Mastering AI-Powered PPC Bid Strategies: A Guide To Maximizing Performance via @sejournal, @brookeosmundson

Let’s talk about PPC bidding strategies. If you’ve ever felt like you’re throwing darts in the dark when it comes to picking the right one, you’re not alone.

When I first started in Google Ads, the only bidding strategy available was “Max CPC” bidding, meaning everything was manual.

Nowadays, there are many AI-powered bidding strategies to fit your diverse campaign needs.

These strategies aren’t exactly a “one size fits all” deal for your campaigns.

Not only are there more choices than ever to reach your goals, but the inputs you set at the campaign level are just as crucial for success.

The truth is that choosing the right bid strategy can be the difference between crushing your PPC goals or watching your budget go up in flames.

Let’s dive into the nitty-gritty of AI-powered bid strategies, or Smart Bidding strategies, and figure out how to maximize performance for each of your campaigns.

How Many PPC Bid Strategies Does Google Ads Have?

Google Ads offers multiple types of bidding strategies aimed at meeting the goals of all available campaign types.

These strategies use Google AI to optimize in every single auction, typically known as “real-time bidding.”

It takes many factors into consideration at the time of auction outside of your bidding strategy, including device, location, time of day, operating system, and many more.

Google categorizes their Smart Bidding strategies into three main goals:

Conversions. Clicks. Viewability.

It’s important to match your Google Ads bid strategies with the campaign’s specific advertising objectives.

If you’re not sure where to start with goals, consider these points when making a bid strategy decision:

Are you looking for users to take direct action on your website? Do you want to increase website traffic overall? How important is brand awareness to you? Are you looking to increase video engagement and interaction? Are you focused on product or brand consideration when users are actively shopping around?

Conversion-Based Bid Strategies

Currently, Google Ads offers these Smart Bidding strategies aimed at increasing conversions:

Target Cost per Action (CPA). Target Return on Ad Spend (ROAS). Maximize Conversions. Maximize Conversion Value. Enhanced Cost per Click (eCPC).

Click-Based Bid Strategies

If your main goal is gaining website traction, the only automated bid strategy currently available is Maximize Clicks.

Manual CPC bidding is still an option, but we’ll get to that later on in the article.

Visibility-Based Bid Strategies

Not all campaigns aim to capture the final conversion, and that’s ok!

You need to have some element of brand awareness coming in, otherwise the group of people who know about your product will continue to shrink.

If your campaign goals are focused on awareness, consider these automated PPC bidding strategies:

Target Impression Share. CPM. tCPM. vCPM.

Next, we’ll examine the main AI-powered PPC bidding strategy more granularly to get a better understanding of each one, as well as when it makes sense to choose that particular bid strategy.

Read more: PPC Automation Layering: How To Get More From Google Ads

Target Cost Per Action (CPA) Bidding

Target CPA lets you set the amount you’re willing to pay for a conversion. Google Ads uses machine learning to get as many conversions as possible at or below your set CPA.

Google then takes your Target CPA to set bids based on the likelihood of conversion from that particular user.

While some conversions may cost more than your Target CPA, others may cost less than your target, but overall, the Google Ads system tries to keep your cost per conversion at the level you set.

There are multiple use cases for choosing Target CPA bidding:

Historical conversion data is available. This bid strategy requires historical conversion data, so if you have ample campaign or account conversion data, this could be a good strategy for you. You need better budget control. It’s also good if you need to retain control over your CPA in order to manage the overall ROI of your PPC program. Conversion tracking is accurately set up. As long as there are no underlying issues with your conversion tracking, this bid strategy could be reliable for your campaigns.

For example, say you run an online boutique clothing website and know that acquiring a new customer at $50 will still be profitable. For your campaign, you choose the Target CPA bid strategy and set the limit to $50.

As you’re running your campaigns, the data shows you’ve consistently been acquiring new customers at $40. Because of this, the Google Ads system knows it can optimize bids further to get you more customers while still staying within that $50 limit.

Now, there are some limitations to Target CPA bidding to be aware of:

Limited budgets could reduce visibility. If you’ve set a competitive Target CPA, Google may limit your ad exposure or participation in the auction and reserve your budget for more expensive or competitive auctions. Essentially, you may see impressions and clicks decline as the system “conserves” budget expenditure for the most likely-to-purchase candidates. Misalignment of daily budget and Target CPA can reduce results. Say you have a daily budget of $50 for your campaign, but your Target CPA is set at $25. Your impressions may be vastly reduced because, in this scenario, you’d need to have a stellar conversion rate for the number of clicks you get in order to stay within that $25 CPA.

