In recent times, Google Ads has been gradually introducing updates to its platform, encouraging advertisers to adopt its automated features. However, these features have been met with a range of opinions from advertisers.

Automated bidding is a prime example. Although it has become more refined over time, this aspect of Google Ads remains quite complex. With numerous variations, each having its own advantages and disadvantages, it raises the questions: Should you utilize automated bidding? And if so, which approach is best suited for your needs?

If these questions resonate with you, you’ve come to the right place. This guide will walk you through:

• The distinctions between manual, automated, and Smart bidding in Google Ads.
• The mechanics of each of the nine bidding strategies available in Google Ads.
• The appropriate scenarios for employing each strategy, along with precautions to consider.

Before diving in, let’s establish a clear understanding of the fundamentals:

What Does Automated Bidding Mean?

When setting up a Google Ads campaign, it’s necessary to specify your maximum bid to Google – the amount you’re comfortable paying for your ad’s display. This bid can be determined in two ways: manually or through automation.

Manual bidding entails informing Google about your highest acceptable cost per click (CPC) on your ad. You retain the flexibility to modify this bid based on your ad’s performance as reflected in the metrics provided in your reports.

Conversely, automated bidding empowers Google to dynamically adjust your bids using automated rules. These adjustments are based on the likelihood of your ad generating a click or conversion. Notably, automated bidding might leverage supplementary data points not readily accessible within reporting metrics.

Google Ads presents eight distinct automated bidding options:

1. Enhanced Cost Per Click (ECPC)
2. Maximize Clicks
3. Maximize Conversions
4. Maximize Conversion Value
5. Target Cost Per Action (tCPA)
6. Target Return on Ad Spend (tROAS)
7. Viewable CPM (vCPM)
8. Cost Per View (CPV)

Seeking optimization but unsure where to begin? Obtain your complimentary Google Ads performance grade today to pinpoint your PPC shortcomings!

Are Smart Bidding and Automated Bidding Synonymous?

The terms Smart Bidding and automated bidding are often used interchangeably, but they are not identical. Smart Bidding specifically refers to Google’s automated bidding strategies that employ “auction-time bidding,” signifying that optimization for conversions or conversion value happens in real-time for each individual auction. These strategies encompass:

• Enhanced CPC
• Maximize Conversions
• Maximize Conversion Value
• Target CPA
• Target ROAS

Therefore, while all Smart Bidding strategies fall under the umbrella of automated bidding, not all automated bidding strategies qualify as Smart Bidding.

How Do I Implement My Bid Strategy?

After identifying the most suitable bid strategy, how do you put it into action?

It’s crucial to remember that during campaign setup, Google automatically assigns an automated bidding strategy aligned with your objectives.

You are not obligated to use this strategy!

You have the freedom to opt for any other automated bidding strategy or even choose manual bidding.

To do this, simply click on the blue text at the bottom that reads “Select a bid strategy directly (not recommended)”

Now that you have a grasp of the basics of Google Ads bidding, let’s delve into each available bidding option.

1. Manual Cost Per Click (CPC)

Manual CPC bidding stands out as the most straightforward bid strategy on the Google Ads platform. Advertisers define their bids manually at the keyword level, and these bids persist until modified by the advertiser.

Contrary to the cautionary message from Google, this is a highly advisable starting point for those new to PPC or managing their accounts during free time.

Considerations When Using Manual CPC

Manual bidding presents two primary considerations:

Time Commitment:

Manual bidding inherently demands time to monitor performance, assess the need for keyword bid adjustments, determine the extent of those adjustments, and implement them.

Potential Information Gap:

When reviewing performance metrics, we rely solely on the data Google chooses to disclose. Automated bidding strategies, on the other hand, can factor in data points that are hidden from our view.

These limitations don’t inherently invalidate manual bidding or imply the superiority of all automation. However, they are crucial factors to weigh when deciding on bid strategies.

2. Enhanced CPC

Enhanced CPC bidding closely resembles manual bidding but grants the Google Ads algorithm the authority to fine-tune manually set keyword bids.

For accounts performing well, it serves as a suitable initial step into automation beyond manual bidding. Enabling Enhanced CPC is as simple as ticking the checkbox below the manual bidding setting or selecting Enhanced CPC from the bidding type dropdown menu.

