Pros & Cons Of The Different Automated Bidding Strategies In Google Ads

As machine learning develops, so too does the AI driven solutions available to marketers.

Google Ads is one platform that has developed a range of AI driven Automated Bid Strategies.

Starting with Enhanced CPC, there are now a range of different bid strategies available, from Maximise Conversions to Target CPA or ROAS, to Maximise Clicks and more.

But which one is right for your campaign and commercial objectives?

The answer isn’t always clear and there’s certain things you need to be aware of with each bid strategy and how they work, in order to configure and manage your campaigns effectively for maximum performance.

In this video, Reef’s Head of Performance Media, Matt Yeadon, walks you through each bid strategy, how the different strategies work, the ‘gotcha’s’ to look out for and the importance of testing and experimentation.

Key Timestamps:

  • Enhanced CPC (1:42)
  • Maximise Conversions (3:21)
  • Target CPA (5:54)
  • Target Return On Ad Spend (8:48)
  • Maximise Clicks (9:57)
  • Other Bid Strategies (11:48)

Video Transcript

Scott Pittman:
Hi everyone, and welcome to another episode of Ask, Learn, Grow, where the Reef team answer questions, share insights, and discuss topics from the digital marketing industry.

Joined today with Matt Yeadon, Head of Performance Media at Reef, and we’re going to talk about bid strategies.

We’ve mentioned bid strategies in a recent video too, but we’re going to take this a level deeper in this video, and we’re going to go through each bid strategy and have a look at the pros and cons and ins and outs of each one.

So Matt, do you want to take over and lead the way into the first one?

Matt Yeadon:
Yeah, so like Scott said, I’ll dig into each of the bidding strategies that are available in Google Ads platforms. I won’t be looking at stuff available in DoubleClick or Kenshoo or Marin or even Bing, for that matter, it’s purely just Google Ads bid strategies.

I’ll go through the top five that we use. There are others that I’ll mention right at the end of the video, but these are the five most common ones that we use.

What we tend to get asked is:

“What are bidding strategies? What are they good for? And what are the pitfalls we see with bidding strategies as a whole?”

So with that said, the ones I’ll look at is

  • Enhanced CPC, which is a bidding strategy ‘introduction’, followed by
  • Maximise Conversions
  • Maximize Clicks
  • Target CPA, and then
  • Target ROAS

So, to begin with, we’ll just jump into Enhanced CPC…

Enhanced CPC is the first step into the world of Automated Bid Strategies

It works like other bidding strategies, like Max Conversions, which I’ll talk about in a moment, in that Google works out the likelihood that a single user is going to convert on whatever conversion point you’ve set up for the account, based on a multitude of factors.

Some of those factors might be previous websites that you’ve explored, things that you’ve shown interest in, where you’ve been, apps that you might use, but it’ll also take into consideration people who have converted, what did their behaviour patterns look like online?

So this is kind of the first step and the reason I say it’s the first step is it still allows for some manual bidding.

So you can still set a ceiling bid limit or a ceiling CPC on your keywords, but then hand the reigns over to Google a little bit, to say:

“Hey, you’re free to move the bid up and down as you so please, within a minimal and a maximum range.”

So that’s the first foray into bidding strategies.

Downside to this is you’re still doing a lot of heavy lifting, in terms of your bids.

So you’re still determining, “Oh, do I want to spend $12? Or do I want to bring that down to $6?”

You’re still spending a lot of time actually invested into adjusting your CPC bids on individual keywords… which is the problem a lot of the other bidding strategies solve.

So that’s Enhanced CPC.

Scott Pittman:

Cool. So where would you go next? What’s the next one, the kind of natural progression to talk about, in terms of the next biding strategy?

Matt Yeadon:

So the next one would be Maximise Conversions. This is what Google calls a fully automated, fully machine learning driven, bidding strategy.

The key difference with this one, is it takes away your ability to do manual bid adjustments. That’s stripped out of the account completely.

