Google Ads Bid Strategy Guide


What is a Bid in Google Ads?

A Google Ads bid represents the amount you’re willing to invest for a click on your advertisement. This bid serves as a pivotal determinant in deciding the position of your ad on the page, commonly referred to as its placement. Securing a prime ad placement can significantly impact your ad’s performance, potentially resulting in increased clicks, higher website traffic, and enhanced opportunities for maximizing your business’s return on investment (ROI).

How Bidding in Google Ads Works

The mechanics behind Google Ads bidding for each available ad space within Google’s realm—whether it’s on a search engine results page (SERP) or across the Google Display Network (GDN)—Google Ads conducts an auction where advertisers vie for the ad space. The rule is simple: the higher your bid, the better your chances of winning the auction and securing the ad placement. However, being the highest bidder doesn’t guarantee victory.

Google Ads takes into account multiple factors when determining the winner of each auction, including:

  1. Maximum cost per click (CPC): This refers to the highest amount you’re willing to pay for a click on your ad.
  2. Quality score: A metric assessing the quality and relevance of your ad based on factors such as expected click-through rate (CTR), ad relevance, and landing page experience.
  3. Ad Rank thresholds: Google Ads sets minimum quality thresholds to ensure users encounter high-quality ads. Your ad must meet these thresholds to appear.
  4. Auction competitiveness: The narrower the gap between the ad ranks of competing ads, the fiercer the competition for the same spot. A significant gap in Ad Rank increases the likelihood of the higher-ranked ad winning, albeit potentially at a higher CPC due to the certainty of its placement.
  5. Search context: Google Ads considers the searcher’s context, encompassing variables like search terms, location, device type, and time of search, to deliver the most relevant ads.
  6. Impact of ad assets and formats: Incorporating additional ad assets such as phone numbers or supplementary links can amplify your ad’s efficacy. Google Ads forecasts how these assets and formats will influence ad performance, aiming to bolster visibility and engagement. These factors, in conjunction with the competitiveness of your industry, collectively contribute to your Ad Rank. A higher Ad Rank translates to a more prominent placement on Google’s SERPs or GDN, even if your bid falls short compared to others. Hence, crafting compelling ads and devising a winning Google Ads bidding strategy are imperative. Securing top-notch ad placements can drive more clicks and conversions, ultimately augmenting the ROI of your Google Ads expenditure. Outlined below is a condensed breakdown of the Google Ads bidding process:
  • Select a Google Ads bid strategy: Determine your preferred bidding approach. Google provides various strategies, such as bidding for clicks to your website, enhancing brand visibility, or maximizing conversions like sales or signups.
  • Specify your bid: Suppose you opt to bid for clicks. You inform Google, “I’m willing to pay up to 50 cents for each click on my ad.” This amount constitutes your bid.
  • Engage in the auction: Whenever someone conducts a search on Google, the auction commences. Google evaluates whether your ad aligns with the searcher’s query. If it does, your ad enters the auction alongside other advertisers vying for the same keyword(s).
  • Winning the auction: Google assesses both your bid amount and the relevance of your ad to the searcher. It’s akin to participating in an auction at an art gallery, where you strive to showcase the most captivating artwork. If your artwork (ad) perfectly aligns with what a collector (searcher) desires, and your bidding price (bid) is reasonable, you’re more likely to secure the sale. Analogous to the quality of your artwork and its pricing determining your success at the auction, in Google Ads, the relevance of your ad and your bid influence your ad’s visibility.
  • Pay for the ad: You only pay the necessary amount to outbid the subsequent advertiser. If you bid 50 cents, but the next highest bid is 30 cents, you might only shell out 31 cents for that click.

Please Note: You can establish a budget to manage your daily expenditure. Once your budget is exhausted, your ads cease to appear for the remainder of the day.

Types of Bid Strategies in Google Ads

 

Manual Cost-per-Click (CPC) Bidding

Manual CPC bidding empowers you to define and tweak your bids at either the keyword or ad group level. Simply stipulate the maximum amount you’re willing to pay for a click on your ad for each keyword.