With Enhanced CPC, Google Ads will raise or lower a bid for a specific keyword in a given auction based on the predicted likelihood of that click converting into a sale.

Previously capped at a 30% adjustment, this limitation has been removed, allowing Google Ads to modify bids by any percentage. Moreover, you can instruct Google to optimize for either conversions or conversion value.

Successful implementation of Enhanced CPC typically leads to improvements in click-through rate (CTR) and conversion rate (CVR).

Considerations When Using Enhanced CPC

The removal of the 30% adjustment cap necessitates close monitoring of your metrics.

Monitor CPC and CPA:

Given the unlimited bid adjustment capability of Enhanced CPC, there’s a possibility of bids and subsequent CPCs exceeding profitable levels for your account.

While this bid type aims to boost conversion likelihood, it doesn’t necessarily prioritize your desired target cost per conversion (CPA). The algorithm often favors bid increases over decreases.

Therefore, keep a close watch on CTR and CVR to gauge the effectiveness of the bidding strategy (both should increase). Additionally, track CPC and CPA to confirm the profitability of the results.

3. Maximize Conversions

In contrast to the semi-automated nature of Enhanced CPC, Maximize Conversions operates as a fully automated bidding strategy. This means advertisers don’t set individual keyword bids for Google to consider. Instead, Google determines CPC bids based solely on the strategy’s objective.

The Maximum Conversions bid strategy prioritizes generating the highest possible number of conversions while staying within your daily budget. As of April 2021, Max Conversions also provides the option to set a target CPA to guide its bidding.

Considerations When Using Maximize Conversions

Despite its relative simplicity, this bid strategy demands a high level of caution.

Independent Daily Budgets for Each Campaign:

It’s essential to assign individual daily budgets to campaigns employing Maximize Conversions, rather than including them in shared budgets. This is because the strategy strives to exhaust the entire daily budget allocated to each campaign. If part of a shared budget, Maximize Conversions will consume the entire shared group’s daily budget, not just its designated portion.

Mandatory Conversion Tracking:

Never activate this strategy without having conversion tracking set up. Google’s goal is to maximize tracked conversions. Consequently, without tracking, the algorithm is more prone to making poor decisions in its quest to find users likely to convert.

Monitor CPC:

Bear in mind that Google’s algorithm will bid whatever it deems necessary to secure the maximum number of conversions. This might lead to an increase in your spending or average CPC as Google bids more aggressively to meet your conversion objectives.

However, while Max Conversions has a track record of potentially aggressive spending, the accompanying rise in conversion rates tends to offset this. Although your spend or average CPC might be higher, you’ll experience a greater influx of conversions, resulting in a lower overall CPA and a higher ROI. Moreover, the recent addition of a target CPA option allows for better control over these risks.

To summarize, if your aim is to generate more leads cost-effectively, Max Conversions could be your answer. However, if budget constraints are a concern, consider using a target CPA with Max Conversions or explore alternative strategies.

4. Maximize Clicks

This strategy shares similarities with Maximize Conversions but centers around clicks instead. With Maximize Clicks, Google endeavors to generate the highest click volume possible while staying within your daily budget.

This strategy proves valuable when aiming to boost website traffic for branding or list building or when seeking to capitalize on strong conversion performance by expanding reach.

Advertisers have the flexibility to set a maximum CPC limit to prevent excessive CPC increases as Google utilizes the daily budget.

Considerations When Using Maximize Clicks

Always establish a maximum CPC and diligently monitor your average maximum CPC. Google will strive to maximize clicks for your campaign but, similar to Maximize Conversions, it will also relentlessly try to spend your entire daily budget, even if click costs become significantly higher than usual.

Regularly assess the CPC performance generated by this bid strategy (along with any other relevant goal metrics) to ensure it aligns with your objectives. If not, consider adjusting your settings or exploring alternative bid strategies.

5. Maximize Conversion Value

Max Conversion Value can be considered an advanced version of the Max Conversions strategy.

While fundamentally alike, Max Conversion Value prioritizes attracting conversions that yield the highest return on investment.

In essence, its focus lies in the value derived from each conversion rather than simply the quantity of conversions. It emphasizes quality over quantity.

Similar to the target CPA option in Max Conversions, Max Conversion Value allows you to set a Target ROAS to guide its bidding process.

