Google Ads Bidding Strategies
Managing your online advertising budget is a daunting task. While many companies offer to do this work on your behalf, you may want to understand the basics in order to engage more effectively with your contractors, or you may be managing an emerging business and not yet have the budget to hire an advertising optimizer. Whatever your situation may be, in this article we hope to help you understand some of the factors that impact Google Ads bidding strategies, and how they can be optimized for your needs.
Bidding Strategies
First, you may be wondering: what is a bidding strategy? In Google Ads, the price you pay to place ads varies based on countless factors, from the popularity of the search terms you are using, to the profile of the target site, to whether you want to optimize ad clicks or focus on actual money spent at your business. When you set your Google Ad campaign, you can chose from a variety of ways to prioritize your spending, based on your campaign goals.
Automatic vs. Manual
You are given the option to utilise automatic or manual bidding. This means, do you want to be in charge of manual choosing and adjusting your bids (what you are willing to spend per advertising opportunity), or do you want to let Google’s algorithms attempt to optimize you bidding based on parameters you set and Google’s knowledge of your business? Unless you have a great deal of time to devote to your campaign, or your campaign is very simple, you will likely benefit from setting up automatic bidding.
Common Terms in Bidding
The following are terms commonly used in Google Ads bidding strategies, and how they influence the outcome of a bid.
- CPA: Cost per Acquisition. If your campaign is based on conversions (turning an ad viewer into a customer), this allows you to set how much money you want to spend on your campaign to acquire a single customer. It helps to know how much an average customer spends on a single purchase with your business to set a realistic budget – for example, if your average customer spends $20, you don’t want your CPA to be $19.
- ROAS: Return on Ad Spend. This metric refers to how much revenue you hope to generate from your advertising dollars. So, if you are hoping to generate $4 of revenue for every $1 you spend on your advertising campaign, your target ROAS would be 400%.
- CPC: Cost per Click. This is how much you are willing to spend to generate traffic to your website, whether or not it leads to a sale. It is useful to know how many people visit your business site versus how many make a sale; for example, if you make one sale for every 500 “clicks” or visits, you can see how a CPC bid will be far lower than a CPA bid.
- Maximise CPA/ROAS/CPC/etc: this is an option to let the Google algorithm attempt to maximise any of the above metrics for your advertising dollars. Some come at the expense of others, though, so it’s not advisable to always “maximise” a bidding strategy. For example, opting to “maximise clicks” doesn’t necessarily optimize your ROAS – you may end up with lots of clicks that don’t turn into dollars spent.
Google Ads bidding strategies are a complex series of campaign management strategies. Many businesses have found a critical market niche in specializing in managing these bidding strategies on your business’ behalf, and it’s worth consulting with a campaign manager to see if they can deliver better returns for your advertising dollars than you can if you manage it yourself.
