Going once, going twice, sold to the highest bidder! Learn how to manage your budget effectively to maximize campaign returns.
Here, you’ll find:
- What PPC bid management is
- A quick guide on Google Ads bidding strategies
- Common pitfalls to avoid when setting bids
- Top PPC bid management tips to maximize your returns
I’ve always been a chocolate lover, so one of my favorite movies growing up was Willy Wonka & the Chocolate Factory. (But then again, who wasn’t a fan?)
As a kid, I relished the thought of getting free chocolates for life, so getting to go inside a chocolate factory became my dream (oh, childhood).
Fun fact: The movie had one of the best auction scenes of all time.
It was a short yet impactful scene that showed the value of that golden ticket and the great lengths people would go to get it.
When you think about it, it’s just like PPC marketing.
You see, whenever Google Ads (formerly Google Adwords) has ad space available, it runs an auction to determine which ads show up on that space at the right time.
Just like in Willy Wonka, the higher your bid increases the likelihood of your PPC ads getting the top spot. And, just like the golden ticket, it’s a prime commodity in the world of digital marketing.
Now, the main goal of any auction is to outbid everyone to become the highest bidder. As someone who wants that prime spot, all you have to do is make sure to set an amount no one will try to match, right?
Technically, yes. But no. Other factors can also impact your likelihood of getting the top spot, like Quality Score (more on that later).
Of course, if you have an unlimited budget and return on investment (ROI) doesn’t matter, then go right ahead.
But in business, ROI matters. So, it’s not just a matter of winning the auction. You have to be smart about bidding to maximize ad placement without using up your advertising spending and losing out on potential conversions.
This is why effective PPC bid management is crucial in maximizing ROI.
What is PPC bid management?
PPC bid management is the process of strategically lowering or increasing your keyword bids to control how much you spend while bidding for placement on search engine results pages (SERPs).
Keyword bids are bids placed in the pay-per-click (PPC) auction to help secure ad placement on Google’s SERPs.
In this auction system, the higher you bid for a specific keyword, the higher your placement will be. According to Wordstream, 41% of all paid search clicks go to the top three spots, so securing a higher spot is a big deal.
However, it’s also important to remember that your bids determine how much you pay for every click your ads get. This isn’t always the most efficient method because a higher cost per click (CPC) also leads to a higher cost per acquisition (CPA).
This is where bid management comes into play.
The keyword here is strategic. It recognizes that although it feels good to see your ads securing pole position, it doesn’t always lead to a good ROI.
By being strategic with your bids, you can achieve a solid CPC value while getting a good volume of clicks and conversions — all while conserving your budget to gain more conversion opportunities.
Google Ads bidding strategies: Explained
The best way to gain success in any digital marketing campaign is to define your strategy.
Your strategy is what aligns your methods to make sure everything you’re doing aligns with your targets and goals.
Think of it as your roadmap to success.
In the same way, a Google Ads PPC campaign requires a bidding strategy. Choosing and implementing the right bidding strategy based on your goals allows you to make the right decisions when adjusting your bids in order to get maximum results while minimizing costs.
“All Google Ads campaigns will require a bidding strategy. But other than being a requirement, they are an important part of the marketing strategy,” says HawkSEM Search Engine Marketing Manager Ian Dawson. “Bid strategies help to maximize the chances for a campaign’s favorable actions.”
Google Ads offers several bid strategies, ranging from manual to various automated strategies, tailored to different campaigns. Below is a breakdown of each of these strategies to help you choose what’s best for your campaign.
Strategy #1: Target cost per acquisition (CPA)
Target CPA bidding is the strategy you use if driving conversions is your campaign’s primary goal.
In this strategy, Google Ads automatically sets and adjusts your bids according to your target CPA value, which is the maximum amount of money you are willing to spend to acquire a customer.
Although some conversions may cost more, others will cost less to even out and align with your acquisition costs. Of course, this requires you to understand your current acquisition costs.
Strategy #2: Target return on ad spend (RoAS)
Target RoAS bidding is an automated strategy where Google makes bid adjustments based on the returns you want from your ad spend. This is a helpful strategy to adopt if you’re launching an ad campaign for your ecommerce store.