Considerations When Using Max Conversion Value

Two key points of caution accompany this bidding strategy:

Conversion Tracking:

Just like Max Conversions, the success of this strategy hinges on accurately implemented conversion tracking.

Assigning Values:

It’s imperative to assign a value to each action; otherwise, the algorithm won’t function optimally.

Naturally, a conversion worth $1000 to your business warrants a higher bid than one worth $5. If your tracking isn’t configured correctly for value-based bidding, this strategy won’t yield the desired results.

6. Target CPA (tCPA)

Target CPA stands for target cost per action (or conversion). Previously a separate bidding strategy, it now exists as an option within the Max Conversions strategy (learn more here).

With tCPA, you specify a desired cost per action (conversion), and Google adjusts bids to drive as many conversions as possible at that CPA.

Advertisers have the ability to set minimum and maximum bid limits to prevent Google from making extreme bid adjustments. However, this feature is limited to portfolio level usage. These bid caps are not available when targeting individual campaigns.

Considerations When Using Target CPA

Three important points to note about tCPA bidding are:

Conversion Tracking is Non-Negotiable:

Similar to Max Conversions and Max Conversion Value, Target CPA bidding relies heavily on enabled conversion tracking in your account. Without it, the strategy becomes ineffective, as it lacks the means to determine if conversions are being generated.

However, there’s more to consider.

The mere presence of conversion tracking doesn’t guarantee success.

Minimum Conversion Data is Essential:

To effectively drive conversion performance, Google requires a certain volume of conversion data to make informed decisions. Insufficient conversion volume hinders the algorithm’s ability to make smart decisions, making tCPA an unsuitable option.

At the campaign level, Google recommends a minimum of 15 conversions in the preceding 30 days. However, we’ve observed this to be a rather low threshold. Ideally, aim for at least 30 conversions, if not 50, in the past 30 days before experimenting with tCPA bidding.

If your campaigns individually fall short of this volume, they might collectively reach it at a portfolio level. If not, tCPA should likely be excluded from your list of potential bid strategies.

Set Realistic Targets:

Lastly, when starting with tCPA, setting attainable initial goals is crucial. If your campaign has historically averaged a $40 CPA over the past six months, setting a target CPA of $20 is counterproductive. It immediately restricts Google’s bidding capabilities and learning potential in auctions.

Anticipate an initial learning phase of two weeks to a month when implementing tCPA bidding. Set your target CPA slightly above your recent average CPA or leverage Google’s suggested CPA target to allow the algorithm to find its footing. Gradually lower it over time to reach your desired target CPA.

7. Target ROAS (tROAS)

Target ROAS closely mirrors Target CPA but focuses on return on ad spend (ROAS). Just as tCPA has been integrated into Max Conversions, tROAS now falls under Max Conversion Value (learn more here).

With this strategy, Google Ads predicts future conversion and conversion value performance based on your historical data to participate in auctions. It then dynamically modifies bids in real time to maximize conversion value while striving to achieve your predefined target ROAS at the ad group, campaign, or portfolio level.

As with tCPA, individual conversions may deviate from your ROAS target. Google’s algorithm will work to balance these fluctuations over time to attain your overall ROAS objective.

tROAS allows advertisers to set bid limits (minimums and maximums) at the campaign or portfolio level. This helps prevent the Google algorithm from making overly aggressive adjustments, although Google advises against this as it can hinder the machine learning process.

Considerations When Using Target ROAS

The same precautions that apply to tCPA also hold true for tROAS. Ensure you have accurate conversion tracking in place, including conversion values, and sufficient historical conversion performance to support this strategy.

Furthermore, avoid setting an excessively high target ROAS initially. Begin with a target slightly below your recent performance levels, and gradually increase it over time to achieve a more profitable ROAS.

8. Target Impression Share

Target Impression Share is a relatively recent addition to the bidding strategies, having come out of beta in 2018.

This strategy allows advertisers to define a desired impression share percentage, similar to setting a target CPA.

Target Impression Share offers three placement options for bidding:

• Absolute Top of Page
• Top of Page
• Anywhere on the Page

Each option conveys different preferences to the Google algorithm, prompting it to adjust bids accordingly.

Advertisers can also set a maximum CPC bid limit with Target Impression Share to mitigate overspending. However, Google cautions against setting it too low, as it might stifle performance.