Target Return On Ad Spend (ROAS) Bidding

Target ROAS aims to achieve a specific return on ad spend. You set the desired ROAS, and Google Ads optimizes bids to maximize conversion value while hitting your target.

Similar to Target CPA, Google then takes your ROAS inputs to set bids based on the likelihood of a conversion from that particular user.

Some good use cases for using Target ROAS bidding for campaigns include:

Your goals are revenue-driven. Target ROAS is great for ecommerce businesses where goals are revenue-based. You have high-value transactions. This PPC bidding strategy can be especially effective for high-revenue transactions or a high volume of conversions. Proper conversion tracking is set up. Similar to Target CPA bidding, this strategy requires accurate conversion tracking. As long as tracking is accurate and validated, this can be a good choice for your campaigns.

The Target ROAS bid strategy is a great choice when you need to balance the cost of your PPC campaigns versus the revenue coming in.

Ultimately, it helps generate more revenue for every dollar spent.

For example, you have an online store that sells running shoes. Your average order value is $150, and you aim to have a 300% ROAS.

That means for every $1 you spend, you get back $3 in revenue. By setting a Target ROAS, Google optimizes campaign bids to focus on the specific conversions that will likely meet or exceed that 300% ROAS goal.

As your campaigns gain more historical sales data, you’ll notice that more of your dollars are going to those higher revenue-generating sales because of the goal setting.

With Target ROAS settings, remember that if you have an overall goal of 300% ROAS, that doesn’t mean every campaign you set should have that 300% goal.

When it comes to search campaigns, brand terms and non-brand terms are not created equal. Brand terms will likely have the highest ROAS because someone is actively searching for your brand, signaling a higher likelihood of purchase.

Non-brand terms, on the other hand, will be more competitive and costly, and likely won’t have the same ROAS as brand terms. So, be sure to set your ROAS goals at the campaign level accordingly.

Maximize Conversions Bidding

Maximize Conversions automatically sets bids to help you get the most conversions within your budget. 

This strategy aims at spending your entire campaign budget without having any ROAS or CPA limitations.

Maximize Conversions can be an ideal bid strategy if:

You have more budget flexibility. As mentioned above, this strategy is not constrained by CPA or ROAS targets. If you’re looking to drive as many conversions as possible and have the budget to do so, this strategy is right for you. You’re looking for quick wins. If you just launched a new product and conversion expectations are high, this is an ideal strategy. A broader audience is targeted. This strategy can be effective with a broader audience because there’s more of a likelihood for your ads to show as the system learns what a valuable customer looks like.

For example, your company just launched a new fitness app and needs to acquire users quickly.

By having a flexible budget, Maximize Conversions is chosen to drive as many downloads and signups as possible. Google will automatically adjust those bids to find the users most likely to convert.

This bid strategy is not for the faint of heart, especially for advertisers who have limited budgets or need to stay within certain performance constraints.

Maximize Conversion Value Bidding

Similar to Maximize Conversions, the Maximize Conversion Value strategy sets bids to help you get the most conversion value within your budget.

This strategy aims to optimize for conversion value while spending your entire campaign budget without having any ROAS or CPA limitations.

Maximize Conversions can be an ideal bid strategy if:

Conversion value is prioritized over volume. This bid strategy is suitable when the goal is to prioritize high-value conversions instead of the volume of conversions. Campaigns are revenue-focused. Maximize Conversion Value is great when maximizing revenue is important. Your products have multiple price points. This is an effective bid strategy when you have different products that vary in price. The system will learn to focus on the high-value transactions from users.

For example, you run an online wedding invitations company with higher price points. Your site also sells accessories that cost much less than the invitations.

Using the Maximize Conversion Value bidding strategy helps focus on those high-value transactions, like wedding invitations, to boost your revenue while spending your campaign budget.

As with each bidding strategy, there are some limitations to using the Maximize Conversions (and Value) strategies:

Performance is dependent on campaign budget. If the campaign budget is set too low, it will be difficult for Google Ads to effectively learn and optimize towards high-value conversions. Less control over specific types of conversions. If you’re measuring multiple conversion types that have values associated, this strategy doesn’t allow you to target the specific conversion types. Its aim is to look at the overall conversion value. This could lead to inefficiencies in performance metrics. While you may see an increase in revenue, you could also yield higher Cost per Acquisition, especially during more competitive markets.

