Bidding 101 — Our Guide to Google’s Expansive List of Bidding Options

Google Ads bidding guide
Google Ads bidding guide

We see this all the time—clients know a few PPC basics, but get tripped up when it comes to developing a bidding strategy that can deliver the ROI they were hoping for. But within Google’s bidding ecosystem lies a whole host of bidding options, from those designed to generate video impressions to others aimed at generating actual sales.

Ultimately, the best bidding strategy for you depends on your business goals. A company set on increasing conversions is not going to use the same approach as another company running an awareness campaign.

Below, we’ll look at the 12 bidding options Google offers and why you might decide to use them.

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1. CPA

Target cost per action (CPA) is a bidding strategy best used for getting as many conversions as possible based on how much you’d like to spend for each action. For example, if you set a target CPA of $10, Google optimizes your bids so you’re spending $10, on average, though in reality some conversions might cost $5 or $7 or $12 individually.

If you’re using conversion tracking (you should be, by the way), you can use CPA as a way to maximize the number of conversions by showing your ads to the people most likely to buy.

CPA is useful for managing your campaign spending. If you decrease your target CPA, rather than lowering your budget threshold, the algorithm will work harder to deliver cheaper leads to your site.

2. ROAS

This bidding strategy is for all you mathematicians out there. ROAS stands for target return on ad spend, and is used as a bidding strategy for getting the most out of your ad dollars.

ROAS is best used as a means of quantitatively evaluating the performance of your ad campaigns and how they fit into your store’s overall bottom line. We recommend using this metric along with customer lifetime value to determine future campaign spend and strategy.

So back to the math. You can calculate your ROAS using the following:

Sales/ad spend x 100% = Target ROAS

$10 in sales from campaign ÷ $4 ad spend (clicks) x 100% = 250% target ROAS. You’ll often see this figure represented as a ratio.

Generally, a 4:1 is the recommended benchmark. In that case, you’d aim for $4 in revenue for every $1 spent on ads. However, your target number has more to do with what you sell, your costs of operation, and so on. Some companies require a 10:1 ROAS to remain profitable, while others can handle a much lower return on ad spend.

According to this case study from PPC Hero, one of their e-commerce clients saw major improvement from switching to a ROAS shopping campaign.

Bidding options, bidding strategy

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3. ECPC

Enhanced cost per click is a strategy that aims to help you get more conversions out of your manual bidding efforts.

While ECPC has been around since 2010, Google recently rolled out some changes to the strategy. Google used to dynamically adjust your bid within 30% if the algorithm determined that the change would likely result in a conversion.

Today, they’ve done away with the cap, to account for the different conversion costs and rates across devices, locations, and so on. Google says that they’ll try to keep bids within the limits you’ve set yourself, but may make some adjustments to maximize conversions.

If you’re operating on a shoestring ad budget, ECPC might not be your best bet. Instead, manual bidding will give you more control over your spend. That said, its convenience makes it a popular choice for bidders whose budgets can accommodate it.

4. Maximize Clicks

Maximize Clicks, one of the few bidding strategies with no acronym, is designed to help you get as many clicks as you can while remaining within the constraints of your budget.

Maximize Clicks is best used for increasing traffic, and according to Google, it’s a good choice for beginners who don’t know much about bidding for keywords and placements. The reason is that you can set a spending limit and Google will work within those confines — no flexible bidding or enhancements required.

5. Manual CPC

If letting Google run the show isn’t your bag, Manual CPC bidding gives you the control you desire. The downside is that you’ll spend more time keeping track of costs and making adjustments to your ads account.

Manual CPC bidding works by letting you set bids for different ad groups or placements. If you see that some campaigns or audiences are performing better than others, you can quickly make changes to increase your ROI.

Even with a fine-tuned strategy, though, Google tends to be better at predicting which audiences and individuals are most likely to convert.

If you want full control over your budget, make sure you unclick the box that enables Enhanced CPC.

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6. TSPL

TSPL, or Target Search Page Location, bidding allows you to let Google automatically adjust your bids so that they either show on the first page of Google or in one of the top four positions on the front page.

We should mention, TSPL doesn’t guarantee that your ad will get the top spot. Other factors such as quality score, keywords, budget, and competition also impact where you show up on the SERPs.

7. CPM

CPM, or cost per thousand impressions, is designed for display network campaigns and may be used as a way to increase awareness. Because impressions are somewhat intangible, Google charges you a flat rate for every thousand people that see your ad.

We get it: at a glance, this method seems like a way to pay to increase a vanity metric. But one way you can get more out of it is to take an ad with a high conversion rate and use it in a CPM campaign. The idea is, if you’re getting a lot of clicks and conversions, you’re still paying the flat fee, rather than the CPA costs.

8. CPV

CPV, or cost per view, is a bidding strategy designed exclusively for video advertising. Views are determined by the amount of time a visitor spends on your ad.

This bidding strategy is similar to other types of PPC options, but instead of appearing as text or photo ads, users have the option to advertise In-Stream or In-Display. In-Stream ads appear inside YouTube videos as if they were a commercial break, while in-display video ads are clickable, branded videos that stand on their own.

Bidding options, bidding strategy

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9. Automatic CPC

This option allows users to hand their controls over to Google so that they can optimize your ad placement based on your daily campaign budget.

Automatic CPC is similar to ECPC, but there are a few core differences you should know before you pick one or the other. ECPC allows Google to increase your spending, while Automatic CPC allows Google to decide how you use your pre-determined budget.

You might not see the best results here, especially if you’re trying to rank for competitive or low-volume keywords. But, you can enable ECPC here or flexible bidding to increase the chances of conversion.

10. vCPM

Where CPV is all about cost per view and CPM is all about cost per 1000 impressions, vCPM is a bidding strategy that measures the cost per viewable impression, or how often an ad is seen by users.

11. Target Outranking Share

This strategy is all about taking sales out of the pockets of specific competitors. Consider it the e-commerce version of Pepsi specifically targeting Coke’s audience. How it works is, you’ll select the domain you’d like to compete against as well as the highest amount you’d pay to outrank your competitor.

12. Maximize Conversions

Maximize conversions is ideal for those users who already have a large budget and want to automate their campaign. This bidding strategy allows Google to take the reigns and optimize ad placement and frequency based on when viewers are most likely to convert. Keep in mind that this approach does not take into account the cost per conversion, so it might not be the best use of your marketing budget.

Maximize Conversions is essentially an awareness campaign with a “conversions at all costs” caveat attached.

Should You Automate? Or Keep it Manual?

According to Search Engine Journal, those who stand to see the biggest benefits from automating PPC efforts are those who already have large conversion volumes. So, it’s one of those cases where the people who need automation most stand to lose money if they’re not careful.

Bidding options, bidding strategy

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Those who stand to see the biggest benefits from automating PPC efforts are those who already have large conversion volumes Click To Tweet

Still feeling Uneasy About Google’s Bidding Options?

Look, there’s a lot to take in if you’re just starting to learn your way around Google Ads, Google Analytics, and the Keyword Planner. While Google does try to make things easier on users by including automated portfolio options and Smart bidding tools that do the heavy lifting on your behalf, if you’re new to the PPC game, automation can easily turn into a massive bill from Google.

Key PPC knows the ins and outs of PPC and helps e-commerce companies drive more conversions and scale their business. Whether you’re unfamiliar with Google Ads or don’t have time to manually adjust your bids, we’re here to help.

Contact us today to learn more about how we can help you grow.

How do Google’s bidding options fit with your business goals? Download our free guide to learn more.