Mastering AI-Powered PPC Bid Strategies: A Guide To Maximizing Performance

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Let’s delve into PPC bidding strategies. If you’ve ever found yourself uncertain about choosing the right strategy, you’re not alone.

In my early days with Google Ads, the only option was ‘Max CPC’ bidding, entirely manual.

Today, there’s a range of AI-powered bidding strategies tailored to meet diverse campaign requirements.

These strategies don’t offer a ‘one size fits all’ solution for your campaigns.

With more choices than ever to achieve your objectives, the parameters you define at the campaign level are equally pivotal for success.

The reality is that selecting the appropriate bidding strategy can determine whether you meet or exceed your PPC goals, or see your budget diminish quickly.

Let’s explore the specifics of AI-powered bid strategies, often referred to as Smart Bidding strategies, and uncover how to optimize performance for each of your campaigns.

How Many PPC Bid Strategies Does Google Ads Have?

Google Ads provides a variety of bidding strategies designed to align with the objectives of different campaign types.

These strategies leverage Google’s AI to optimize bids in each individual auction, a process known as ‘real-time bidding.’

During each auction, numerous factors beyond your bidding strategy are taken into account, such as device type, location, time of day, operating system, and more.

Google classifies its Smart Bidding strategies into three primary objectives:

  • Conversions
  • Clicks
  • Viewability

Aligning your Google Ads bid strategies with the specific advertising goals of your campaign is crucial.

If you’re uncertain about which goals to prioritize, reflect on these considerations when determining your bid strategy:

  • Are you aiming for direct user actions on your website?
  • Do you seek to boost overall website traffic?
  • How critical is brand awareness to your objectives?
  • Are you aiming to enhance engagement with video content?
  • Are you focusing on product or brand consideration when users are actively comparing options?

Conversion-Based Bid Strategies

Currently, Google Ads provides these Smart Bidding strategies designed to enhance 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 primary objective is to increase website traffic, the sole automated bid strategy currently available is Maximize Clicks. Manual CPC bidding remains an alternative, which will be discussed later in the article.

Visibility-Based Bid Strategies

Not all campaigns are solely aimed at capturing the final conversion, and that’s perfectly acceptable.

It’s crucial to maintain a level of brand awareness, as without it, the group of people aware of your product will diminish over time.

For campaigns focused on awareness, consider these automated PPC bidding strategies:

  • Target Impression Share
  • CPM (Cost per Thousand Impressions)
  • tCPM (Target CPM)
  • vCPM (Viewable CPM)

Next, we’ll delve deeper into each primary AI-powered PPC bidding strategy to gain a clearer understanding of when it’s most appropriate to choose each one.

Target Cost Per Action (CPA) Bidding

Target CPA allows you to specify the amount you are willing to pay for a conversion. Google Ads employs machine learning to maximize the number of conversions achieved at or below your designated CPA.

Google adjusts bids based on the probability of conversion from individual users according to your Target CPA. While some conversions may exceed your Target CPA, others may cost less. However, the overall aim of the Google Ads system is to maintain your cost per conversion at the level you have set.

Here are various scenarios where selecting Target CPA bidding is advantageous:

  1. Availability of Historical Conversion Data: This bidding strategy relies on historical conversion data. If your campaigns or account have substantial conversion data, Target CPA can be a suitable choice.
  2. Need for Budget Control: Target CPA is beneficial when you require precise control over your Cost Per Acquisition (CPA) to manage your PPC program’s overall Return on Investment (ROI).
  3. Accurate Conversion Tracking: Assuming your conversion tracking is correctly configured without any issues, Target CPA bidding can reliably optimize your campaigns.

For instance, imagine managing an online boutique clothing store where acquiring a new customer at $50 remains profitable. Opting for the Target CPA strategy, you set the CPA limit at $50.

During your campaign’s runtime, data consistently shows that acquiring new customers costs around $40. As a result, Google Ads recognizes the potential to further optimize bids, securing more customers while adhering to the $50 ceiling.

Here are the considerations regarding the limitations of Target CPA bidding:

  1. Impact of Limited Budgets: Setting a competitive Target CPA could lead Google to limit your ad visibility. This means your ads might not participate in all auctions, especially those considered more expensive or competitive. Consequently, you may experience a decline in impressions and clicks as Google conserves budget for auctions where conversions are more likely.
  2. Daily Budget and Target CPA Misalignment: If your daily campaign budget is set at $50, but your Target CPA is set significantly lower at $25, you might encounter reduced impressions. This discrepancy arises because achieving a sufficient conversion rate from clicks within the $25 CPA limit becomes challenging. As a result, Google may limit your ad exposure to manage within the specified CPA constraint.