All you need to do, is give the campaign a daily budget, say $250 a day, and what your conversion goal is, and the account will optimise towards that conversion goal.

As it says in the name Maximise Conversions, the aim is to drive as many conversions as possible, while spending your daily budget.

Downside to this bidding strategy though, is you need to have Google Analytics set up correctly and you need your tagging in place. If any of your conversions aren’t firing properly, they’re not set up or configured correctly, that means you’re going to see worse performance on a Maximise Conversion bid strategy.

The other is, you have no control over CPCs anymore.

You can see in some industry verticals, like say for example finance, your CPC bids, where it’s a very competitive market, if Google thinks that someone’s going to convert, it’ll drive that CPC up to $100, $200, and you won’t be able to do anything about it, except pull your daily spend down.

Which is another downside. Changing your daily budget also causes the bidding algorithm to go into a learning period again.

A learning period for these things, for these bidding algorithms is about three to five days, where it’s working on your account, working out how much to spend per day, what an average user looks like who’s going to convert, a whole bunch of different metrics it takes into consideration, that’ll reset your learning phase for the account again.

So, that’s Maximise Conversions. Really handy at getting you as many conversions as possible, but your tagging needs to be set up correctly, you need to ensure that you’re feeding it good quality data, and you’re not making too many adjustments to your overall campaign budgets, otherwise it’s going to reset it.

Scott Pittman:

Really good considerations there. Because I think quite a lot of people might look at that and say, “Maximise Conversions? Well, yeah, I want as many conversions as possible, so that’s got to be the right one.”

Yeah, maybe. There’s some important considerations, like you’ve just highlighted.

Matt Yeadon:

Yeah.

Scott Pittman:

CPCs and the budget. So it’s thinking about all those different details, when you’ve decided on the right, most appropriate bid strategy. Cool. Okay. So what’s the next bid strategy that we want to break down?

Matt Yeadon:

So, Maximise Conversions is really good for a brand new account, say after you’ve been running Enhanced CPC for a month or two. The next one that you’d want to test is Target CPA.

So target CPA, just as it says in the name, you just want to target a particular CPA for your campaign. It’ll work to optimise your campaigns towards that goal.

What Google will do, is just optimise your bids. So same thing, we hand away the ability to control our bids, that goes straight over to Google, to drive performance in line with our goal CPA.

What you’ll find, where a lot of people tend to get a bit nervous is, say I had a CPA of $150, some days that might be $250 that you get as your CPA average. But the next day it might be $100.

The important thing with all these bidding strategies, is not to look at them on a daily basis, it’s to look at them on a monthly basis to see if it’s hitting it’s target.

Daily adjustments, these accounts just don’t work and the Google Ads platform has been gradually moving away from daily budget, or daily adjustments to monthly ones.

Keep an eye on the CPA target throughout a whole month, rather than a single day. Because there will be days where it’ll spend more and get you a CPA that’s double what you’re aiming for, but the long term trend will balance out.

That’s how the account will balance out over the long haul.

Scott Pittman:

And would I be right in saying that also, even if the CPA isn’t necessarily too important to you, therefore you think that Maximise Conversions might be better, it’s still good to experiment and test between the different strategies, just to get the highest level of performance from the campaigns.

Matt Yeadon:

Yeah, absolutely. So testing, definitely.

What I’d recommend doing is, if you’re running Maximise Conversions already, run Target CPA as an experiment against max conversions and then see if you get a better CPA performance out of your target CPA campaign.

Scott Pittman:

Great.

Matt Yeadon:

If you do, great. I wouldn’t blanket roll this out. A lot of this stuff needs to be done slow and steady. It’s not something where you can just flick a switch and turn it off.

It’s also not a magician. You can’t give it a ridiculous CPA.

So, running Maximise Conversions, if you’re getting $150 CPA, don’t run a target CPA campaign with a $20 target. That won’t work.