Every time a user conducts a search, Google analyzes and predicts the conversion value of products being advertised using machine learning. Based on these predictions, Google adjusts your bids to maximize your returns.
For example, if the Google algorithm determines that a search has a high likelihood of generating a high-value conversion, then Google bids high on that search. Otherwise, it bids low.
But before you can use this strategy, you’ll have to determine a realistic number to set as your target. This is crucial, considering the bids being placed will depend on this value.
If you’re not sure what value to set, navigate to previous campaigns and modify your columns to add the “Conv. value/cost” metric and use that to inform your strategy.
Strategy #3: Maximize conversions
Maximize Conversions is one of the simplest bid management strategies you can set on Google Ads.
This is a pretty straightforward strategy that only requires you to set a maximum daily budget. Once set, Google takes care of bidding, spending your budget wisely on searches that get you the most conversions.
If the Google algorithm deems that the cost of a single conversion is too high, Google will not bid on it for you.
Strategy #4: Maximize conversion value
Maximize conversion value is a new strategy that essentially works like Target RoAS wherein the algorithm tries to maximize the returns on your ad spend.
But unlike Target RoAS, you no longer need to specify how much you’re willing to spend.
Instead, Google takes care of everything for you and will utilize your ad spend budget to the best of its ability.
Strategy #5: Manual CPC bidding
Just as the name indicates, manual CPC bidding gives you complete freedom over your campaigns, from the campaign budget to spending on the keyword level.
For PPC marketing experts, manual CPC bidding could mean spending more time monitoring campaign performance and making adjustments if necessary. But it also offers a higher level of control over decisions that impact the success of each campaign.
But there’s a caveat. As Dawson explains, manual bidding requires extra work and extensive knowledge to pull off. Otherwise, you may end up bidding for extra clicks that aren’t likely to convert.
So, only use this strategy if you’ve had considerable experience working with Google Ads.
Strategy #6: Enhanced cost per click (ECPC)
ECPC can be described as a mix of manual and smart bidding strategies as you get to set the basic CPC on the ad and keyword level.
Once the basic stuff is set, the Google algorithm will then work to optimize each campaign. It will adjust bids based on the likelihood of generating a sale.
For instance, if a keyword is too competitive, it will lower your bids to avoid overspending. But it will increase your bids if it determines that the CPC is reasonable and the search is winnable.
Pro tip: To further optimize a campaign, you can choose whether to enhance bids after a specified number of conversions or optimize based on the value of conversions. But this will only work when different conversion values or dynamic conversion events have been set.
Strategy #7: Maximize clicks
Maximize clicks is another automated bidding strategy that takes your maximum daily budget into account.
In this strategy, Google optimizes your bids in order to get the highest possible click-through rate (CTR) for your ads but without considering the quality or relevance of the traffic generated.
In that regard, this is seen as only a means to get the most traffic possible on a limited budget or when a keyword has a limited search volume.
Strategy #8: Target impression share
In late 2018, Google introduced a new bidding strategy called target impression share aimed at getting the most reach possible for your ad.
There are three options available for this strategy, depending on where you want your ads displayed on search results:
- the absolute top of the page
- near the top of the page
- anywhere on the SERPs
Based on which option you choose and your percentage share targets, Google will automatically optimize each bid to reach your target as much as possible.
Say you chose an impression share target of 100% on the absolute top of the page. Google will maximize your bids to ensure your ads reach prime ad space 100% of the total possible amount of times.
However, take note that the percentage impression share is not just a function of your bids but also the quality score of each individual ad and ad group.
So, regardless of the target score you set (in this case, 100%), your ads will unlikely reach that score without overbidding terribly for clicks and views.
This strategy is best used if you want to improve brand awareness and reach as many people as possible through branded search campaigns.
More bidding strategies
Aside from the eight strategies mentioned above, Google also launched three other bid strategies reserved for only the Display Network and YouTube Ads. But we’ll go over them quickly below:
- Cost per thousand impressions (CPM) – a type of bidding strategy that involves bidding on impressions. The cost is determined based on every 1,000 impressions your ad gets.
