last Updated 18 April 2024

What Do the Different Bidding Options Mean in Google Ads and Which Bid Strategy is Best?

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If you've read my article about how the Google Ads auction works, you'll know that it uses a bidding system to help decide which ads appear and in which order, each time someone runs a Google search.

When Google Ads (or AdWords as it was back then) first launched, there was only one bidding option and this required advertisers to manually set a maximum bid that would apply either to individual keywords or to all the keywords in a particular ad group. 

Over the years, new bidding options have been added and so today Google Ads offers a total of twelve different bidding strategies for advertisers to choose from.

Your bidding strategy will play a big part in determining the costs and the results you get from your Google Ads campaigns. In this article, I'm going to explain what all the different bidding options are so as you can make an informed decision about which one is going to be best for you.

1

Manual CPC Bidding

Manual cost per click (CPC) bidding is the original bidding strategy that I mentioned in the above introduction. With the Manual CPC option you set a maximum bid for different ad groups, placements, and keywords. 


This strategy is the one I most commonly use for my own campaigns and for my clients' campaigns. It requires some experience to understand how to set bids at the most profitable level. And you need to be willing to commit time to monitoring your results and fine-tuning your bids based on how all your different keywords perform.


But on the plus side, Manual CPC bidding gives you lots of control over your expenses and it allows you to scale your campaigns by increasing the maximum cost per click for high-performing keywords.


The Manual CPC bidding option can be combined with Enhanced Cost Per Click (ECPC) bidding.

2

Enhanced CPC Bidding

Enhanced CPC allows Google to automatically increase or decrease your manual bids for a particular auction if it thinks that's in your best interests.


For example, with ECPC enabled, Google can increase your bid in situations where its algorithm suggests you have a strong chance of getting a conversion from a particular search query.


So sometimes you'll pay more than the maximum bid you set and sometimes you might pay a lot less. But Google will try to ensure that your average CPC doesn't exceed your maximum bid.


By using ECPC you can avoid wasting money on trying to rank for search terms that are too competitive, by letting Google lower the bidding. And you can benefit from your bids being increased automatically when there is lower competition and you have a higher chance of getting a conversion.

3

Target CPA Bidding

The Target Cost Per Acquisition (CPA) bid strategy can help you when your goal is to get more conversions from your Google Ads campaigns.


Before you start using this option, you need to know how much money you can spend per conversion to be profitable. For example, if you make an average of £100 profit per conversion, you need to be pay less than this amount for each conversion that Google Ads generates.


Target CPA is an automated bidding option. If you use it, Google will automatically set your bids in such a way as to try to get you the maximum number of conversions whilst keeping within the CPA limit that you've specified.

4

Target Return on Ad Spend (ROAS)

Target ROAS is a bidding option that aims to get you a higher conversion value based on the return that you want to achieve from your ad spend.


You set the Target ROAS bid as a percentage. For example, if you wanted to get £5 worth of conversion value back for every £1 spent, your Target ROAS would be 500%.


Once you have set your Target ROAS, Google automatically optimises your bids at auction time to try to achieve your desired result.

5

Maximise Conversions

This is a simple bidding option where you set a maximum daily budget, and then Google tries to get as many conversions for you as it can within that budget.


For example, if you have a £100 daily budget, Google will not bid for expensive conversions that would use up most of your budget in one go.


Your daily budget has to be reasonable for the result that you expect. If you budget is unrealistically low, your ads will not get enough impressions.

6

Maximise Clicks

When you select this bidding strategy, Google will try to deliver as many clicks as possible within the daily budget that you set. It is an automatic bidding strategy that is focused on generating more traffic for a website, regardless of whether that traffic converts.

7

Target Search Page Location

Target Search Page Location is a Google Ads bidding strategy where you instruct Google to set your bids at a level which will mean your ads achieve a certain position in the paid search results.


There are two targets you can select from - either to have your ads appear anywhere on the first page of the search results, or to have your ads appear at the top of the first page.


Bear in mind though, that Google says that these placements are not guaranteed.

8

Target Outranking Share

This automated bidding strategy is the one to use if your goal is to beat a specific competitor in the Google Ads auction.


To use Target Outranking Share bidding you provide the competitor's domain name, and specify how often you want to outrank them and what your maximum bid is. Then Google will adjust your bids so as to increase your chances of outranking the ads of your competitor.


Keep in mind that the more often you successfully outrank your competitor, the more money you will spend on your ads.

9

Target Impression Share

If your goal is to increase brand awareness, you can choose to focus on getting more ad impressions for specific keywords by using Target Impression Share bidding. It works better with broad keywords because you can reach a wider audience.


When you use the Target Impression Share bid strategy, it's possible to set a 100% impression share target. Your ad will then be shown to every user whose search query matches to your targeted keywords.


If you want to reduce your costs, you can decrease the percentage of impression share to target.

10

CPM Bidding

CPM stands for cost per mille, but it is more commonly  referred to as cost-per-thousand-impressions bidding (mille being the French word for a thousand).


When you use the CPM option, you're bidding an amount that you are willing to pay for every thousand ad impressions. An impression is recorded every time your ad gets displayed, regardless of whether or not it gets clicked. 