This hands-on approach proves advantageous if you prefer direct oversight and possess the bandwidth to actively manage your campaigns. However, it necessitates considerable attention and consistent monitoring to optimize its efficacy.

Automated Bidding

Automated bidding strategies within Google Ads leverage algorithms to fine-tune bids for your ads. These algorithms prioritize performance objectives to maximize the likelihood of clicks or conversions. This strategy exemplifies PPC automation, saving time while enhancing the efficiency of your ad campaigns. Automated bidding proves beneficial in reducing the time allocated to bid management sans compromising ad performance.

Smart Bidding

Smart bidding represents a subset of automated bidding strategies for Google Ads, focusing on optimizing for conversions or conversion value in real time.

This bidding strategy harnesses Google’s AI prowess at each auction—referred to as “auction-time bidding”—and considers various auction-time signals such as device, location, and time of day to enhance the precision of each bid.

Smart Bidding proves instrumental if you aim to leverage AI for heightened bidding efficiency, particularly in scenarios where conversion optimization reigns supreme.

How to Choose A Bidding Strategy

Align your Google Ads bidding approach with your specific advertising objectives. Whether you prioritize clicks, impressions, views, or conversions, selecting the appropriate strategy can profoundly influence your campaign’s efficacy.

Consider the following five fundamental goals to determine the bidding strategy that best suits your needs:

  • For direct actions and conversions: Smart Bidding can optimize bids for each auction based on the likelihood of conversion if your goal is to drive immediate actions on your site, such as purchases or signups.
  • Generating website traffic: CPC bidding enables you to pay solely for the clicks your ads garner, making it a cost-efficient method if boosting site visits constitutes your objective.
  • Enhancing brand awareness: Cost-per-thousand-viewable-impressions (vCPM) bidding proves advantageous when you seek to amplify your message’s reach to a broad target audience, remunerating for every thousand times your ad is displayed.
  • Increasing video ad views and interactions: Cost-per-view (CPV) or cost-per-thousand-impressions (CPM) bidding is ideal for video campaigns aimed at bolstering views or interactions with your ads.
  • Stimulating product or brand consideration via video ads: CPV proves effective for campaigns aiming to pique interest in your product or brand through video content.

Bidding Strategies in Google Ads Explained

Comprehending each bidding strategy is paramount to achieving your search engine marketing (SEM) objectives, such as generating leads and amplifying sales.

Let’s delve into each Google Ads bidding strategy in detail, shedding light on when and why to utilize them, as well as their advantages and limitations.

Manual Cost-per-Click (CPC) Bidding

This strategy proves optimal for campaigns focused on driving website traffic, facilitating precise budget management. Its primary aim is to drive traffic while granting you control over each cost per click. Choose it if you prefer direct oversight of your campaign expenditures.

How Manual CPC Bidding Operates

  • Determine the maximum amount you’re willing to pay for a click on your ad.
  • Manually adjust bids to regulate spending and adhere to your advertising budget.
  • Regularly monitor and tweak bids to optimize ad performance.

For instance, a business specializing in high-value items like electronics might leverage Manual CPC to manage costs while targeting high-intent buyers. Similarly, a local service provider such as a plumber could establish bids for specific services to maximize ROI.

Manual CPC bidding is applicable to both the Search and Display Networks.

 

Advantages of Manual CPC Bidding

  • Enables swift response to market fluctuations or campaign data.
  • Facilitates detailed bid management at the keyword or ad group level.
  • Empowers bid adjustments for high-performing keywords or placements to allocate budget efficiently.

Limitations of Manual CPC Bidding

  • Consumes substantial time.
  • Demands continual oversight and frequent adjustments.
  • Carries the risk of over or underbidding due to manual intervention.

Enhanced CPC (ECPC) Bidding

Enhanced CPC (ECPC) bidding constitutes a semi-automated strategy that tweaks your manual bids to enhance conversion probabilities. It’s ideal if you seek to strike a balance between manual control and automated efficiency.