Considerations When Using Target Impression Share

As with any bidding strategy, if not managed carefully, this strategy can potentially inflate your bids beyond profitability. While primarily focused on awareness and reach (though applicable to performance-driven campaigns), it’s important to acknowledge your budgetary constraints.

Monitor CPC:

Always set a maximum CPC bid to avoid excessive costs per click. Despite Google’s cautionary advice, don’t hesitate to set a conservative bid initially. Consider setting it at a 20%-50% increase over your current bid. If it performs well, maintain that cap. If you’re not seeing the desired volume, incrementally raise the maximum CPC.

Achieving 100% coverage in auctions is increasingly rare. Therefore, even with a 100% target, don’t be surprised or discouraged if the highest achievable impression share hovers around 95%.

Continuously track CPCs and performance outcomes to confirm that this bidding strategy is fulfilling its objectives before proceeding.

9. Viewable CPM

Viewable CPM (vCPM) refers to the cost per thousand viewable impressions. According to Google_, an ad is classified as viewable when at least 50% of its area is displayed on the screen for a minimum duration of one second for Display ads and two seconds for video ads.

This Display-exclusive bid strategy enables advertisers to bid for impressions specifically when their ad is rendered in a viewable space.

vCPM bidding proves effective when your objective is to broaden brand visibility and simply get your message across to a wider audience.

Considerations When Using Viewable CPM

Two aspects to be mindful of with vCPM bidding are frequency and placements.

Frequency:

This strategy compels Google to maximize the number of viewable impressions your ad garners. When applied to a limited audience, the probability of high frequency counts for individual users increases.

We’ve all experienced ads that seem to follow us across the internet. Therefore, while striving for maximum ad views, ensure you’re not overwhelming a small segment of your audience with excessive exposure to your brand.

Placements:

It’s crucial to remember that not all viewable impressions are equal. Just like any other display campaign, diligently monitor your placements report to prevent unwanted website associations.

10. Cost Per View (CPV)

Bidding on individual views is exclusively available for video ads. With Cost Per View, you define a campaign-level bid limit representing the maximum you’re willing to pay for each view or interaction with your video (whichever occurs first).

In this context, you’re only charged for a view if someone watches your video for at least 30 seconds (or the entire duration if it’s shorter than 30 seconds). Alternatively, if a viewer clicks on a link within the video or engages with other calls to action (such as app downloads), you’ll be billed for that specific interaction.

A notable advantage of CPV bidding is its ability to “bid up” when your ad appears alongside popular YouTube videos with a higher likelihood of generating a return.

Considerations When Using CPV

Exercise caution if your video campaigns have loosely defined targeting! If you’re attracting a massive volume of views at a low cost, CPV might not be the most suitable option.

Since you’re bidding on individual views, it’s prudent to spend strategically. This becomes challenging to gauge with broader targeting. Moreover, video views and average costs per view tend to be relatively inexpensive.

Consequently, CPV is an excellent strategy for highly targeted video campaigns in fiercely competitive landscapes. However, it’s not the optimal choice for those venturing into video advertising for the first time.

Selecting the Right Automated Bidding Strategy

Having covered all the automated bidding strategies, you might assume it’s time to choose one for your entire account. However, this is not the case.

One of the most significant advantages of automated bidding and bid management is the flexibility to adopt a tailored approach.

Google Ads allows for automated bidding strategy implementation at the ad group, campaign, or portfolio level, depending on the chosen strategy. This empowers you to apply different bid strategies to various segments of your account based on their specific goals.

When selecting a bid strategy, evaluate it at the campaign level. Determine if the strategy aligns with your objectives and whether you possess sufficient data to ensure its effectiveness (e.g., enough conversion volume for Target CPA to be impactful). If not, consider an alternative bid strategy, a portfolio-level strategy, or even adjustments to your account structure to leverage it more effectively later on.

Set It and Don’t Ignore It

Automated bid strategies in Google Ads offer a powerful way to save time while harnessing algorithms to optimize your account. However, their success hinges on careful evaluation and selection.

While automated bidding strategies demand less hands-on management compared to manual bidding, it’s crucial to avoid a “set it and forget it” mentality. Once implemented, establish reminders to periodically review their performance and ensure they remain aligned with your goals. Embrace the power of automation, but do so strategically and attentively.