At the end of the day, it’s up to you to decide if you have enough budget flexibility to utilize Maximize Conversions (or Value) or need to stay within certain ROAS or CPA constraints.

Read more: How To Get The Most Out Of Max Conversion Value And tROAS Bidding

Maximize Clicks Bidding

The Maximize Clicks bid strategy aims to get as many clicks as possible within your budget.

What’s nice about this strategy is that you can add “ceiling” bid limits for Google to not go over within the auction process.

Maximize Clicks is ideal for your campaigns if:

You’re looking to increase website traffic. If you’re less focused on conversion and looking to get as much traffic as possible, this strategy is for you. You’re running Top-of-Funnel (TOF) or Middle-of-Funnel (MOF) campaigns. Similar to the above, if your campaign goal is more about awareness generation and buyer consideration, Maximize Clicks is a great place to start. You’re setting up new campaigns with no history. Because many of the conversion-based bid strategies require historical data, setting campaigns to Maximize Clicks with a suitable maximum CPC limit can really help your campaigns take off quickly.

For example, you started a recipe blog website and just published a new guide on healthy swaps in your kitchen. Your primary goal is to drive as much traffic to that page as possible within your given budget.

Using the Maximize Clicks bid strategy will then aim to get you as many clicks to your site within that budget for the keywords you’re bidding on. Just remember to set a maximum CPC if you’re in a competitive industry!

Target Impression Share Bidding

This next PPC bidding strategy focuses mainly on the visibility of your campaigns, whereas the others focus on conversion or click-based outcomes.

Target Impression Share automatically sets bids to help ensure your ads achieve a specific impression share on the search results page. 

You can choose your goal to show your ads:

At the absolute top of the page. On the top of the page. Anywhere on the page of the search results.

Using the Target Impression Share strategy can help boost your campaigns if:

Brand awareness is top of mind. If the campaign’s main goal is maintaining a solid presence on Google or increasing visibility for your brand, this strategy is for you. You’re in a highly competitive market. In markets where competition is high and visibility to your brand is crucial. You’re running top-of-funnel keywords. Similar to brand awareness, you may be targeting keywords that aren’t conversion-focused and want your brand to be top of mind when users first start their purchase journey.

For example, you just launched a new fashion brand and want to ensure your ads are visible in a highly competitive space.

Your goal is to appear at the top of the Google search results page for keywords like “summer fashion trends” or “stylish summer outfits for women.” By choosing Target Impression Share, you can choose how often you’re willing to appear at the top of the page for the keywords you’re bidding on.

Keep in mind that by using this bid strategy, you may see higher-than-average CPCs. That’s because you’re paying extra for that coveted top space on the search results page.

Another example is setting your brand campaign on Target Impression Share to ensure your core brand terms are always covered.

Results have been mixed in my experience, as sometimes I’ll just see inflated CPCs on terms where I would’ve seen lower CPCs utilizing Maximize Conversions or Maximize Clicks.

What About Manual Bidding?

Manual CPC bidding is still around – for now.

Google has not indicated that it is removing this option, but we can never guarantee that it will always be there.

As the name says, Manual CPC bidding means you set the maximum CPCs you’re willing to pay. They can be set at the campaign, ad group, or keyword level.

The reason many have transformed their PPC bidding strategies to more AI-powered strategies from Google is that human real-time bidding simply can’t keep up with machine learning.

There are still use cases for brands who need to use Manual CPC and continue to use it to this day. Especially for brands that don’t have conversion data or are running small accounts, some just opt into this model for managing their Google Ads campaigns.

Read more: Do Manual Adjustments Still Make Sense With Automated Bidding?

Choose The Right Strategy For Your Specific Goals

So, there you have it – a breakdown of Google Ads’ AI-powered bid strategies and when to use them.

Remember, the key to PPC success is not just picking any strategy but choosing the right one for your specific goals and campaign needs.

Google’s machine learning outputs are usually the direct result of the inputs from the advertisers, so choose accordingly. And remember, they can be changed over time! Just make sure that your changes align with the overall business goals.

By understanding these strategies, you can make smarter decisions and get the most out of your PPC budget. Happy optimizing!

More resources: 

PPC Experts On AI In PPC: Potential & Limitations ChatGPT & PPC: 7 Ways SEMs Can Leverage AI Tools PPC Trends 2024

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