Over the past year or two, advertisers have mixed feelings about Google Ads’ gradual shift to automation features.
Automated bidding is a feature of Google Ads that has improved over the years, but can still be overwhelming. There are many different types of automated bidding, each with its own advantages and disadvantages. So, should you use automated bidding? And if so, which strategy should you use?
So, what is Target CPA Bidding?
Target CPA bidding sets your bids such that you have a good chance of getting the most conversions for a target cost-per-acquisition that you set as a goal.
Target CPA bidding automatically sets your CPC bid in order to find an optimal average CPA equal to your target across all of your campaigns. It does this by using historical information about your campaign and evaluating contextual signals present at auction-time.
Your cost per conversion through Google Ads will stay close to your target CPA, even though individual conversions may cost more or less. Your actual CPA may be affected by things like changes to your website or ads, or more competition in ad auctions. Additionally, your actual conversion rate could be different than what was predicted.
For example, if it costs $3750 to acquire a deal by generating 15 leads through Google Ads, you might be willing to set your target CPA at $250.
You are willing to pay $250 per lead to get 15 leads from Google. Google will work to optimize your bids to reach that goal.
Google Ads will use past data to try and identify potential customers who may be interested in your product or service. Factors such as what kind of device they are using, the time of day, and their location will be taken into account. Additionally, ads will be targeted towards people who have visited your site before or who seem to fit the profile of your ideal customer.
Sounds great right?
Not so fast. Let’s keep going.
There are a few items that you must know.
You will not be able to accurately track your conversions or Cost-per-Acquisition without properly setting up conversion tracking. Google Ads uses conversion tracking to track the number of conversions (lead form submissions) an ad generates and how much revenue it has generated based on your target CPA. Once your ads start running, your total average Cost-per-Acquisition will be reported as the Effective Target CPA.
After that, you’ll be less free. Google will be able to pay more than the regular click rate if it sees that a keyword search matches its data. Within campaigns to get sellers who are motivated, there is no guarantee that you’ll even get a lead if the data points to that.
If you’re asking those questions, you’re in the right place! In this guide, you’ll learn:
- The difference between manual, automated, and Smart bidding in Google Ads.
- How each of the nine bidding strategies in Google Ads works.
- When to use which strategy, plus cautions to take for each.
But first, let’s nail down the basics:
What is automated bidding?
When you create a Google Ads campaign, you need to specify how much you’re willing to spend on each ad view. This is called your bid, and you can either set it manually or let Google automatically adjust it based on real-time conditions.
With manual bidding, you can tell Google the maximum amount you are willing to spend per click on your ad. You can make adjustments to your bid based on how your ad is performing, as determined by the metrics available in your reports.
Google will automatically adjust your bids for you based on how likely your ad is to get clicked on or to result in a conversion, using automated rules. Automated bidding may take into account additional data points that you wouldn’t be able to see in reporting metrics.
There are eight types of automated bidding options in Google Ads:
- Enhanced cost per click (ECPC)
- Maximize Clicks
- Maximize Conversions
- Maximize Conversion Value
- Target Cost Per Action ( tCPA)
- Target Return on Ad Spend (tROAS)
- Viewable CPM (vCPM)
- Cost Per View (CPV)
Is Smart bidding the same as automated bidding?
While they may share some similarities, smart bidding and automated bidding are not the same thing. Smart bidding is a system that uses machine learning to automatically adjust your bids based on real-time auction insights. Automated bidding, on the other hand, is a system that allows you to set pre-determined bid rules. These include:
- Enhanced CPC
- Maximize Conversions
- Maximize Conversion value
- Target CPA
- Target ROAS
There are different types of automated bidding strategies, but not all of them are classified as “Smart Bidding” strategies.
How do I set my bid strategy?
After you have decided which option is best for you, how do you choose it?
When creating a campaign in Google, an automated bidding strategy will be selected for you based on your goals.
You do not have to use this strategy!
The other automated bidding strategies are Target search page location, Target outranking share, Target cost-per-acquisition (CPA), and Maximize clicks. You can also choose to bid manually.
and then pick your poison To change your bid strategy, select the blue text at the bottom that says “Select a bid strategy directly (not recommended)” and then select the desired option.
1. Manual CPC
Manual bidding is the simplest bid strategy on the Google Ads platform. Advertisers set their bids for each keyword individually, and the bids remain unchanged until the advertiser changes them.
This is the best place to start for people who are starting out in PPC or who are using their spare time to manage their account. However, there are some drawbacks.
