Automated Bidding Strategies for Google Ads: When to Use Which One?

In the past few years, the landscape around Google Ads has changed considerably.First, we went from Google Adwords, to simply Google Ads. Then, Google introduced one of the most impactful things they possibly could: automated (or smart) bidding strategies.

Written By:

So, what exactly are these “smart bidding strategies?”Google defines these in a : “Automated bidding takes the heavy lifting and guesswork out of setting bids to meet your performance goals. Each type of automated bid strategy is designed to help you achieve a specific goal for your business.” Wait...I don’t have to spend hours each week tweaking each bid individually anymore?!? That’s right: gone are the days of adjusting each bid based on the previous week’s/month’s/day’s performance. But how do these strategies actually work? And when should you use each of them? Different bidding strategies have different advantages, and choosing the right one is absolutely imperative to get the best results possible from your advertising campaigns.Let’s take a look at the pros and cons of each smart bidding strategy, and when to use them:

Manual CPC

This is the only other bidding strategy I would consider launching a new campaign with. The name explains this one best: it will get you the maximum number of clicks it possibly can for your allotted budget. This is a good strategy to use when you’re entering an industry you don’t know much about. You may not know what the average CPC is (you should’ve done some competitive research beforehand), and this will give you a good idea of what those prices look like on the lower end. It’s a good strategy to use when searching for that “baseline” of your campaign, and trying to get there quickly.

Target Impression Share

Target Impression Share is a pretty unique bidding strategy. Instead of focusing on conversions, or clicks, or conversion value, it focuses on impression share, which is how often your ads show up when certain keywords are shown.A lot of people don’t factor in impression share into their campaigns, and I think that’s a huge mistake. Impression share is a good indicator of where you stand in relation to your competition. For example, your impression share for a certain keyword may be around 10%. That means that 10% of the time that keyword is triggered by a search term, your ad will show up. Maybe you want to show up 50% of the time these keywords are triggered. You would then set your Target Impression Share to 50%, and Google will do the rest of the heavy lifting by adjusting your bids in real-time to attempt to achieve that 50% Impression Share.I recommend using this strategy only if you’re having a hard time beating out competitors for specific keywords.

Maximize Conversions

Maximize Conversions is another self-explanatory bidding strategy: based on your budget, this strategy will attempt to get you the maximum number of conversions within said budget.It’s usually the one I move on to after manual bidding for lead generation focused accounts.This strategy works best when it has some data to work with, so make sure you have 15-20 conversions for the month (more is even better) before switching to this strategy.Another strategy I use to determine if this is going to be the best strategy is implementing it through an experiment.Experiments allow you to send 50% of the traffic to your original campaign, and 50% of the traffic to a campaign using the smart bidding strategy. I’ll then compare the two closely for a few days/weeks, then I’ll make a decision once the data is conclusive enough to say that the automated bidding strategy outperforms the manual bidding strategy.I’ve found that, without fail, 100% of the time, the automated bidding strategy performs better than the manual bidding strategy. I’ve run almost 30 separate experiments on this specific change, and it always outperforms the original campaign.

Maximize Conversion Value

Maximize Conversion Value is a good strategy to use if you are able to have different values assigned to different conversions.A good example of this would be an e-commerce account running shopping ads. Say you have an account with three different products. One sells at $49.99, one sells at $59.99, and one sells at $89.99. What Maximize Conversion Value will do is create an algorithm it will use to maximize the sales value within your daily budget. So, in essence, it will bid a bit more aggressively to get conversions for the $89.99 product than the $49.99 product.This is all in an effort to maximize the returns you get from Google. This also works if you have assigned different conversion values to different conversion actions.For example, a phone call lead may be worth more to your company than a form fill lead. Hopefully, some calculations have been done and values have been assigned to accurately reflect that value difference, and Google will handle the rest, trying to maximize the value of your campaign’s returns.

Target CPA

Target CPA is yet another bidding strategy that’s pretty much self-explanatory.Target CPA lets you set a target cost per conversion. If you know that you typically can get conversions for about $50 each in a certain industry, you may want to start out at the $50 number and lower it incrementally as time goes on.It’s never good to make a big change to these bidding strategies, and it can take artificial intelligence a few days to “learn” properly.The main draw to this bidding strategy is that you can consistently get conversions right near a target price, and over time, it tends to do a good job of averaging out to the target cost per action.

Target ROAS

Target Return On Ad Spend is a fantastic choice of a bidding strategy for certain businesses. What types of businesses, you ask? E-commerce.This strategy works really well, BUT ONLY IF YOU HAVE YOUR ACCOUNT SET UP CORRECTLY. This is extremely important when it comes to this strategy. You want to make sure that your Google Ads account is set up and lists the purchase prices correctly. You also want to make sure that your Ads Account is integrated with your store’s site.Let’s say you have three products, one for $49.99, one for $59.99, and one for $179.99. You want to make sure that when someone purchases your product for $179.99, Google Ads knows that someone just converted, and that conversion is worth 179.99. This will allow the bidding strategy to optimize towards clicks that bring you the highest return on your spend.If the bidding strategy is fed accurate data, Target ROAS can work wonders for your e-commerce business.

Final Thoughts

I hope this helps explain each automated bidding strategy and helps to give a better idea of when to implement each. That’s the key to all of it: does your bidding strategy align with your business’s goals? If not, you may want to re-evaluate, and, if so, you should be set up for success.The overall goal is to drive revenue for your business, and utilizing the correct “smart” bidding strategy can give you a leg up on your competition. If you happen to utilize the wrong bidding strategy for your business goals, the results can be disastrous. One last thing, and it’s maybe the most important part of it all: how you implement these strategies can be just as important as utilizing the correct strategies. I mentioned earlier that I like to get my accounts running on manual CPC (enhanced for conversions) until there is enough data in my account for the bidding strategy to accomplish its goals. This usually means at the very least 15-20 conversions for the month, although the more you have, the better your position.Starting out with manual CPC gives you a chance to establish a baseline, and to make some “old school” optimizations before entrusting Google to make all bidding decisions. Your starting point for these bidding strategies ultimately has a huge impact on overall performance. The more data Google has to plug into its bidding algorithms, the better your chances for success. From here, I like to use a campaign draft/experiment to test the effectiveness of the bid strategy. I typically send 50% of the traffic to the old campaign using manual bidding, and 50% of the traffic to the experimental campaign using a smart bidding strategy.After this, I’ll allow Google to gather the data for about two weeks (sometimes shorter depending on indications), and that seems to be enough time to allow for a comparison and decision to switch fully to the automated bidding strategy.This implementation strategy allows us to ease into the bidding strategy transition, and also allows us only to change if there is data indicating that that is the correct move. Remember, as a marketer, I try to make each and every decision based on the data in front of me. As I mentioned earlier, in my personal experience, 100% of the time without fail, the automated bidding strategies outperform the manual bidding strategies. Here are a few screenshots that prove that concept: