Understanding how different auction strategies work is a subject that can quickly prove to be formidable when you start on Google Ads …
Indeed, it is not easy to find exhaustive documentation on this subject from Google. This can more often than not hinder more than one account manager from going beyond manual CPC and pivoting towards more advanced strategies.
The purpose of this article is to help you demystify how Google’s bid strategies work, and therefore help you get a clearer picture before you get started with any of these strategies.
1. Why use automatic bidding strategies?
First of all, let’s try to understand why it makes sense to opt for bid strategies other than Manual CPC.
At first, you may not want your ads to be triggered against all user requests, and you may want adjust their distribution according to your business objectives.
Bidding strategies were created for this purpose. They allow you to better control the distribution of your ads, and to optimize your budget according to your objectives.
Adwords puts at your disposal 8 auction strategies, and therefore gives you a rather varied choice to reach your objectives.
2. (Semi) automatic bidding strategies
These are primarily bid strategies that are not directly focused on conversion, but that allow you to serve your ads based on predefined goals.
A. The CPC Optimizer (or eCPC)
Here, Adwords fixes for you automatically the max CPC needed to trigger your ads, i.e. Adwords will set your max CPC for you. You will thus be able to ensure the best possible visibility on your semantic field and your target market.
It’s a good bid strategy if you don’t want to manage your CPC. It is also interesting if your data is not enough to pass 100% on smart bidding, but which is often more expensive and sub optimal on the long term.
I advise you to opt for the eCPC in case you do not have the time to manage your campaigns in the CPC Manual, and you want to obtain data quickly on your target market for a migration to 100% automatic auction strategies.
B. Target upgrade rate and location target on the search page
The purpose of this strategy is to constantly position yourself above one of your competitors, or in a predefined place on the results of the search network.
It is very useful if you want suffocate your competitor on specific keywords but is also very expensive if your quality score on these keywords is lower than that of your competitor. Adwords will effectively bid until your max CPC exceeds your competitor’s AdRank. Bids can soar! Avoid this strategy on overly competitive keywords.
It’s also a great strategy if your main focus is visibility.
For example, in very competitive markets, you can use the target upgrade rate to target 4th place in search results. This is a good compromise that allows you to remain visible without having to pay very high CPCs to reach the second or the first position.
It’s also a great way to get an idea of volume on a semantic field or a defined keyword without breaking the bank.
By being placed in 4th position, you can get an idea of the monthly impression volume that your target market generates, without breaking the bank.
vs. Maximize clicks
This type of strategy may prove to be suboptimal in the sense that Adwords only seeks to maximize clicks and not quality of these.
On the other hand, it is a fairly adequate strategy if you simply want to attract as many people as possible to your website in order to create awareness of your offers and products.
It is also a strategy that can pay off on certain keywords on which you want to capture the largest market share possible, and steal traffic from your competitors.
In this case, you do not want to worry about the quality of the clicks, but simply steal a maximum of potential buyers from your competitors by making them click on your ads, rather than theirs.
It’s also an interesting strategy on very competitive keywords. Indeed, by giving the order to Google to maximize your clicks for a defined daily budget, the latter will not bid on the most competitive user requests (because too expensive, and therefore too budget-consuming, which would reduce the volume clicks possible on a day).
This strategy allows you to limit your CPCs in some way while maximizing your clicks. On the other hand, it may be that you buy only the traffic of “second zone” that is to say the traffic having lower CPCs, in a way that the rest of the competition does not wish to buy because less qualitative .
If your main goal is conversion, unless you have a perfect landing page, which converts excellently, don’t use this strategy in the first place.
3. 100% automatic bidding strategies
This is where things get more complex. Indeed, by introducing smart bidding focused on conversions, Google has rotated its model from quality score to conversion probability.
The paradigm is changing. It is therefore important to understand that the following auction strategies optimize the delivery of ads around the probability of conversion and no longer the quality score.
A. Maximize conversions
The purpose of this strategy is toto let Adwords spend your budget entirely in order to maximize your conversions.
Google’s algorithms will only focus on the likelihood of a user converting to determine whether or not your ad will be triggered.
As a result, if the algorithms calculate a high probability of conversion with a user request. So they’re going to do everything to get them to click on your ad … because your goal is to maximize conversions, right?
Google will bid automatically to secure the top spot and maximize the chance of conversion, which often leads to dramatic increases in CPCs and CPAs.
In order for this strategy to work best, Adwords algorithms need a broad history on your conversion data.
It is recommended to obtain a minimum of 15 conversions per month AND per campaign to properly use this bid strategy. Otherwise, the results will be clearly uninteresting.
2. Target ROAS
Understand by ROAS ” back to advertisements ». Opt for this strategy if you want each euro invested in Adwords to bring you a return on investment of around X%.
Fantastic isn’t it?
Except that in fact, your account must have a very important conversion history also to reach your ROAS goal (100 / month and per campaign also).
If you don’t have enough records, this bidding strategy can be counterproductive because Google will not be able to properly optimize your max CPC as well as showing your ads to achieve your goals.
On the other hand, this strategy requires a large number of tests before find the optimal ROAS for your business. Indeed, if your ROAS is too high, for example 1000%, Google will not broadcast your ad to people whose ROAS it estimates is 600%. This is unfortunate because it remains probably profitable people for your business. This bidding strategy is therefore reserved for experienced account managers.
I do not recommend starting with ROAS Target if this is the first time you have experienced smart bidding.
3. Target CPA
Last strategy which is quite close to that at ROAS, but which instead of optimizing for a return on target advertisements, optimizes for an acquisition cost (CPA) that you define in advance.
Like all automatic conversion-based bidding strategies, this is really effective if you have a substantial conversion history (15 / month and per campaign).
This bidding strategy works by juxtaposing the likelihood of conversion that Google assigns to each user request, as well as the price you are willing to pay for a conversion.
Roughly speaking, if for example your CPA limit is 20 €, and a user is assigned a conversion probability of 20%, and a CPC of 7 €, Google will do the following calculation: CPA = 7 € * 5 = 35 € (it will take on average 5 clicks to generate a conversion).
35 € being higher than your target ceiling of 25 €, Google will therefore seek to lower the CPC assigned to this request (and therefore your average position). If the CPC has to go too low to reach your CPA limit, based on what the competition is willing to pay, then your ad will not run.
So you understand that the lower your CPA, the less you will be disseminated. Also, the higher it is, the more Google will take the liberty of keeping high CPCs when the ads are shown.
Finding the right CPA that allows a good compromise between broadcast and CPC is therefore not easy, and requires a large number of tests to find the optimal CPA!
Your turn now ! Which bidding strategy seems most relevant to you? The most complex? The least effective?
Don’t hesitate to share your experiences! 🙂