I’ve seen so many people do that. It won’t work. Gradually nudge it down over the long term. It’s all about long term gains, not very short term.

The account will spiral out of control if you do that. So just slow and steady in the account and experiment often. Always experiment.

Scott Pittman:

The scalpel rather than the axe.

Matt Yeadon:

Yeah, exactly. Yeah.

Scott Pittman:

Cool. Okay. And what’s the next bidding strategy we want to break down?

Matt Yeadon:

Target ROAS is nearly identical to Target CPA, but instead we’re looking at a return on ad spend. Here Google’s predicting future conversion value performance.

With this strategy though, we can set a minimum and maximum bid limits, which is great.

We can still tell Google, “Hey, I don’t want to spend $200 on a finance keyword.” However, Google don’t recommend we do that, but there are some instances where the client might push back and say, “We just don’t have the budget to spend on a $200 CPC.”

So definitely use it with caution, because if you do have bids in there with a ceiling limit, that’s going to impede the bidding algorithms progress. It won’t be able to bid as efficiently as it usually would.

So, that would probably be the downside to it is, you can change your bid limits, but in doing so, you do restrict the machine learning algorithm’s capacity to optimise the account.

Scott Pittman:

Cool. And the next bidding strategy please, Sir.

Matt Yeadon:

Finally, it’s Maximise Clicks.

So Maximise Clicks, the name gives it away. Google will just try to give you as many clicks as possible, with paid search.

So this is great for accounts where their primary KPI is click volume and they might not necessarily have a conversion attached to it.

It’s also great for accounts that might not have their conversion tracking in place yet, it’s still in the process of being set up or they need to get traffic through the site quickly.

This is a great bidding algorithm to do that. So you can just apply that and get as much traffic through as possible.

We manage a lot of Google Grants accounts, so Maximise Clicks is helpful for generating a lot of Google Grants traffic through to the website, because just having a bidding strategy on the account will remove that $2 CPC cap that Google has. So it’s a great way to drive traffic.

Downside to it obviously though is, it’s optimising towards people who are likely to click an ad. So will bid very aggressively to get as much traffic through the site as possible, but it may sacrifice conversion performance and it may sacrifice the quality of the click that you’re actually getting.

So that would be the downside to maximise clicks.

Scott Pittman:

So, like you said before, the key is experimentation.

Well, first of all, choosing the strategy that fits your specific business case and objectives and commercial metrics, but then experimenting using the scalpel all the time, very slow, monitored, calculated changes.

And if you do that skill-fully, then the performance of the account should continue to increase, until you get to a point where you’ve got a really a strong, efficiently run account, using the most appropriate bid strategy.

Matt Yeadon:

Exactly.

Scott Pittman:

Cool. Anything else to add? Just before we…

Matt Yeadon:

There are other bidding strategies that haven’t been included.

So you’ve got other ones, like target impression share, which is, you want to go for a particular percentage of impression share, target search page location, so where you want to appear in the SERP, target outranking share, and then cost per thousand viewable impressions, which is more appropriate to something like YouTube or to Skype.

With all the bidding strategies, like Scott said, highly suggest you experiment first.

So experiment and experiment often with any of the bidding strategies.

They are a useful tool, but they are just a tool and sometimes they’re not suitable for the job. So always test and learn with the accounts and see how things go.

And keep it slow and steady, don’t just blanket roll them out on all the accounts and expect to see overnight success. It’s a very slow methodical approach that you need to take.

Scott Pittman:

Great stuff. Solid advice there, Matt. Thanks a lot for your time today.

That wraps up today’s call. So if anyone’s got any questions about bid strategies or anything digital marketing related, please feel free to get in touch and we’ll see what we can do.

If you’ve got any questions you’d like to see the team answer in a future video, send them in and we’ll see if we can schedule that in for you too.

Don’t forget to subscribe to the channel to be notified when the next video is available. Apart from that, thanks for watching and enjoy the rest of the day.

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