PPC bidding strategy illustration

When we talk about bidding strategy in PPC, itโ€™s exactly as it sounds. We are literally bidding to get our ad displayed on search engines like Google.

In this article weโ€™ll describe in detail what bidding strategies are available to you, and what the optimal PPC bidding strategy is based on your current situation.

Before you even start with bidding however, make sure all of the following points are optimized for:

What is Bidding in PPC?

A PPC bid (or keyword bid) within Google Ads, is a bid placed in a pay-per-click auction to secure the placement of an advert at the top of search results. 

Online businesses will bid on specific keywords in an attempt to secure ad space. This is commonly used in Google Ads, where a bid placed in the auction to help secure the ad space for search terms relevant to their business.

The higher bid will typically win, but Google also takes into account other factors such as the quality of the advert & and the quality of the page being advertised. 

PPC Bidding Strategy

๐Ÿค– Automated Bidding - A New Age

Nowadays, automated bidding strategies (also known as smart bidding strategies) will work best unless you have very low conversion data. 

๐Ÿค– Googleโ€™s โ€œSmart Biddingโ€ types are completely AI-driven and automated, which means you do not have to set and price per bid yourself, Google will take care of it for you.  

The technology has come a very long way, and automated smart bidding is very impressive. 

How automated bidding works

Think of automated bidding (Smart bidding) as a prediction machine.

Google analyzes thousands of data points (like search terms, user information, device, time of day, search history etc.) in real-time for every auction.

Google then uses that data to predict the likelihood of someone converting (buying, signing up, etc.)

It automatically sets the perfect bid for each auction to maximize your chances of getting a conversion at your desired cost.

It's an incredible feat of machine-learning advancement, and you can read more about the complexities of how it works in this guide.

This is just one of the many types of automation that ad platforms are starting to roll out with the power of AI.

6 Types of Automated Bidding

  • Target CPA (Cost-Per-Acquisition): You set a target cost for each conversion, and Smart Bidding gets you there.
  • Target ROAS (Return On Ad Spend): Aim for a specific ROAS, and Smart Bidding optimizes for that percentage.
  • Target Impression Share: Aims to bid as high as possible to give you the maximum impression share on Google.
  • Maximize conversions: Get as many conversions as possible within your budget.
  • Maximize conversion value: Focus on getting the most valuable conversions (high-spending customers).
  • Maximize clicks: This is where Google's algorithm will serve your advert in a way to maximize the number of clicks to your website from your budget. It sounds good, but it'll often push low-value customers. 

Automated Bidding Only Works If...

  • You have conversion tracking set up and running effectively.
  • You are checking lead-quality & feeding qualified leads back to Google ads.
  • Should really have 30+ conversions a month for maximum impact.
  • It takes time for Smart Bidding to learn, so be patient and give it some data.

Manual Bidding is Still Relevant

Manual Bidding - Still an Option

The old bidding strategies are still available and open to every advertiser however, and many brand new accounts should still go down this route.

2 Types of Manual Bidding Exist - 

  1. Manual CPC - You can set a maximum price on the cost of someone clicking on your ads.
  2. Enhanced CPC - Similar to Manual CPC, but this strategy raises your manual bids in situations that seem more likely to lead to a sale or other conversion on your website, and lowers your bid for situations that seem less likely to lead to a conversion.

When to use Manual Bidding?

You should use manual bidding if you have a brand new Google ads account and do not yet have enough conversion data to feed Google with.

This is because smart bidding strategies (automated bidding) is all based on machine learning, and if the machine doesn't have any existing data to work from, then those automated bidding strategies won't work.

๐Ÿ‘‰ But generally speaking once you have >30 conversions per month, automated bidding will outperform manual bidding.

How to Think About Bidding ๐Ÿค”

Our bidding strategy on Google boils down to achieving 2 goals:

  1. Decrease bids on low performing keywords / ad groups / campaigns.
  2. Increase bids on high performing keywords / ad groups / campaigns.

Thatโ€™s literally all weโ€™re attempting to do.

If high performing keywords or ad groups are performing really well, then logically we want to maximize our impression-share and get more clicks from those high-performing ads. 

๐Ÿ‘‰ I've decided to adjust my bids, now what?

As yourself the following questions:

  1. How much do I adjust my bid by? 
  2. How exactly is my performing going? How to tell what low performance is?
  3. Am I tracking LTV or first purchase only?

Answering these questions will all help guide you to a sensible decision, but we'll have more on this below.

Ultimately when setting our bidding strategy, all we want to know is this...

SHOULD we adjust bids on our keywords / ad groups / campaigns

And if so, SHOULD we make them higher or lower?

That's all there is to it.

PPC Campaign Audit

Using Data for Bidding Decisions

Here's a simple cheat sheet to help you look at your performance data and then make a decision about your bidding strategy.

