A Brief Guide To Google AdWords Bidding Strategies

by Dorian Travers December 27th, 2013 

ppc-bidding

Bidding strategies have evolved significantly over the past few years.  There are currently several primary types of bidding strategies offered by Google AdWords, and the introduction of flexible bidding strategies has made the process more complex as well as more effective.  CPC bidding is more advanced (and complicated) than ever.  Bidding can be based on clicks or conversion rates.  In addition, flexible bidding can be used to further refine existing CPC campaigns.  Below is a short guide for different bidding strategies on Google:

Manual Cost-Per-Click

Manual CPC is the most straightforward method of bidding.  Select the option Ill manually set my bids for clicks. This setting allows for optimal control over bids, and its primary focus is to drive click traffic.

Automatic Cost-Per-Click

Automatic CPC gives individuals the freedom to use Google ads without going over budget.  Select the option "AdWords will set my bids to help maximize clicks within my target budget." AdWords will automatically adjust bids to optimize the number of clicks per dollar spent within the parameters of your daily budget.

Enhanced Cost-Per-Click

Instead of focusing on clicks, Enhanced CPC is designed to optimize conversion rates.  Bids will be automatically increased or decreased based on conversion tracking rates.  Bids may be increased by up to 30% for clicks that Google algorithms suggest are likely to lead to conversions.  Similarly, bids may be decreased for clicks that Google algorithms suggest are less likely to lead to conversions.

CPA Bidding (Conversion Optimizer)

Customer-per-acquisition or CPA bidding is used to target the cost of customer acquisition.  This option is only available for sites that have a demonstrated history of daily conversions.  All sites must have at least 15 conversions in the past 30 days in order for the algorithm to accurately estimate the cost of customer acquisition.  Maximum CPA is available to set costs at the maximum amount you are willing to pay per conversion, and Target CPA is available to set costs at the average cost of customer acquisition.  Google will recommend a CPA, or a CPA can be set manually.

Flexible Cost-Per-Click Bidding Strategies

Automated CPC can be more flexible and offer more options to increase conversion rates by utilizing one or more of the following types of flexible bid strategies:

  • Maximize Clicks: flexible version of Automatic CPC bids.
  • CPA Bidding: flexible version of CPA bids.
  • Enhanced CPC: flexible version of Enhanced Campaigns.
  • Search Page Location: bids are increased or decreased depending on their location on the Search page.  However, advertisers cannot choose a specific location such as the top of the page.  Campaigns may only target the Search Network.
  • Return on Ad Spent (ROAS): ROAS uses algorithms based on history of conversion rates for the Search Network and/or the Display Network.  A site history of 30 conversions in 30 days is required.

The Best Cost-Per-Click Campaign on Google

There is no one size fits all bid strategy for CPC.  It is important to evaluate ample baseline data to determine current business needs in addition to needs in the foreseeable future.  Stay on-budget and maximize returns by developing the right CPC strategy for any given site.

Dorian Travers

Dorian Travers is the Internal Marketing Strategist at digital marketing firm Wpromote, and has always had a particular interest in content marketing and creating brand development strategies

Wpromote

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4 Responses to “A Brief Guide To Google AdWords Bidding Strategies”

  1. Sarah Trell says:

    Google has quietly removed the Max CPA option from conversion optimizer, allowing you only to use Target CPA, which of course works in their favor.

  2. Hi Dorian,
    One of the difficulties we find is explaining to clients exactly why a given bidding strategy is being used. Unfortunately, we operate in an environment where transparency leads to micro-management by the client, who more often than not has no idea how to calculate ROI and are measuring success by number of referrals only. Educating the client about referral quality and conversion is often very difficult. Do you use a learning / teaching document to give to clients?

    • Dorian Travers says:

      Hi Perry. We invest time at the beginning of a client relationship to explain our strategy and its rationale in great detail. Our audits of client accounts help them understand the necessary changes to improve their business goals. We provide clients educational resources when requested, noting that Adwords is a dynamic ecosystem with constantly changing factors.

  3. Aahna says:

    Nobody can predict the best bidding strategy, it's basically depends on your ultimate goal which you're looking to achieve. For example, If you want to show your ads to a maximum number of users for branding purpose then you should go to CPM bidding which is not mentioned in this post.

    However if you want visitors to take specific action, then you can go with enhanced CPC and later on move to CPA bidding.