- Cost per thousand visible impressions (vCPM) – a variation of CPM bidding where bids can be placed based on 1,000 potential viewable impressions. According to Google, an ad is considered viewable when 50 percent shows on screen for one second or longer. This also counts when a video ad plays for two seconds or longer. This is a tactic used in manual bidding to generate brand awareness.
- Cost per view (CPV) – bids are placed to get the most views or interactions on video ads placed on the Display Network and YouTube. Interactions can be clicks on calls-to-action (CTAs) or overlays, cards, or companion banners. Meanwhile, a view is counted when someone watches at least 30 seconds of your ad, the entire duration of the ad if it’s below 30 seconds, or when they engage with your ad.
Common PPC bid management pitfalls to avoid
We know a human touch is crucial to campaign success — luckily, marketers are humans (AI bots notwithstanding). That also means mistakes sometimes happen.
But in PPC marketing, those same mistakes can be costly as they can gradually eat up your marketing budget without significant returns.
We’ll do our part to help you avoid these costly mistakes by sharing the common pitfalls you want to avoid.
Adopting the wrong bidding strategy
Your bidding strategy is like a treasure map that tells you what to do and where to go to find the treasure.
But in order to find the right kind of treasure, you must, of course, use the right map.
In the same way, if your main goal is to maximize RoAS, then a bidding strategy that focuses on getting maximum click-throughs is not the way to go.
Start by defining your goals.
Generally, there are four types of goals you can target with an aim to increase when running Google Ads:
- Site traffic by maximizing CTR while minimizing CPC
- Branding by maximizing impressions while minimizing CPM
- Leads by maximizing conversions while minimizing CPA
- Sales by generating conversions while maximizing RoAS
Understanding what you want out of your campaigns will help you identify the proper strategy to use in order to reach that goal.
Bid and budget mismatch
And when we say mismatch, we mean you’re setting too high or low of a budget without accounting for max CPC bids.
For example, if you set your daily budget at $50, but you’re bidding $25 per click, then, of course, you’ll be reaching your limit at just two clicks.
That won’t get you far.
Meanwhile, it also wouldn’t help if you’re shortchanging your bids if your budget is more than adequate. Cheap bids can negatively impact your ad rank and, subsequently, your impression share.
A good budget to set should allow for about 10 to 20 clicks to get ample opportunities to generate conversions. It should also be sufficient enough to account for a bid amount based on historical conversion data.
Using automated bidding without setting a cap
Setting a cap on how much you pay for each bid can seem like a no-brainer. But it’s actually one of the things you can easily forget about, especially when you’ve been using manual bidding for a while.
If you’re not already familiar, a bid cap is the maximum amount of money you’re willing to pay for a bid.
It’s a useful yet frequently overlooked feature in Google and social media ads that can spell the difference between a lucrative campaign and a disaster.
But also keep note that the cap you set is absolute. If you cap your bids at $5.00, then Google will no longer pursue bid opportunities beyond that, even if it’s just $5.01.
To get an idea of how much you should be targeting, you can use SEO and PPC keyword research tools like Ahrefs.
Search for the specific keyword or key phrase you’re targeting and look for its average CPC. This will give you a ballpark figure on how much to set as your ceiling and floor values.
Using smart bidding without historical data
Smart bidding gives your campaigns more of a focus than manual bidding. However, using smart bidding too soon can actually hurt your campaigns.
By too soon, we mean using smart bidding strategies without any historical data. Smart bidding strategies actually rely on historical data to inform bid performance and maximize returns.
In the absence of available data, Google will make assumptions about your campaign and do everything in its power to set bids according to your settings.
But this will all be terribly inefficient without data to back it up.
“Sometimes, automated bidding lacks the proper signals, which can cause spending without results,” explains Dawson. “We often recommend starting a new campaign with manual CPC bidding for the strategy. As part of a plan to build on positive performance, we recommend avoiding automated bidding until you are satisfied with the quality of user and search queries and ad placements.”