๐Ÿ‘€ Look at the following:

  1. Performance of keyword / ad group last 7 days
  2. Performance of keyword / ad group last 90 days

๐Ÿ’ก Super important to check search impression share as well.

This is because if an ad is super profitable, we might be tempted to increase the bid.

However, if weโ€™re already dominating the market and outbidding all competitors, then weโ€™re just costing ourselves money with no benefit! Weโ€™re already the highest bidder and have maximum impresion share for our ads!

On the flip side, if we have super profitable ads that have a low impression share, we can CRANK UP THE BIDS and expect to profit wildly! ๐Ÿค‘

This is the cornerstone of our PPC agency - We want to discover those high-performing ads, and push as hard as we can on them to generate more profit for our clients.

PPC Bidding Strategy Cheat Sheet

Let's go through each PPC bidding strategy and examine when you may decide to use them.

Manual Bidding

This covers both manual CPC and enhanced CPC bidding strategies.

When to Use โœ…

  • You have a brand-new Google ads account.
  • You don't have any data and want to feed some in before transitioning to automated bidding.
  • Your have a low spend or expect to get < 30 conversions per month.
  • You already tested automated bidding and it didn't work. 

When to Avoid โŒ

  • You just don't have all the data Google has. 
  • Automated bidding has come a long way, it will normally outperform you.

Maximize Conversions

When to Use โœ…

  • You have good conversions data and can't seem to spend your ads budget.
  • You are no underperforming you target KPIs like cost to acquire a customer.
  • We see lead-generation companies (e.g. travel agents or builders) perform best here.

When to Avoid โŒ

  • It'll spend your money and pay lots to earn additional conversions 
  • You really care about profitability in your Google ads

Maximize Conversion Value

When to Use โœ…

  • You want to attract the highest value customers and want to pay more for them.
  • You have good conversions data and can't seem to spend your ads budget.
  • You have variable conversion values (e.g. Ecommerce stores running PPC)
  • Usually works best with Google shopping campaigns.

When to Avoid โŒ

  • It'll spend your money to find the best possible conversions. 
  • You want a more balanced option.

Maximize Clicks

When to Use โœ…

  • You want to get data rapidly for brand new accounts (it's a solid alternative to manual CPC in this case)
  • If your account has incredible conversion performance.
  • You just launched a new product and want to get as many eyeballs on it as possible.
  • You're promoting a piece of content or something that's more about awareness than conversion.

P.S. We do like using maximize clicks at our agency to get a lot of data into the account fast and help us make adjustments. 

When to Avoid โŒ

  • You really care about click quality.
  • You don't want low quality leads coming in.
  • You're limited by budget and prefer efficiency. 
  • If CPA and ROAS are important, you should use other automated bidding strategies instead.

Target CPA

When to Use โœ…

  • You have a good volume of conversions >30 per month. 
  • Efficiency is important to you - You really want to have a predictable CPA (cost per acquisition) and not go over it. 
  • This is a great option once you have a lot of data and want a steady, predictable account.
  • You are a running PPC for a lead generation business with solid data.

When to Avoid โŒ

  • You have <20 conversions per month. 
  • You need to immediately lower your CPA when your account is underperforming. 

Target ROAS

When to Use โœ…

  • Revenue based / shopping campaigns. 
  • You want a predictable ROAS (return on ad spend) 
  • You have lots and lots of reliable data. Ideally >50 conversions per month.
  • Better for shopping and ecommerce accounts.

When to Avoid โŒ

  • You are not tracking conversion value.
  • You're a lead generation company and are not feeding back offline conversion data to Google Ads.

Target Impression Share

When to Use โœ…

  • Perfect for brand campaigns. 
    • Note that if you're using a significant budget on your brand campaigns, you should considering using a brand monitoring tool to see who else is bidding on your brand keywords.
  • You're happy with aggressive bid strategy.
  • You are confident that your conversion rate is very strong.

When to Avoid โŒ

  • If you aren't confident that your site converts well.
  • Only use on non-brand campaigns if you convert like crazy. 

Super Cheat Sheet

If you want an even more consolidated cheat sheet, here's my personal cheat sheet...

  • Use manual bidding or maximize clicks for completely new accounts to gather data.
  • Use target CPA for lead-generation businesses after you've got strong data >30 conversions per month.
  • Use target ROAS for ecommerce businesses after you've got strong conversion data >50 conversions per month.
  • Use target impression share only for your brand campaigns.
  • Use maximize conversions if you want to scale fast, budget isn't an issue and you're confident that you have a well-oiled conversion machine on your hands.

Bidding Can Get Confusing

Many people get confused with Google Ads, because they assume that if they increase their budget by 50%, they will automatically get 50% more conversions.

