Bidding Strategies in Google Ads

The perhaps biggest change in Google Ads in recent years is machine learning and the new “smart” campaign formats and bidding strategies. The ability of smart bidding strategies to optimize advertising based on hundreds of signals is simply meant to eventually replace manual bidding. In this post, we list all the smart bidding strategies, what they mean, and when it makes sense to use them.

Smart Bidding Strategies

In the early days of Google search advertising, there was only one bidding strategy: manual CPC. You simply set a bid for how much you were willing to pay for a click on each keyword. The advertiser with the highest bid would get the top position. Based on the results, you could determine whether the advertising was profitable or not and adjust bids to find the optimal level.

Over time, so-called bid adjustments were introduced, making it possible to modify manual bids based on factors such as location, day of the week, time of day, or device type to further improve cost efficiency. In 2010, the first smart bidding strategy was launched, designed to simplify optimization for advertisers by automating bid adjustments with the help of machine learning. Today, there are several smart bidding strategies, and which one you should use depends on the goals of your advertising.

Enhanced CPC

Enhanced CPC, or “Förbättrad CPC” in Swedish, is a semi-automated bidding strategy that, just like manual bidding, sets a maximum bid per click. However, based on historical data and insights into the customer journey, you allow Google to dynamically adjust your manual maximum bid for individual searches if the likelihood of conversion is high.

Over time, the average cost per click should still align with the set maximum bid. This bidding strategy is suitable for advertisers who want to take advantage of smart bidding while still retaining a significant degree of control.

Maximize Clicks

Maximize Clicks is a fully automated bidding strategy with the sole goal of maximizing the number of clicks within the set budget. This strategy is best suited for advertisers whose primary objective is to drive traffic to the website at the lowest possible cost.

Maximize Conversions / Conversion Value

Maximize Conversions or Conversion Value are fully automated bidding strategies in which Google completely determines the keyword bids. The only thing you as an advertiser do is set a maximum budget for the campaign. Google then automatically optimizes the bids to maximize either the number of conversions or the total conversion value within the set budget.

Which one you should choose depends on what matters most: revenue or conversion volume? Keep in mind that this bidding strategy does not take into account how much a conversion is allowed to cost.

Target CPA and Target ROAS

Target CPA and Target ROAS are Google’s latest bidding strategies. These are perhaps the most comprehensive and are best suited for advertisers with strict profitability goals. They are fully automated and do not use maximum bids either; instead, they automatically optimize to maximize sales within the set budget.

Unlike Maximize Conversions, however, these strategies do factor in the acceptable cost of a conversion, either referred to as CPA (Cost Per Acquisition) or ROAS (Return on Ad Spend). Target CPA works best when selling products or leads with the same value, while Target ROAS is better suited when selling products with varying values. These smart bidding strategies are the most advanced and require more data than the others to achieve optimal results.

For Target ROAS, Google recommends having at least 20 conversions within the last 45 days for the campaigns using this strategy. However, having more is strongly advised.

Target Impression Share

Target Impression Share is a relatively new bidding strategy that replaces the former Target Search Page Location and Target Outranking Share. Rather than focusing on traffic or sales, this strategy controls how the ads are displayed. The strategy is automated, and instead of setting bids, the advertiser sets a goal in the form of impression share percentage. A 100% impression share means that the ad will appear in all searches for the keywords in the campaign or campaigns, provided the budget allows for it.

As part of the strategy’s settings, you can decide whether the ad placement should be anywhere in the search results, at the top of the first page, or in the absolute top position. This strategy may be suitable for strategic keywords where a strong position is important, or perhaps for searches on your own brand?

Tips:

• When smart bidding strategies are activated, a learning period begins. During this period, results may fluctuate somewhat. This happens because Google’s algorithms test what works and what doesn’t—just like you would do with manual optimization. The length of the learning period depends on how much data comes in; patience usually pays off.
• Make sure the requirements for the bidding strategy are met for the campaigns that will use it. This information is updated on Google’s support page.
• Multiple campaigns can share a bidding strategy using a portfolio bid strategy. However, you should not use the same strategy for campaigns with different goals.
• There is no guarantee that results will improve compared to before using smart bidding strategies. It depends entirely on your level of knowledge in manual optimization, among other factors. However, it is a time-efficient solution that allows you to focus on other areas when resources are limited.

Good luck with the automation!