Target Return On Ad Spend (ROAS) Bidding

Target ROAS bidding is designed to achieve a specific return on ad spend by allowing you to set a desired ROAS. Google Ads then adjusts bids to maximize conversion value while aiming to meet your target. Similar to Target CPA, this strategy uses your ROAS goals to determine bids based on the likelihood of conversion from each user.

There are several scenarios where Target ROAS bidding is particularly beneficial:

  1. Revenue-driven goals: It is highly effective for ecommerce businesses that prioritize revenue-based objectives.
  2. High-value transactions: This bidding strategy is well-suited for campaigns involving high-revenue transactions or a significant volume of conversions.
  3. Accurate conversion tracking: Similar to Target CPA bidding, effective implementation relies on precise conversion tracking. When tracking is reliable and validated, Target ROAS can be a strategic choice for your advertising campaigns.

The Target ROAS bidding strategy is ideal for striking a balance between the expenses of your PPC campaigns and the revenue they generate. Its primary goal is to maximize revenue for every advertising dollar spent.

For instance, consider an online store selling running shoes where the average order value is $150, and the target ROAS is 300%. This means for every $1 invested in advertising, the aim is to generate $3 in revenue. By implementing Target ROAS, Google Ads adjusts bids to prioritize conversions that are likely to achieve or surpass this 300% ROAS objective. Thus, the strategy focuses on optimizing campaign performance towards maximizing revenue in alignment with specified ROAS targets.

As your campaigns accumulate more historical sales data, you’ll observe that a greater proportion of your advertising budget is allocated to those sales generating higher revenue, thanks to your goal settings.

When configuring Target ROAS, it’s crucial to understand that having an overarching goal of 300% ROAS doesn’t imply that every campaign should aim for exactly that figure.

In search campaigns, it’s important to differentiate between brand terms and non-brand terms. Brand terms typically yield higher ROAS because these searches indicate a direct interest in your brand, suggesting a higher likelihood of conversion.

Conversely, non-brand terms are often more competitive and expensive, and typically yield lower ROAS compared to brand terms. Therefore, it’s essential to set your ROAS goals at the campaign level accordingly, recognizing the distinct performance characteristics of brand and non-brand campaigns.

Maximize Conversions Bidding

Maximize Conversions is an automated bidding strategy designed to maximize the number of conversions within your allocated budget. Unlike strategies such as Target ROAS or Target CPA, it does not impose specific cost-per-acquisition (CPA) or return-on-ad-spend (ROAS) targets.

Here are situations where Maximize Conversions can be particularly advantageous:

  1. Budget flexibility: If you have the flexibility to spend your entire campaign budget to drive as many conversions as possible, without being constrained by CPA or ROAS targets, this strategy is suitable.
  2. New product launches: When launching a new product or service and aiming to achieve maximum conversions quickly, Maximize Conversions can help prioritize exposure and generate initial traction.
  3. Broad audience targeting: It is effective when targeting a broad audience because it allows the system to optimize and learn from a wide range of interactions, increasing the chances of reaching potential customers effectively.

As an illustration, imagine your company has recently launched a new fitness app and aims to rapidly attract users.

Opting for a flexible budget, you’ve selected Maximize Conversions to maximize downloads and sign-ups. Google will autonomously adjust bids to target users with the highest likelihood of conversion.

However, this bidding strategy may be challenging for advertisers with constrained budgets or specific performance targets to meet.

Maximize Conversion Value Bidding

Similar to Maximize Conversions, the Maximize Conversion Value strategy adjusts bids to help you achieve the highest possible conversion value within your allocated budget.

This strategy prioritizes optimizing for conversion value without strict ROAS (Return on Ad Spend) or CPA (Cost per Acquisition) constraints.

Maximize Conversion Value can be a suitable bid strategy if:

  • Conversion value is prioritized: It focuses on maximizing the total value of conversions rather than just the number of conversions.
  • Revenue-focused campaigns: Ideal when your primary goal is to maximize revenue generated from conversions.
  • Products with varied price points: Effective for campaigns with products or services that have diverse price ranges. The strategy learns to prioritize conversions that result in higher transaction values.

For instance, imagine you operate an online business specializing in wedding invitations, which are high-priced items, alongside cheaper accessories. Implementing the Maximize Conversion Value bidding strategy can enhance revenue by concentrating on high-value transactions, such as wedding invitations, while adhering to your campaign budget.

However, like all bidding strategies, there are inherent limitations with using Maximize Conversions (and Value) strategies:

  • Budget Dependency: The effectiveness of this strategy heavily relies on your campaign budget. If the budget is set too low, Google Ads may struggle to learn and optimize effectively towards high-value conversions.
  • Limited Control over Conversion Types: Unlike strategies that allow targeting specific conversion types, Maximize Conversion Value focuses on maximizing overall conversion value. This lack of specificity can potentially lead to inefficiencies in performance metrics.
  • Potential for Higher CPA: While revenue may increase, there’s a risk of experiencing higher Cost per Acquisition (CPA), especially in competitive markets.

