The Evolution of Bidding Strategies in Google Ads

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Get to know the essentials of Google Ads bidding strategies so you are equipped to take advantage of a new feature that will be rolled out in 2021.

Manual Biding & ECPC

With Manual Bidding, your cost per click bid largely drives the position of your ad in (paid) search results. Advertisers set the maximum cost per click they are willing to pay and will not pay more than the amount set. With this rather straight-forward approach, advertisers have become adept at adjusting bids on keywords that lead to conversions, generate revenue, and have a positive return on ad spend. Manual bidding allows for total control of your CPC.

Enhanced CPC (ECPC) is a type of “smart bidding” that was introduced as an optional feature within manual bidding to help you get more conversions within your budget. When enabled, this feature employs basic machine learning and automatically raises or lowers your bid based on whether a user is more or less likely to convert on your website. Using your max CPC as the baseline, bids may be adjusted +/- 30% so you may end up paying a bit more than the amount you set. Enhanced CPC allows for limited control of your CPC.

Automated Bidding

Automated Bidding strategies enable advertisers to set bids based on 6 different types of performance goals. This type of bidding strategy relies even more on Google’s ability to process data and user signals at scale.

  • Maximize Clicks = increase website visits
  • Target Impression Share = increase visibility
  • Maximize Conversions = get as many conversions as possible
  • Maximize Conversion Value = generate the highest dollar value as possible from your conversions
  • Target CPA = generate conversions within the cost per acquisition you are willing to pay
  • Target ROAS = maximize the value generated from your conversions

With Automated Bidding, you may not always see your ads and when you do, they may not be in the top of page positions. Automated bidding shifts control of CPC from advertisers to Google.

Smart Bidding

Smart Bidding refers to a subset of automated bidding strategies that use your historical website data coupled with several real-time user signals to predict how to make the best bids on the fly.

A few of the user signals that Google considers in Smart Bidding are:

  • Time of day, day of week
  • Device type (android, apple)
  • Operating system and version
  • On-site activity (time on site, products browsed, etc.)
  • Seasonality
  • Customer match lists

While Smart Bidding relies very heavily on machine learning, Google provides clear reporting with deeper insights into bidding performance to help users understand how different elements of the bid strategy impact results. Advertisers also can run a test to model how this strategy will perform against the current strategy before implementing it.

What’s Next in Bidding Strategies?

New, optional target fields are being rolled out this year that allow advertisers to maximize conversion value based on ROAS or CPA. Simply let Google know the value that you want to maximize, and Smart Bidding will optimize to the target! Adding a ROAS target to a maximize conversion value bidding strategy will allow for getting the highest dollar value from your conversions, while working within your ROAS target. This added layer of optimization has the potential for even more efficient use of ad spend dollars.

How can you prepare for what is next?

  1. Have transaction-specific conversion tracking in place.
  2. Know the value and profitability of your conversions.
  3. Establish clear ROAS goals, segmented by campaign type.

Advertisers armed with this knowledge will be ready to take advantage of up-and-coming features that Smart Bidding has to offer. Contact our team of Digital Marketing Specialists If you want to learn more about how Smart Bidding features can be incorporated into your campaigns.

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