How Enhanced CPC Bidding Functions

  • Adjust your manual bids for each auction based on the likelihood of a click leading to a conversion.
  • Utilize auction-time signals like browser, location, and time of day for bid optimization.

While ECPC endeavors to maintain the average CPC below your maximum set bid, it may temporarily surpass this threshold for high-potential opportunities likely to culminate in conversions.

For instance, if you’re selling cakes and set your max CPC at $1, ECPC might elevate your bid to $1.70 for an auction likely to result in a store visit. Conversely, it might reduce it to $0.30 for an auction more inclined toward a website visit without a conversion.

ECPC is available on the Search Network and Display Network (except for app install campaigns).

 

Advantages of Enhanced CPC Bidding

  • Strikes a balance between manual control and automated efficiency.
  • Adapts bids for higher value conversions, prioritizing more lucrative clicks.
  • Provides more manual control compared to fully automated Smart Bidding strategies like target cost per action (tCPA) and target return on ad spend (tROAS).
  • Operates in tandem with your campaign settings, adjusting bids within the confines of your max CPC.
  • Dispenses with the need to set explicit targets for CPA or ROAS.

Limitations of Enhanced CPC Bidding

  • Optimal performance with ECPC hinges on implementing conversion tracking to guide bid adjustments.
  • ECPC may temporarily inflate your average CPC to exceed the maximum CPC bid for opportunities deemed likely to result in conversions.

Cost-per-Thousand Impressions (CPM) Bidding

CPM bidding prioritizes visibility and brand awareness over direct clicks or conversions. This strategy enables you to bid and remunerate for every thousand impressions your ad garners, rendering it suitable for campaigns where exposure takes precedence.

How CPM Bidding Operates

Implement it based on the following use cases:

  • Brand awareness campaigns: Aimed at amplifying brand visibility and recall.
  • Video ad campaigns: Targeting views or interactions with video content.
  • Google Display Network: For display ads where emphasis is placed on the frequency of ad appearances.

For instance, suppose a company is launching a new product line. They can leverage CPM bidding to augment the likelihood of their promotional ads reaching a broad audience across the GDN, thereby enhancing product visibility and brand recognition.

Another variant of CPM is viewable CPM (vCPM), enabling payment solely when users can view your ads.

 

Advantages of CPM Bidding

  • Expands your ad’s reach to bolster brand exposure.
  • Affords control over impression costs, effective for budget management in awareness campaigns.

Limitations of CPM Bidding

  • Prioritizes ad exposure over engagement, potentially leading to expenditure on ads yielding no clicks or conversions.

Target Cost-per-Action (CPA) Bidding

Target CPA bidding aids in optimizing for conversions while adhering to an average cost per action. This automated bid strategy proves beneficial when you possess a defined ROI target and aspire for each conversion to yield similar value to your business.

How Target CPA Bidding Operates

  • Google Ads adjusts bids to secure as many conversions as possible at your targeted CPA.
  • Harnesses your campaign’s historical data and real-time contextual signals during auctions.
  • While some conversions may surpass your target, others may fall below it. Google strives to strike a balance to align with your specified target CPA.

For instance, if you set a target CPA of $5, Google Ads endeavors to secure as many conversions as possible at this average rate, employing auction-time adjustments based on various signals to bolster bid efficacy.

 

Advantages of Target CPA Bidding

  • Modifies bids using real-time signals like device, location, and time of day.
  • Facilitates the attainment of a specific return on investment by maintaining a consistent cost per action.

Limitations of Target CPA Bidding

  • Despite targeting a consistent CPA, actual CPA may fluctuate due to external influences such as website modifications or shifts in market competition.
  • Target CPA bidding necessitates historical conversion data, which may be unavailable for nascent campaigns or those with scant conversion volumes.
  • To uphold CPA targets, Google Ads might curtail ad exposure in more competitive or costly auctions, potentially diminishing overall visibility.