Ultimately, the decision rests with you to determine whether your budget allows for leveraging Maximize Conversions (or Value), or if adhering to specific ROAS or CPA limits is necessary.

Maximize Clicks Bidding

The Maximize Clicks bidding strategy aims to maximize the number of clicks within your specified budget.

One advantage of this strategy is the ability to set bid limits, ensuring Google does not exceed a certain amount during the auction.

Maximize Clicks is well-suited for your campaigns if:

  • You want to boost website traffic. If your primary goal is increasing visits to your site and you’re less concerned about immediate conversions, this strategy is ideal.
  • You are running Top-of-Funnel (TOF) or Middle-of-Funnel (MOF) campaigns. Similarly, if your aim is to build awareness and consideration among potential buyers, Maximize Clicks is a strong starting point.
  • You are launching new campaigns with no historical data. Since many conversion-focused bid strategies rely on past performance data, starting with Maximize Clicks and setting a reasonable maximum CPC can rapidly accelerate your campaigns.

For instance, imagine you’ve launched a recipe blog and recently published a new guide about healthy kitchen swaps. Your main objective is to attract maximum traffic to this page within your allocated budget.

Implementing the Maximize Clicks bidding strategy would focus on maximizing clicks to your website for the keywords you’re targeting, while staying within your specified budget. It’s important to set a maximum cost-per-click (CPC), especially if you’re operating in a competitive industry, to control costs effectively. This approach can efficiently drive traffic to your content and enhance visibility for your new guide on healthy kitchen swaps.

Target Impression Share Bidding

This new PPC bidding approach prioritizes the exposure of your campaigns, whereas other strategies emphasize conversions or clicks.

Target Impression Share adjusts bids automatically to ensure your ads achieve a desired impression share on search results pages.

You can select your preference for where your ads appear:

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

Using the Target Impression Share strategy can be advantageous for your campaigns in the following scenarios:

  • Brand Awareness Focus: If your primary objective is to establish a strong presence on Google or increase visibility for your brand, this strategy is ideal. It ensures your ads are consistently displayed to users, enhancing brand recognition and recall.
  • Highly Competitive Markets: In industries where competition for visibility is intense, such as fashion or technology sectors, Target Impression Share helps maintain a prominent position in search results. This is crucial for standing out against competitors and capturing the attention of potential customers.
  • Top-of-Funnel Keywords: When targeting top-of-funnel keywords that are not directly conversion-focused but aim to attract potential customers at the beginning of their buying journey, this strategy ensures your brand remains visible and top of mind. It supports nurturing leads and influencing consideration early in the decision-making process.

For instance, if you’ve recently launched a new fashion brand and need to ensure your ads are visible amidst fierce competition, using Target Impression Share can effectively bolster your campaign’s visibility and brand awareness efforts.

If your aim is to secure top placement in Google search results for keywords such as “summer fashion trends” or “stylish summer outfits for women,” choosing Target Impression Share allows you to dictate how frequently your ads appear at the top of the page for these specific keywords.

It’s important to note that opting for this bidding strategy may lead to higher-than-average CPCs. This is because you’re investing more to ensure your ads occupy the premium top positions on the search results page.

For example, setting your brand campaign to Target Impression Share ensures consistent coverage for your core brand terms.

In my experience, the outcomes have been varied. There are instances where I’ve observed inflated CPCs compared to what I would have achieved using Maximize Conversions or Maximize Clicks, which typically aim for broader outcomes like conversions or clicks.

What About Manual Bidding?

Manual CPC bidding remains available, though its future isn’t certain. Google hasn’t signaled its removal, yet ongoing availability isn’t guaranteed.

As the name implies, Manual CPC bidding involves setting maximum CPCs at the campaign, ad group, or keyword level.

Many advertisers have shifted to AI-powered bidding strategies from Google due to the limitations of human real-time bidding compared to machine learning.

However, Manual CPC still serves purposes for brands lacking conversion data or managing small accounts, making it a viable option for managing Google Ads campaigns.

Choose The Right Strategy For Your Specific Goals

So, there you have it – an overview of Google Ads’ AI-powered bid strategies and their optimal uses.

Remember, PPC success hinges on selecting the strategy that best aligns with your goals and campaign requirements.

Google’s machine learning outcomes depend largely on the inputs provided by advertisers, so choose wisely. Keep in mind that strategies can be adjusted as needed over time, ensuring they align with overarching business objectives.

With a clear understanding of these strategies, you can make informed choices to maximize your PPC budget effectively. Happy optimizing!

Original news from SearchEngineJournal