect for lead generation focused campaigns. AdWords has no automated bidding strategy that differentiates between online purchase focused conversions and lead focused conversions, so sometimes manual tweaks can be better for your objectives. Ad scheduling could be beneficial if your industry is travel or B2B or any industry where there is a heavy weekday vs weekend bias. Target CPA strategies override all these manual bid adjustments, so be careful that your implemented techniques don’t clash.
2) Combine RLSA with competitor brand bidding
Another clever bid trick is to use RLSA with competitors’ brand bidding to side-line competitors. It may sound unorthodox at first but it is very effective.
RLSA drives higher conversions because users have already expressed an interest in your site. Remarketing lists for search ads can be used with competitor brand bidding because unlike display remarketing you can target queries in search. Users may search for your competitors even if they have expressed an interest in your site before. This could be because they are comparing prices or do not realise that you also supply that product or service.
By using competitor brand terms and a remarketing list for the search ads, you can leverage their familiarity with your brand to pull conversions away from competitors. It is a fantastic two-pronged approach to defeating rivals and increasing your conversions.
3) Bid to sales
Lead generation focused businesses need to be very careful using bidding strategies that focus on conversions. Maximise conversions, eCPC, target CPA and even target ROAS cannot appropriately account for your sales closing rates because they happen offline.
If you need to boost leads rapidly then these bidding strategies can serve a purpose in the short term. To ensure long term ROI, your bids should focus on what works best for the most sales not just leads. Always review your sales data and compare it to AdWords performance to see which terms have actually driven the most profitable value and experiment with higher bids on these terms.
4) Use different bidding strategies for different audiences
Just as you would use different keywords, ad copy and landing pages for various audience types, so too should you use different bidding strategies. This is particularly relevant for audiences who have connected with your brand before.
As you can see from Wordstream’s data below, across all networks, conversion numbers increase with greater familiarity. Previous buyers, cart abandoners, repeat site visitors and new visitors all have a different attitude to your company. Their varying familiarity places them at different stages of the funnel and their value differs greatly.
We can clearly see that previous buyers and cart abandoners have greater conversion value upfront than new visitors but they are more likely to convert anyway. You should therefore target these different groups in different campaigns with separate bidding strategies. You may be able to save money on the likely convertors by focusing on target ROAS or target CPA, whereas maximise conversions might be better for the repeat visitors who have not yet bought.
You should definitely always set different bids for the search network, display network and shopping network. As you can see from the graph, likelihood of conversion also differs by network. CPC may typically be lower on the display network but conversion rates are also lower and this should be taken into account when choosing your objective and bidding strategy.
Now that you have some powerful bidding strategy knowledge in your arsenal, it will be easy to choose the right one for your objective, your data collection stage and your audience. It is time to get out there and bid your way to success.