Target Return on Ad Spend (tROAS) Bidding

Target ROAS bidding constitutes a Smart Bidding strategy empowering you to optimize your campaigns for conversion value relative to your ad spend. This approach is ideal when you harbor specific ROI targets and different conversions carry varying values.

How Target ROAS Bidding Operates

  • Leverages Google’s AI to predict the value of a potential conversion at the time of a user’s search.
  • Adjusts bids in real time to maximize conversion value while striving to achieve your specified ROAS.

For instance, suppose you operate an online mug store and aim to generate $13 in sales for every $10 spent on advertising, setting your target ROAS at 130%. Google Ads tailors your bids to enhance conversion value while endeavoring to maintain your ROAS at 130%.

Accurately assigning values to the conversions you track aids in comprehending your campaign’s ROAS, thereby optimizing your marketing endeavors for maximum effectiveness.

 

Advantages of Target ROAS Bidding

  • Available for use in both standard and portfolio strategies (strategies employing Google AI to set bids to meet performance goals) across multiple campaigns, including Search and Shopping ads.
  • Incorporates real-time signals such as device and location for bid adjustments.

Limitations of Target ROAS Bidding

  • Most campaign types necessitate at least 15 conversions in the last 30 days to effectively utilize this strategy. This data furnishes a reliable foundation for the algorithm to prognosticate future performance.
  • Google AI mandates a substantial history of conversions to make more accurate predictions and adjustments, ensuring that your target ROAS is anchored in robust, real-world data.

Maximize Conversions Bidding

Maximize conversions bidding exhausts your entire budget to secure the most conversions. This Google Ads bid strategy proves advantageous if your primary objective revolves around utilizing the budget without targeting a specific ROI or CPA.

How Maximize Conversions Bidding Operates

  • Analyzes your campaign’s past performance and considers real-time contextual signals during each auction.
  • Dynamically adjusts bids to secure the most cost-effective conversions within your budget.
  • Tailors bids for each auction to augment the likelihood of winning valuable ad placements.

For instance, a retailer endeavoring to clear seasonal inventory could leverage a maximize conversions bid strategy to ensure Google Ads utilizes their entire advertising budget. This tactic maximizes exposure and potential sales without fixating on a specific cost per sale.

 

Advantages of Maximize Conversions Bidding

  • Strives to exhaust your daily budget to secure as many conversions as possible.
  • Adapts bids for each auction in real time to maximize conversions within your budget.
  • Swiftly adapts to changes in search behavior and competition for more competitive bids.

Limitations of Maximize Conversions Bidding

  • Aims to deplete your entire budget, potentially leading to increased spending if your current expenditure falls below your set budget.
  • Not conducive to campaigns with specific ROI goals like target CPA or ROAS.
  • Mandates monitoring post-implementation to ensure alignment with your campaign objectives and prevent overshooting your budget.

Maximize Conversion Value Bidding

  • Utilizes AI to set bids at auction time, endeavoring to maximize the total value of conversions, such as sales revenue or profit margins.
  • Typically utilizes your designated budget to optimize for the highest conversion value.
  • Considers real-time signals and historical data to ascertain optimal bids for each auction.

Utilize maximize conversion value bidding if specific conversions, such as selling a high-end product, carry more value than others. Alternatively, deploy it for campaigns featuring varied conversion goals, such as distinct product categories or services boasting varying profit margins.

 

Advantages of Maximize Conversion Value Bidding

  • Focuses on maximizing the total conversion value within your budget, ideal for ROI-driven campaigns.
  • Adapts to real-time market shifts and search behavior, potentially boosting conversion value under diverse conditions.

Limitations of Maximize Conversion Value Bidding

  • Performance is heavily contingent on the designated advertising budget, potentially limiting efficacy if the budget proves insufficient.
  • Hinges on precise conversion tracking and value assignment to accurately gauge performance.
  • Offers less control over targeting specific conversion types, emphasizing overall value.
  • While striving to maximize value, may entail higher costs per conversion in competitive markets.

