The Best Google Ads Bid Strategies to Increase Revenue in 2023
Whatever your Google Ads objectives are, all advertisers are on a mission to drive the best possible results, maximize revenue and increase return on ad spend (ROAS).
There are lots of different factors that contribute to efficiency, but one of the most important is selecting the right Google Ads bid strategy. It’s one of the first steps when creating a campaign and if you get this wrong, you could end up wasting your budget. So, getting it right goes a long way.
According to The Feed Marketing Report 2022 by DataFeedWatch by Cart.com, retailers in select eCommerce sectors deal with higher complexity of data feed management due to the high amount of products and variations. This highlights why choosing the right bid strategy is vital for retailers and eCommerce businesses, especially in optimising bids for revenue whilst advertising a high number of products.
What is a Google Ads bid strategy?
Google Ads bid strategies are the foundation of a campaign and determine how the campaign optimises your bids. There are 11 bid strategies in total and they can be grouped into two categories: automated and manual.
Automated bid strategies
Automated bid strategies are the most popular strategy and what most advertisers opt for. As well as being the most popular, automated bidding is also what Google recommends when setting up campaigns.
This is because automated bidding takes the heavy lifting and guesswork out of setting bids, with Google Ads automatically setting bids for your ads based on that ad’s likelihood to result in a click or conversion.
Automated bidding does not replace the wealth of experience and knowledge that’s required to effectively set up and manage Google Ads campaigns. It’s just a more optimal way to manage bids. Looking into the future though, marketers should expect Google to switch to automation more and more. In fact, the new Google Ads campaign type - Performance Max runs exclusively on automated bidding.
Manual bid strategies
In comparison, manual bid strategies require the advertiser to manually change bids on an ongoing basis. This is time-consuming and also not as effective compared to the machine learning technology that powers automated bid strategies.
For example, if you’re advertising one hundred products with a search campaign, and each product has 10 keywords, that already amounts to 1,000 keywords. So managing each bid for 1,000 keywords is going to take a lot more effort, and will arguably be less effective, than using an automated bid strategy.
(Screenshot of Google Ads keywords)
Manual bidding becomes even more challenging in retail when there are so many products and variations to manage. This is why it is advantageous to use automated bidding in retail since you will benefit from the use of machine learning to optimise for conversions or conversion value.
However, if the budget is limited, you want to tightly manage bids and you have plenty of time on your hands, then, there is a place for manual bidding.
Remember to read up on all of the numerous tactics to further optimise bids, even after setting your bid strategy. This includes the use of audiences, demographics data, and the use of custom labels (for Google Shopping campaigns). For the latter, 2 out of 5 retailers are using custom labels to increase ROAS from their Shopping campaigns when running sales and promotions (Feed Marketing Report, 2022).
Feed Marketing Report 2022 | DataFeedWatch anonymised data
The 11 Google Ads Bid Strategies in 2023
There are 11 Google Ads bid strategies in total. Automated strategies are likely to be your best bet when it comes to driving conversions and revenue, especially when managing multiple campaigns and wanting to increase ROAS.
It is important to learn about all of them in order to make the best selection. Here is a great overview by WordStream of all 11 Google Ads bid strategies, broken down by non-automated (or manual), semi-automated, and fully automated.
How to Choose the right Google Ads bid strategy in 2023
Your ultimate goal for running Google Ads campaigns can be broken down into three categories, which will narrow down your choice and make it easier to select the best Google Ads bid strategy for you.
Here’s an overview of the 3 goals and Google Ads bid strategies that are best suited to hitting your goal:
Is your account tracking conversion data, and enough of it?
On top of your goal, ask yourself the question - am I tracking conversions?
Automated bid strategies require quality and accurate conversion data, which includes conversions and can also include conversion value (revenue). So, if your account isn’t set up to track conversions it would be best to choose a traffic or awareness bid strategy.
Automated bid strategies also require a 1 - 2 week learning period and enough conversion data to work effectively. While there isn’t an exact number of conversions that Google recommends, 15 to 30 conversions in a 30 day period is often regarded as the minimum to get the most out of automated bidding.
Top 5 Bid Strategies for driving conversions and revenue
If your goal is conversions and revenue then there are 5 Google Ads bid strategies that are automated and the most suitable. Automated bid strategies learn as they go, using information about a bid’s performance to inform future bids. They are the most optimal as they make the most of performance data and machine learning.
Here’s a rundown of the top 5 bid strategies best suited to maximising conversions and revenue.
1. Maximise Conversion Value with Target ROAS
This bid strategy is for ad accounts that are tracking both conversions and conversion value. It is essentially telling Google to drive as much revenue as possible, but also giving guidance as to what ROAS is needed in order to be profitable.
To calculate your target ROAS, a basic level of maths is required. The equation for how to work out what your target ROAS should be is as follows:
Conversion value ÷ ad spend x 100% = Target ROAS
So, if you have £500 to spend and you need to generate £3,000 in revenue, the equation would look like this:
£3,000 conversion value ÷ £500 ad spend x 100% = 600% Target ROAS
To set up this bid strategy, in campaign settings first select maximise conversion value and then tick the optional box and input your Target ROAS.