But it simply doesn't work like that.

If you have a lower impressions rate, then your cost per conversion will actually be cheaper.

Doesn't make sense? Let's explain.

Costs are lower because Google's bidding system can be selective.

Imagine there are 100,000 ad views available, but you only need 10,000 to reach your sales goals. Google cherry-picks the leads for you, adjusting your ads visbility as needed and ensuring you hit your targets.

When you're only targeting the bottom 20% of available ad views, it's actually easy to succeed it PPC.

This is because the competition is less intense at the lower end of the bidding auction.

However, at the top 20% of impressions things get much more competitive. 

If you're trying to maximize impressions, you are essentially telling Google "Make sure we show up on Google Ads every single time. We don't care if it's inefficient and lowers our cost per conversion. We want to dominate the market and we're willing to pay more for it."

You're demanding maximum visbility, and paying the price for it.

This strategy can become costly. While aiming for a 100% view rate might seem ideal, once you surpass 70-90% visibility, your costs can skyrocket, and your return on ad spend (ROAS) may plummet. You might get a few more conversions, but they're not cost-effective unless you're a major advertiser focusing on volume over efficiency.

It's when we reach this breaking point that our cost per conversion can go through the roof. If we push too aggressively, it can lead to massively diminishing return on ad spend. 

That's why it's all about balance.

Sure, if our mandate is to be as aggressive and possible and dominate a particular market, with a very lenient ROAS goal, then that's fine.

But most advertisers still want value for money even as they scale.

That's where professional PPC marketers can help to find the right balance. 

Conversion costs will rise with growth...

As we've discussed, it's actually pretty easy to get success in PPC if you are only targeting a small portion of impressions - perhaps single keyword ad groups (SKAGs) that you know convert like crazy.

Incidentally, that's why we're not particularly impressed when agencies show crazy ROAS numbers on campaigns with limited impression share.

That's all fine and well if your business is happy with sales leads and steady growth - If advertising is working for your goals, then fantastic! 

But where it starts to get difficult is when the pressure is on to get more out of a larger advertising budget to push business growth more aggressively.

There comes a point where you simply must settle for a higher cost per conversion. 

With all of that said, don't just take my word for it! 

We encourage you to test everything in PPC. It's the only way to know with clear evidence what bidding strategy will work.

PPC Consulting Brainstorming

Starting Bids on New Account

If you're entirely new to PPC and Google Ads, then you'll need to know what your starting bid should look like.

There's a few considerations to make here:

๐Ÿ‘‰ Budget - What's your monthly budget for advertising spend?

  • Let's say your budget is $6,000 per month.

๐Ÿ‘‰ Competitor Analysis - Research typically what companies in your space might expect to pay per click? You can use tools like SEMRush and Ahrefs to help guide this.

  • Let's say you're a dentist and you're going to pay $3 on average per click.

๐Ÿ‘‰ Clicks - Given your monthly budget and based on your research, how many clicks might you expect to receive?

  • If we divide our budget ($6,000) by $3 per click, we can expect to get 2,000 clicks per month.

๐Ÿ‘‰ Customer Lifetime Value - How much do we expect a customer to spend with us over their lifetime?

  • Let's say it's $5,000 and our profit is $1,000 with a 20% profit margin.

๐Ÿ‘‰ Conversion Rate - Now this is going to be an assumption on a new account, but let's assume it's 5% 

๐Ÿ’ก Bottom line:

  • Budget is $6000/ month
  • $3 CPC across the board
  • 2,000 clicks per month
  • 100 conversions per month 
  • = $100,000 lifetime profit per month

Now obviously this is a ridiculously profitable example, but based on those numbers and projections, we'd be more than delighted to pay $3 CPC to start with, and to be honest if those numbers are accurate we could easily go all the way up to $15+ and still remain very profitable.

Key Takeaway

To get a rough idea of starting bid, you need to run some numbers and do some projections.

Just estimate roughly what's going in your industry, and run your numbers to estimate how much you'd ideally like to bid to have a profitable ads account. 

Starting Bids on Existing Account

Now let's assume you've just come into a Google ads account that already has a ton of history and conversion data.

Will fortunately, that's going to be much easier to adjust your bidding strategy!

  • Just use the strategies on the account as a current guideline.
  • See which campaigns are performing / underperforming and consider modest bid adjustments on those. 
  • See which keywords are performing / underperforming nd consider modest bid adjustments on those. 

What Next?

If you've exhausted all of your options when it comes to bidding strategy, then go back to the basics of PPC account management:

  • Are you adverts solid?
  • Are your landing pages solid?
  • Is the website converting well?
  • Is the page experience great for visitors?
  • Are you doing re-targeting and re-marketing?
  • How can you increase your average order value? (this will make more difference than improving anything else!) 
Stewart Dunlop