Target Impression Share Bidding

Target impression share bidding enables you to maximize your ad’s visibility in Google’s SERPs. This strategy concentrates on positioning your ad at the top of the page—be it at the very apex, amid the top positions, or elsewhere on the search results page—based on your preferences.

How Target Impression Share Bidding Operates

  • You specify the desired percentage of ad impressions your campaign garners. This proves effective for campaigns prioritizing brand visibility, particularly when targeting specific brand terms.

For instance, suppose you operate a local grocery store competing with larger establishments. A target impression share strategy can ensure your brand remains conspicuous in pivotal searches. If you aspire for your ad to manifest 100% of the time for searches tied to your brand, setting the target impression share to 100% aims to realize this visibility.

 

Advantages of Target Impression Share Bidding

  • Aims to augment the likelihood of your ad appearing in the desired position, thereby enhancing brand presence.
  • Allows for precise targeting predicated on where you desire your ads to surface in the search results.

Limitations of Target Impression Share Bidding

  • This strategy may not align with every campaign’s goals, especially those not centered on brand visibility.
  • May lead to escalated costs in competitive markets to sustain the desired impression share, impacting budget efficiency.

Maximize Clicks Bidding

Maximize clicks is an automated Google Ads bid strategy aimed at maximizing the number of clicks within a specified budget. This strategy proves effective for driving traffic to a website.

How Maximize Clicks Bidding Works

When opting for maximize click bidding, Google Ads automatically adjusts your bids to attract the highest possible clicks within your average daily budget. For instance, during a seasonal promotion, using maximize clicks can drive significant traffic to your offer page without exceeding your budget.

 

Advantages of Maximize Clicks Bidding

  • Efficiently utilizes your budget to boost the total number of visits to your website.
  • Allows setting a maximum CPC bid limit to prevent overspending on a per-click basis.
  • Ideal for campaigns primarily focused on driving traffic, requiring less hands-on adjustment and oversight.

Limitations of Maximize Clicks Bidding

  • Prioritizes increasing click volume potentially at the expense of click quality, which may not align with specific conversion value or goals.
  • May attract clicks from less relevant audiences, leading to lower conversion rates.
  • Without setting a maximum CPC bid limit, you might pay more per click than intended, affecting cost efficiency.

Cost-per-View (CPV) Bidding

CPV bidding is suitable for video ad campaigns where engagement, such as views or interactions, is the primary goal. It’s particularly effective for campaigns aimed at increasing product or brand consideration through video content.

In CPV bidding, you pay for video views and interactions, such as clicks on call-to-action (CTA) overlays, cards, and companion banners. Google Ads counts a view when someone watches 30 seconds of your video ad (or its entire duration if shorter than 30 seconds) or interacts with the ad. This approach allows you to set the maximum price you’re willing to pay for a view when setting up your video campaign.

 

How CPV Bidding Works

  • You advertise on platforms like YouTube, where CPV bidding is commonly used.
  • Target your ad to local viewers interested in your product or service, such as baking, cooking shows, or cake decoration.
  • Set a CPV bid, determining the amount you’ll pay each time someone watches a significant portion of your video.
  • Since your video is engaging and showcases the quality and artistry of your cakes, viewers who watch it are more likely to be interested in visiting your bakery.
  • You only pay when someone watches your video for 30 seconds or interacts with it, making it a cost-effective way to ensure potential customers see your ad.

Advantages of CPV Bidding

  • Suitable for campaigns where video interaction holds more value than clicks to a website.
  • Helps manage your budget effectively by setting the maximum amount you’re willing to pay per view or interaction.
  • Provides video ad reporting with data on viewer engagement.

Limitations of CPV Bidding

  • Less suited for campaigns primarily focused on driving traffic to a website rather than engaging with video content.

Select the element you want to modify from the drop-down menu. Here, we chose “Locations.”

Click the pencil icon under the “Bid adj.” column to edit the bid adjustment.

Set a percentage increase or decrease and click “Save.”