The CPM bidding option is not available for campaigns that show ads on the search results page of Google. It can only be used on the Display Network and for YouTube Ads.

11

vCPM Bidding

vCPM stands for viewable cost-per-thousand-impressions. It's another Google Ads bidding option that's only available for YouTube Ads and for ads on the Display Network. 


A Display Network ad is only counted as having had a viewable impression when 50% of the ad is shown on screen for one second or longer.


A video ad on YouTube has to play continuously for two seconds or longer before it is counted as a viewable impression.

12

CPV Bidding

Cost Per View (CPV) bidding in Google Ads is available only for video advertising. You pay based on the number of views or interactions your video ad gets on the TrueView video platform.


A view is defined as someone watching your video ad for a minimum of 30 seconds. The interactions that you're charged for are call-to-action clicks, overlay clicks, cards, and companion banners. 


When you create a video ad with CPV bidding, you set a maximum amount that you want to pay for each view or interaction. You can start with a low bid in the beginning and increase it later to adjust and scale your video ad campaigns.

google ads bidding options - What Do the Different Bidding Options Mean in Google Ads and Which Bid Strategy is Best?

Why You Should Avoid The Default Settings - A Cautionary Tale

A few years ago I was at a black-tie dinner that had been organised by a friend’s 20-something year old daughter to raise money for Tommy’s - a charity that funds research into miscarriages and stillbirth and which my friend’s daughter had, sadly, had a lot of dealings with.

Before we sat down to eat it was announced that, at the end of the meal, there was going to be a fund-raising auction consisting of various items that had been donated by some of the guests and local businesses.

There were a lot of items in the auction - everything from vouchers for the local tanning salon through to a helicopter flight over London. And I have to confess that by the time it got to the end I wasn’t paying much attention.

But then the guy running the auction said something about an extra lot that had just been donated during the evening. I didn’t catch exactly what he said but it was something to do with a holiday in Tenerife. And from the murmurs of excitement going round the room it was clearly a bit of a special thing.

So I was a bit surprised when the bidding kicked off and things were going really slowly. 

£10…

£20…

£50…

£55…

Clearly someone needed to give this auction a kick up the bum and get things moving a bit. And for some reason, I decided that person should be me. So I stuck my hand in the air and called out….

A grand!

At which point….  the room fell silent.

Far from getting the party started, I seemed to have killed it stone dead.

Of course, what I should have realised (as my wife helpfully pointed out afterwards) was that, because of the age of the person who’d organised the event, most of the other guests were students or unemployed graduates who didn’t have loads of spare cash.

Going…  said the auctioneer

Going…

GONE!

And that’s how I came to “win” a two week stay in an apartment in Tenerife (flights not included).

Obviously there are lots of lessons to be learned from this story. But the key one I want to share with you today is:

Never go into an auction where you don’t know what the rules of engagement are

And yet that’s exactly what I see Google Ads advertisers doing all the time. 

Why?

Because they accept the default settings that mean the amount they are willing to bid for each click is automated and decided by Google instead of by them.

In other words, they’re saying to Google:

Here’s my credit card. Head off to that auction room and get me whatever you can for whatever you think is a reasonable price.

It’s like giving one of your kids a wallet full of cash and sending them off into a sweetshop and expecting things to turn out well.

Or bidding in an auction where you’ve got no idea what you’re bidding on or who you’re competing against.  

If you’ve tried running Google Ads and not got great results, I can almost guarantee it’s because you’ve been letting Google set your bids for you.

google ads bidding options - What Do the Different Bidding Options Mean in Google Ads and Which Bid Strategy is Best?

Which Google Ads Bidding Option Is Best?

The best bid strategy will depend on what your advertising goals are. As we've seen above, Google Ads gives you many alternative bidding options, each of which has a different focus. So, here are a few things to consider when deciding which one's right for you.

If you want to stay in full control of how your ad budget is spent, you should choose the Manual CPC bidding option rather than giving Google free rein to decide how it spends your money for you. You can set individual maximum bids for each keyword if you want, or you can just set all the keywords in an ad group to use the same maximum bid.

The downside of manually setting your bids is you'll need to keep a close eye on your campaigns and be prepared to adjust the bids regularly based on the results you're getting.

If your business is using Google Ads to get conversions rather than to create brand awareness, then options 3, 4, and 5 in the list above are the best ones to look at if you don't have the time or inclination to get to grips with manual bidding.

If you're interested in maximising the reach of your campaigns and building brand awareness then you'll want to look at one of the bid strategies which is designed to maximise clicks or impression share or give higher rankings. 

Conclusion

There are twelve different bidding options available in Google Ads, most of which offer a degree of automation which is designed to make life easier for new advertisers. It's quite easy to get started with any of these automated bidding options, but just be aware that when you use one of these options you are effectively handing Google your wallet and letting it spend on your behalf. 

So whichever bid strategy you opt for, and whether it uses manual or automated bidding, you need to set a budget and have a good understanding of how much money you can afford to spend per click or conversion before you start.

About the author 

David Miles

As a digital marketing consultant, author and trainer, I specialise in helping businesses in the financial services sector use the internet to get more enquiries and increase profits.

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