What you have to consider with the different bidding variants of Google Ads, you can find out here.
Especially for those who are new to the topic of Google Ads (formerly Google AdWords), it is quite difficult to determine when to use which bidding strategy and what is actually behind each strategy. Therefore, with this article we would like to clarify which bidding strategy is most suitable in which situation, and which 3 strategies we personally favor …
1st Google Ads bidding strategy: Target CPA
The target CPA (cost per action or cost per conversion) is our favorite bidding strategy. Here the user specifies how much he is willing to pay for an action or conversion.
In concrete terms, this means that if you have defined a newsletter subscription or even a transaction in your store as a goal, you can use the bidding strategy target CPA to determine how much this specific conversion is worth to you.
If you want to grow quickly with your business, then set the maximum value to such a sum that you simply break even. Later on, you can sell more products and services to the customers you have gained through this strategy. Someone who has already bought something from you will buy again faster and easier than a stranger.
2. Google Ads bidding strategy: Target ROAS
With the target ROAS (return on advertising spend) you define your concrete return that you want to achieve per advertising euro spent. In this case, if you spend one euro on advertising, you want to achieve that you get back the defined value of x euros. This means:
If you spend €1 and want to generate a revenue of at least €8, the target ROAS must be at least 800%.
The prerequisites for target CPA and target ROAS are that you have successfully set up conversion tracking and have at least 15 conversions in the last 30 days as part of a search campaign.
Furthermore, you have to consider that this is only the return per spent advertising budget and not necessarily the return of the company. For example, if you were to run an online store for leather gloves, you would of course also have to cover the costs of materials, logistics, personnel, ancillary costs, etc. in addition to the advertising costs, i.e. all the company’s expenses in addition to the pure advertising costs.
For the concrete ROI – Return on Investment – these costs are easy to calculate. Referring to our calculation example from above, this means: If you have spent 1 € on Google advertising for a turnover of €8, you will have €7 left over for the remaining cost coverage of the company. Only after all expenses have been deducted, you can see how profitable your campaign really was.
3. Google Ads bidding strategy: Maximize clicks
This strategy is set by default. However, we can least recommend it. It is also completely unsuitable for newly set up accounts or campaigns.
The “Maximize clicks” action is, as the description suggests, the strategy of getting as many clicks as possible. In concrete terms, this means that this goal should be implemented completely independently of the price. Consequently, it does not matter whether the business goal is achieved or not. At the end of the day it is relatively uninteresting for you how many clicks you had on the website, if you could make no or only hardly profit!
You can’t buy anything from clicks and you can’t pay your employees with reports about your high click numbers. The primary purpose of a business is to create revenue and be profitable. If you don’t take this to heart, you have only built up a new hobby with your business and have failed economically.
So you need to be clear about what your business model is and optimize your business goal based on that. Any parameters that have only a limited direct influence on it will not get you anywhere.
The “maximize clicks” setting only makes sense for you if you intend to collect all possible data as quickly as possible. So if you want to know who you are basically addressing with your internet presence, the bidding strategy “maximize clicks” can make sense for a very short period of time.
The prerequisite is, of course, that you have enough cash flow to carry out this type of data collection and that you can afford to lose a few euros.
In no case should you run ads with this strategy in the long term. Maximizing clicks is suitable for pure data collection, but the price you would have to pay for it in the long run is simply too high.
To ideally meet your business goals, we definitely recommend you to choose other strategies.
4. Google Ads bidding strategy: Conversions
Here, Google’s bids are defined in such a way that as many conversions as possible are achieved, again regardless of how profitable they are. Google tries here to achieve as many actions related to the conversion as possible. If you want to pursue an upsell with this strategy, this bidding strategy can make sense to some extent.
So if you want to quasi-buy newsletter subscribers or customers for an initially low-priced product with Google, so that they later purchase something else in your store or use another service from you, you can consider this strategy.
To perform even better online, secure a free initial consultation with the online experts at Monkeys.Digital now!
5. Google Ads bidding strategy: Maximize conversion value
With the bidding strategy “Maximize conversion value”, the bids are adjusted in such a way that the individual conversion value is maximized.
If you run an online store, for example, the bids are set in such a way that you primarily reach the people who usually make a lot of purchases. Google Ads then targets precisely those people who often have a very well-filled shopping cart when placing orders.
However, this does not necessarily mean that you will achieve the highest profit:
This method can reduce the total volume, for example.
For example, you can recruit more of those customers who buy a lot, but you will either spend more money on this type of customer acquisition or you will have fewer customers overall, which would increase your profit much more.
6. Google Ads bidding strategy: targeted share of possible impressions
This bidding strategy in Google Ads helps you to increase the visibility of the company and is only available in the Google search network. You define how often you want to be on the top position and Google spends accordingly a lot of budget and outbids other competitors to achieve this.
The goal of this bidding strategy is to be seen and profitable sales do not matter. In short, you get great visibility at any cost!
Whether this is worth it? Probably not.
7. Google Ads bidding strategy: manual CPC and enhanced CPC strategy
The manual CPC (cost per click) is a very good way for you with a new account to limit how much you want to spend for a click. Here you manually specify the maximum budget that you are willing to pay for a click. This gives you more control over the maximum bids.
You can also choose to use the “Enhanced CPC” option when creating a campaign. Enhanced CPC is the only semi-automatic bidding strategy. You specify a maximum bid per click, but still allow Google some leeway. In the auction, Google can bid for you with this setup a maximum of 30% above, but also up to 100% below the specified bid.
To find out whether you should use the “Enhanced CPC” option for yourself, you can create two campaigns that you compare later:
One follows the normal “Manual CPC” bidding strategy and the other the “Enhanced CPC” strategy. After 4-6 weeks you compare both results and with the data you decide which strategy is more suitable for you.
Conclusion of the different bidding strategies for Google Ads
Google Ads offers you a total of 7 bidding strategies for campaigns. If you have not yet dealt with this topic in detail, the selection can be quite overwhelming.
Therefore, we summarize our three most important tips for Google Ads for you once again:
Use target CPA or target ROAS for campaigns with good conversion tracking.
Use manual CPC or Enhanced CPC for new accounts
Avoid the default setting “maximize clicks” and use “manual CPC” instead.
Would you have thought before that maximizing clicks is such an unsuccessful bidding strategy? We would be happy if you tell us your favorite strategy!
PS: If you want to get started in business online and need support with PPC like Google Ads, then secure a free initial consultation with the experts at Monkeys.Digital here!