Experiment with Automated Bidding

Testing automated bidding helps focus on maximizing conversions or conversion value, saving time and identifying opportunities that might be overlooked with manual bidding. Semrush’s PPC Keyword tool can refine keyword targeting and set up negative keywords to optimize automated bidding with a targeted keyword set.

Negative keywords are words or phrases excluded to prevent ads from appearing for specific search queries. From the left-hand navigation bar, click the “Advertising” drop-down and select “PPC Keyword Tool.”

Select your project or domain.

Please note: You have to create a project for your domain first.

Click the “Negatives” tab beside “Keywords.”

Add negative keywords based on how specific or broad you want the filtering effect to be. Using specific negative keywords narrows your ad’s reach, while broad negative keywords expand the filter.

For example, if you’re advertising for an Italian restaurant, “fast food” might be a broad negative keyword to avoid irrelevant searches. A specific negative keyword could be “pizza delivery” if your restaurant doesn’t offer this service.

Use campaign-level negative keywords for broad exclusions across your entire campaign. For more precise control within certain ad groups, apply group-level negatives. This approach is particularly effective when different ad groups cater to varied aspects of your offerings and need distinct keyword strategies.

Select whether to add your negative keyword manually or via .txt file by clicking the green “+ Negatives” button.

After organizing your keywords, upload the negative keyword list to your Google Ads to implement them in your campaign.

Here are some Semrush PPC tools and tips to improve automated bidding in Google Ads:

  • Use Advertising Research reports to identify keywords where competitors are changing positions and analyze their ad copies for insights into their strategies.
  • Use the Ads History tool to examine the performance history of specific keywords in paid campaigns, providing data on how competitors adapt their keywords to seasonal trends.
  • Use the PLA (Product Listing Ads) Research tool to gain insights into display campaign performance, helping inform your bidding choices.
  • Identify and include keywords with lower competition in your campaigns for a more cost-effective way to reach your audience.
  • Bid on branded keywords to control your brand narrative in search results, improving visibility for searches directly related to your business, which can enhance click-through rates and conversions.

    Use Google Ads Scripts

    Google Ads scripts are advanced yet highly effective tools for automating and optimizing your bidding strategy. These scripts, written in JavaScript, can be set up within Google Ads to automate various campaign aspects based on specific criteria, such as time intervals or performance metrics.

    Google Ads scripts offer several benefits:

    • Handle repetitive tasks like bid adjustments, freeing up time for more strategic activities.
    • Enable deployment of sophisticated bidding strategies that would be too complex or time-consuming to manage manually.
    • Adjust bids in response to real-time market conditions, ensuring campaigns remain competitive and efficient.

    Implementing Google Ads scripts involves:

    • Determining which aspects of your campaigns you want to automate or optimize using scripts.
    • Developing custom scripts or finding pre-written ones that suit your needs.
    • Testing the scripts in a controlled environment to ensure they work as expected, then implementing them in live campaigns.

    Visit Google’s developers page to get started with your first Google Ads script.

FAQs

 

What Is Bid Strategy in Google Ads?

A bid strategy in Google Ads refers to the method used to determine how much you’re willing to pay for each click on your ads. It’s a crucial aspect of your ad campaign as it influences ad visibility and the likelihood of achieving advertising goals.

How Are Bid Strategies Used in Google Ads?

Bid strategies can be manual or automated. Manual bidding gives you control over bid amounts for different ad groups or keywords, while automated strategies use Google’s algorithms to optimize bids in real-time for the best results.

For example, maximizing clicks aims to get the most clicks within your budget, while targeting CPA focuses on getting as many conversions as possible at or below your target CPA.

How Do I Change Bidding Strategy in Google Ads?

To change bidding strategy in Google Ads:

1. Navigate to “Campaigns” in your Google Ads account.

2. Click the “Settings” icon next to the campaign you want to change.

3. Select “Bidding” from the setting menu.

4. Click “Change bid strategy.”

5. Choose your desired strategy.

6. Click “Save” to apply your changes.