Failing to consider other conversion factors
While your bidding strategy can significantly impact your returns, it’s helpful to remember that other factors can also impact the overall success of your campaign, namely:
- Landing page quality
- Quality Score
- Your definition of a conversion
- Search intent
- Conversion timeline
Top PPC bid management tips for maximizing returns
Now that you’ve learned what bidding strategies to use and what mistakes to avoid, it’s time to learn about how to maximize the returns on your campaigns.
The following are some tips you can follow to optimize your bids and generate maximum ROI.
1. Don’t be afraid to test out different bid strategies to choose the right one.
Mistakes can hurt. And in PPC, they can be costly.
But while it’s important to avoid mistakes when you can, it’s just as important to learn from them. So, when you think your campaigns aren’t doing well with your current strategy, don’t be afraid to pivot to a different one.
Don’t stick to one strategy just because it fits the definition. So, if your goal is to increase conversions, there may be value in optimizing your bids for maximum clicks.
The point here is to test out different strategies to find what works.
2. Don’t always aim for the top spot.
The absolute top of search results is prime real estate in SEO and PPC.
Advertisers, marketers, and business owners will often aim to reach the top because it offers the highest likelihood of landing a conversion. Theoretically, this makes it the most profitable spot.
But that isn’t always the case.
In fact, the top spot isn’t always the most profitable position. You can only win it when you set the highest bid value, which increases CPC and, in turn, CPA.
A campaign that generates the most profit isn’t one that’s always shooting for the top. It’s the one that manages to find the sweet spot between cost and high-quality traffic volume.
In many cases, finding the sweet spot between affordable ad spend and conversions can offer the most ROI.
3. Don’t bid more than you can afford.
Unless your goal is anything other than to make a profit, it won’t make sense to bid an amount that exceeds the value you get from a conversion.
For instance, if your product is worth $50, bidding $50 or just below that can make your profits negligible, and bidding over that would lead to a loss.
Always place bids that would make sense from a business standpoint to make your campaigns more worthwhile.
4. Understand the limitations of your PPC bid management tools.
Bid management tools like Acquisio and Optmyzr can help you with bid optimization by offering insights that can help you save time and make the most of your advertising budget.
If you’re planning to use any PPC bid management system or tool, make sure you understand everything about it: its strengths, how it works, and its limitations. Make it a point to learn about its capabilities to make sure it makes the right decisions when operating on your behalf.
5. Monitor automated bids more closely and make tweaks when necessary.
Even if you’re using automated bidding strategies for your campaign, they still require a level of manual control and monitoring.
You can’t just set the initial parameters of the campaign and forget about them because you want to make sure they are working to help you reach your goals.
At some point, you may find that your settings are too aggressive or not aggressive enough and require tweaking.
Throughout the lifetime of your campaign, make sure to revisit your campaign settings periodically.
“The best way to maximize your ad spend is to prove value and scale based on those results. Proving value will come with constant testing in your ad account, especially with bidding strategies,” explains Dawson. “By monitoring performance, you can decide to adjust your maximum conversions/target CPA to ensure more conversions or monitor your historical CPC to adjust your manual bidding to pay less for clicks. With any testing, strive for statistical significance and ensure that you are collecting enough data to inform your decisions.”
Take a look at available data and glean what information you can in the context of your goals. If these settings aren’t helping you achieve your goals, you can adjust your automation strategy as needed.
PPC bid management is one of the most confusing aspects of CPC. But it’s also an essential skill that should be part of an advertiser’s complete arsenal.
By understanding the fundamental components that make up effective bid management, you can be well on your way to managing campaigns that meet your goals and generate the most value.
Need more help with PPC bid management or running paid search campaigns? Look no further. Get in touch with us today to learn more about how we can help you get to the next level and continue to thrive.
PPC Marketing Chapters
What is PPC Marketing
Costs to Consider
PPC vs. SEO
Setting Up Google PPC Campaigns
PPC Audits: How to
Audit Tools to Use
Competitor Analysis: How to
PPC Management Like a Pro
Software to Use
How to Increase ROI
Boost Landing Page Conversions
PPC Optimization Tips
PPC for Lead Generation
Common Mistakes (and Solutions)
PPC Agency: Hiring and Budget