Cautions with Manual CPC
Manual bidding has two drawbacks:
Prepare to invest time
It takes time to manually bid on keywords, including performance review, bid changes, and making the changes.
You could be underinformed
We can only see the performance metrics that Google allows us to when we review our campaign’s progress. With automated bidding strategies, Google can consider data points that we don’t even know exist.
There are two disadvantages to automation that should be considered when choosing a bid strategy. However, this does not mean that all automation is bad or that manual bidding is always the best solution.
2. Enhanced CPC
With Enhanced CPC bidding, you set a manual bid for each keyword, and then the Google Ads algorithm will make small adjustments to the bids if it believes that doing so will result in more conversions.
If you’re doing well with manual bidding, it’s a good first step to try automation. You can enable Enhanced CPC by just checking the box below the manual bidding setting, or by choosing Enhanced CPC from the drop-down menu.
With Enhanced CPC, Google Ads will automatically adjust your bids for individual keywords based on how likely those clicks are to result in a sale.
Previously, Google Ads would only allow for a 30% increase or decrease in bids, but that limit has been removed. Now, Google Ads can adjust bids by any percentage, and you can choose to optimize for either conversions or conversion value.
If Enhanced CPC is used correctly, it results in increased click-through and conversion rates.
Cautions with Enhanced CPC
You’ll need to stay on top of your metrics without the 30% adjustment cap.
Keep an eye on CPC and CPA
Although Enhanced CPC can raise keyword bids without any limits, this could lead to CPCs that are much higher than what is profitable for the account.
The point of this bid type is to make it more likely that someone will clicked on your ad, even if it means that you will end up paying more per conversion. The algorithm usually raises the bid more often than it lowers it.
Pay attention to your CTR and CVR to see if your bidding strategy is working as planned (both should increase). Also, track your CPC and CPA to make sure the results are still profitable.
3. Maximize Conversions
Google’s Maximize Conversions bidding strategy is Fully automated, meaning that there are no individual keyword bids set by advertisers.
Cautions for Maximize Conversions
This bid strategy may be relatively straightforward, but it still requires a lot of care and attention.
Each campaign needs its own daily budget
It is more effective for each campaign using the Maximize Conversions strategy to have its own separate daily budget, rather than being part of a shared budget. This is because the Maximize Conversions strategy will always try to spend the entire daily budget that has been assigned to the campaign, rather than just a portion of the shared budget.
You need conversion tracking in place
This strategy will not work unless you have conversion tracking set up. Google’s algorithm is designed to prioritize conversions, so if there is no tracking in place, it is more likely to make suboptimal decisions.
Keep an eye on CPC
Google will place bids as needed to get the most conversions possible. This may result in an increase in spending or average CPC.
The potential for Max Conversions to lead to increased spending is offset by the increased conversion rate, resulting in an ROI that is higher overall. The new option to add a target CPA allows you to keep the risks associated with this strategy under control.
If you’re looking to get more leads at a lower cost, Max Conversions could be a good option for you. However, if you’re on a tight budget, you might want to try a target CPA with Max Conversions, or go for another strategy.
4. Maximize Clicks
Instead of trying to get people to convert on your website, this Google Ads strategy focuses on getting people to click on your ad. Google will work to get as many clicks as possible while spending your daily budget.
This strategy can be useful if you want to increase the amount of traffic to your site for branding and list building, or if you have very strong conversion performance and want to find more volume.
Google will spend the daily budget while keeping the cost per click down for advertisers who set a maximum CPC limit.
Cautions with Maximize Clicks
Always set a max CPC and make sure to keep track of your average max CPC as well. Google will try to get as many clicks as possible for your campaign, but, similar to the “Maximize Conversions” setting, it will also aim to spend your entire daily budget each day, even if clicks are much more expensive than they typically are.
It’s important to check in on your CPC performance and goal metrics to make sure your bid strategy is still effective. If it’s not, you can adjust your settings or try a new bid strategy.
5. Maximize Conversion Value
The Max Conversion Value strategy is more advanced than the Max Conversion strategy.
Max Conversion Value and Average Order Value are both strategies to bring in conversions, but Max Conversion Value is meant to bring in conversions that will give you the highest return.
This means that it is not focused on the number of conversions, but on the value of each conversion. It is a strategy that prioritizes quality over quantity.
Similar to the Target CPA feature in Max Conversions, the Max Conversion Value feature allows you to set a Target ROAS to help guide its bidding.
Cautions with Max Conversion Value
There are two things to be careful about if you use this bidding strategy.
Setting up conversion tracking is important for the success of this strategy.