(Screenshot of Google Ads settings)
Expert tip - if you’re running a brand new campaign, or there isn’t any conversion value data in the campaign yet, it is best practice to first select ‘maximise conversion value’. Then, when the campaign has gathered a sufficient amount of data, enable Target ROAS.
If you’re running Google Shopping campaigns, you can take this bid strategy to the next level with a data feed solution by optimising for a profit margin percentage. Check out this real life case study detailing how one business increased Shopping ROAS by +96%, revenue by +602% and conversion rate by +73% when applying this model.
2. Maximise Conversion Value
‘Maximise conversion value’ is the same as the above, except you are not providing Google with a Target ROAS. A maximise conversion value bid strategy will still optimise your bids to drive the maximum amount of revenue.
This bid strategy will spend your entire budget regardless of what ROAS is achieved, which is something to keep in mind. When using Target ROAS, if Google isn’t able to hit the target, then this will impact the delivery of the campaign and the campaign may not spend all of its budget.
3. Maximise Conversions with Target CPA
Target CPA used to be a stand-alone bid strategy, however, in 2022 it was merged with maximise conversions. Maximise conversions with target CPA is one of the most popular bid strategies for businesses that want to drive as many sales and leads as possible within a target cost per acquisition.
It works in a very similar way to maximise conversion value with target ROAS, except the focus here is on driving conversions, rather than conversion value.
In order to use this bid strategy successfully, you’ll need to work out what your acquisition costs are. For example, if you can afford to spend £10 acquiring a sale or lead, then your target CPA should be set to £10. Working this figure out is totally dependent on how much a sale or lead is worth to your business.
Your bids will likely vary from keyword to keyword and as long as your target CPA is being met, the focus here should be on your CPA, not your CPCs.
Expert tip - if your campaign isn’t delivering many impressions, or if it’s not spending your full budget even though there is enough search volume and impression share, your target CPA may be too low. Google will hold back delivery if your target CPA isn’t achievable. If this happens, switch to maximise conversions or enhanced CPC and try to gather more conversion data to gauge a realistic cost per acquisition.
4. Maximise Conversions
Maximise conversions is similar to ‘maximise conversions with target CPA’, except you’re not giving Google a target acquisition cost. Therefore this bid strategy will aim to spend the entire budget and optimise bids in order to get the most number of conversions possible.
One thing to keep an eye on with maximise conversions is how high CPCs can be, since Google isn’t considering costs or targets with this bid strategy. Set a reasonable budget that you are willing to spend, then after a sufficient period of time, review how many conversions you’ve achieved and how profitable this bid strategy is.
If you’re getting a steady and consistent stream of conversions, consider upgrading this bid strategy by using a Target CPA.
(Screenshot of Google Ads settings)
5. Enhanced CPC
Enhanced CPC bid strategy, also known as ECPC, is a hybrid of manual and smart bidding. ECPC combines manual bidding with a Smart Bidding strategy such as Target CPA or Target ROAS. Manual bids are set, and then Google raises bids accordingly when a user is likely to convert.
The benefit of this is that you retain more control over bids, meaning you can help to keep costs down as well as benefiting from Google’s machine learning magic.
This strategy is in the top 5 bidding strategies for driving conversions and revenue because ECPC campaigns optimise for either conversions or conversion value. ECPC is not as automated as the previous four bid strategies but still an excellent choice when the objective is revenue and to increase ROAS with Google Ads.
Google Ads bid strategies for driving traffic
While the previous 5 Google Ads bid strategies are the most optimal from a conversion and revenue perspective, the next two bid strategies are great for traffic driving.
Whether you’re kicking off brand new campaigns and would like to gather data before switching to a conversion-focused bid strategy, or you need to launch Google Ads campaigns but tracking isn’t quite there yet, ‘Maximise Clicks’ or ‘Manual CPC’ may be the best choice for you.
6. Maximise clicks
Choose ‘Maximise Clicks’ bid strategy in order to get as many clicks as possible with your budget. It works in a similar way to Maximise Conversions, only the objective is to generate as many clicks as possible.
You can control the maximum amount you are willing to pay for a click by setting a maximum CPC limit. It’s a good idea to use this feature to keep a handle on your CPCs and how much you pay for a click. If you set a maximum CPC limit and ads are not really delivering, try raising the max CPCs as this could make a difference.
(Screenshot of Google Ads settings)
7. Manual CPC
Manual CPC is a simple way of setting and managing bids manually. You set the maximum cost-per-click you’re willing to spend, known as ‘Max. CPC’. Providing there are no bid adjustments and enhanced CPC isn’t enabled, the amount you pay for a click will not exceed the max. CPC.
For example, if a keyword has a max CPC of £0.50, then you’ll pay either £0.50 or less when someone clicks on an ad. The actual CPC you pay is determined by your Ad Rank.
There are numerous factors that contribute to ad rank. Such as bid amount, ad quality, expected CTR, landing page experience, competitiveness, plus other attributes and signals. Read more about Google Ads Ad Rank here.
Although this bid strategy is simple in the way that it works, the level of monitoring and management needed is often time-consuming. The majority of advertisers now hand over this level of optimisation to automated bid strategies.
Google Ads bid strategies for maximising visibility and awareness
The remaining four bid strategies are focused on driving visibility and awareness, rather than traffic, conversions, and conversion value.
8. Target impression share
Target impression share bid strategy allows advertisers to set a goal impression share percentage. This works in a similar way to setting a target CPA or target ROAS. There are three placements you can bid for when setting your target impression share:
Absolute Top of Page, which is the very first position
Top of Page, which is any position above organic results
Anywhere on the Page, which includes both above and below organic results
As well as selecting one of the three options above, input your target impression share and also your maximum CPC limit. Essentially, you are telling Google where you want your ad to appear and how much you are willing to pay. Google will then adjust your bids accordingly.
(Screenshot of Google Ads settings)
9. Cost-per-view (CPV)
Cost-per-view bid strategy can be used for video campaigns on Google Ads and the YouTube Ads platform. When using CPV bidding, you pay for video views or interactions.
A view is counted when someone watches 30 seconds of your video ad, the entire duration (if the video is shorter than 30 seconds), or if a user interacts with the ad. Video interactions refer to clicks on the call-to-action overlays (CTAs), advert cards, and banners that may accompany the video ad, as seen in the following screenshot.
(Screenshot of YouTube Ad)
You set CPV bids to tell Google the maximum amount you're willing to pay for each view or interaction, similar to that of setting a maximum CPC bid limit. Setting a low CPV may impact delivery, something to be mindful of when choosing a CPV.
10. Viewable CPM
Viewable CPM (vCPM) refers to cost per thousand viewable impressions. An ad is counted as "viewable" when 50 percent of the ad shows on screen for one second or longer for display ads, and two seconds or longer for video ads.
Again, this bid strategy is for Display and Video campaigns, rather than the Search network. If your Google Ads objective is to drive awareness and get as many eyes on your ads as possible, then this bid strategy could be right for you.
11. Cost Per Thousand Impressions (CPM)
Finally there's the Cost per Thousand Impressions bid strategy, also known as CPM, which is bidding based on impressions rather than clicks and conversions. This bid strategy is for Display and YouTube campaigns, similar to the above, and you’re not able to use this bid strategy for the Search network.
According to Google, Viewable CPM bidding will soon replace the CPM bid strategy, and existing CPM campaigns will automatically switch over to viewable CPM bidding, which makes this bid strategy less relevant now.
Testing Google Ads bid strategies to increase ROAS
To push performance to new heights it’s important to experiment with relevant bid strategies. You may have success using enhanced CPC or even manual CPC, however without experimenting with Target CPA or Target ROAS, there’s no way to know if these alternative bid strategies could increase ROAS.
Use a Google Ads experiment before changing bid strategies, in order to minimise any disruption to performance. This way you can test the waters and learn whether or not a different bid strategy will improve results. If not, it’s easy to end an experiment and resume with the previous bid strategy. If an experiment outperforms the original campaign, you can go ahead and roll this out to the main campaign.
Experiments can be set up using the custom experiment feature.
Change the bid strategy in the trial campaign and select what percentage of traffic you’d like to send to the trial campaign (the bid strategy you’re testing) VS the original campaign (e.g. 50:50, or 20:80, etc.). Monitor as the experiment gathers data.
The below experiment is a test using Manual CPC in the trial campaign, versus Target CPA in the base campaign. Manual CPC did not outperform Target CPA, as suspected, therefore the campaign resumed with Target CPA:
According to The Feed Marketing Report, Search and Social are the dominant channels for almost every retailer, with 44% using both (The Feed Marketing Report, 2022). For Search, a fundamental first step is selecting the right Google Ads bid strategy.
Knowing the best bid strategy to choose really does depend on your product as well as what your goal is and whether or not your account is tracking conversions and revenue. There are 5 bid strategies that are the most effective when trying to maximise revenue and return on ad spend.
Once you’ve selected the right bid strategy, it doesn’t end there. Testing campaigns and giving these trials enough time to prove themselves is the best way to approach bid strategies in 2023.
Jacques van der Wilt is a leader in the feed marketing industry and an entrepreneur. He founded DataFeedWatch (acquired by Cart.com) - one of the largest feed management companies in the world, that helps online merchants optimize their product listings on more than 2000 shopping channels in over 60 countries.
Prior to that, Jacques has held leadership positions in both the US and Europe. He is also a seasoned guest speaker at industry events and mentor at Startup Bootcamp.
Title: Feed Marketing Industry Leader, General Manager Feed Marketing @ Cart.com
Company: DataFeedWatch by Cart.com
Company logo: https://www.datafeedwatch.com/hubfs/Copy%20of%20DFW_cart_logo.png
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