The algorithm will be confused if each action is not assigned a value.
If you want your value-based bidding to be effective, you need to make sure your tracking is set up correctly. Otherwise, you’ll end up bidding more for conversions that are worth less to your business.
6. Target CPA (tCPA)
Target CPA bidding is a way to optimize your ad campaigns to get more conversions at a specific target cost per action. Previously, it was its own bidding strategy, but is now only available as an option under the Max Conversions strategy.
With tCPA, you set a target cost per action (conversion) and then Googleadjusted bids to generate as many conversions as possible at that CPA.
6 Common Mistakes of Google Ads Automated Bidding for a Motivated Seller Campaign
Bid matrixes are a tool used to help determine how much you should bid on a given keyword in order to get your ad in a desired position. The problem with this approach is that it can be very time consuming and complex. Google has recommended a new approach that is more automated and easier to use. This new approach is called “Enhanced CPC”. Enhanced CPC is a feature in Google AdWords that automatically raises or lowers your bids based on whether or not your ad is likely to result in a conversion. There is a growing trend of using automated bidding strategies, as opposed to manual ones. This is mostly due to the fact that they are much easier to use, and don’t require nearly as much time and effort to maintain. Google has been recommending the use of their “Enhanced CPC” feature, which automatically adjusts your bids based on the likelihood of conversion. This can save a lot of time and hassle in the long run, although it may take some time to get used to.
Despite the success of these methods over the past 5 years, we have seen a significant increase in the frequency with which our members embrace automated bidding at the request of the assumed “authority.”
Though automated strategies can provide a lot of value, they don’t work for everyone. If you’re not seeing the results you want from your motivated seller Google Ads campaign, it may be because automated strategies aren’t a good fit. Before giving up, make sure you’re not making any of the following mistakes.
Budget control is a major factor in the success of your Google Ads account. This is not only true for automated bid strategies, but also for manual strategies.
6 Common Mistakes of Google Ads Automated Bidding
You Don’t Know Your Numbers
Selecting a strategy is crucial and will determine the key performance indicator (KPI) that Google Ads will aim to achieve. Oftentimes, the most vital KPI for a campaign targeting motivated sellers is the Cost Per Acquisition (CPA).
It is essential that you have a good understanding of numbers and performance indicators. If there is a disconnect between what you use to gauge performance and your #1 KPI, the chances of having unsuccessful results increase. To make sure you have the proper number for your goals, use the Carrot ROI Calculator and make sure you understand all of the automated bidding strategies.
Too High of Target Cost Per Acquisition (CPA) and Budget
After you’ve solved your target number equation, you still need to be careful with your budget. Automated bid strategies require a lot of financial control.
Google will spend as much of your budget as possible while trying to achieve an “acceptable” level of return. Automated strategies are honed in by volume (search traffic) and data. Therefore, it is commonplace for automation to rapidly spend through your budget caps during the “learning” phase.
If you want to use automated bidding, it’s a good idea to start with a lower budget than you normally spend. This will help you see how automated bidding affects your costs without blowing your entire budget.
Your Budgets Are Too Low
You don’t want to start too low, because it will take longer for the bid strategy to learn, and it can lead to inconsistent performance.
If your Target CPA isn’t working, it’s because your campaign isn’t getting enough money.
No Cost Per Click (CPC) Caps
Although Google generally recommends removing CPC limits on automated bid strategies, sometimes it can be beneficial to keep them in place, especially in competitive markets. This option can be found under ‘Portfolio Bid Strategies’ in the ‘Tools’ section.
Not Enough Conversion Data
In order to have a successful automated bid campaign, both you and Google will need to rely on consistent and significant data. If your account and campaigns are too low in volume, the chances of having poor results increase. Google Ads suggests that you need at least 15 conversions per month for your campaign in order to be successful.
However, a data threshold of 15 is too low. Incomplete optimizations will occur if the data threshold is below 30, resulting in a failure of the system.
You Don’t Give It Enough Time
That’s difficult to swallow especially if there’s immediate pressure to increase leads at a low cost This is a difficult situation. when you start using a new automated bid strategy, the algorithm starts learning, but that takes time. Usually it will take several months. Some Google Ad Strategist suggest that it could take up to 8 months to get enough data. In that learning period, you could see costs go up but leads go down. That can be difficult to accept, especially if you need to increase leads quickly and cheaply.
If you make any changes to your budget or bid, it will reset the process.
If you want your automated bidding strategy to be successful, you need to be patient and make small changes rather than starting from scratch.