Conversation on Google Ads’ Main Bidding Strategies
I’ve been managing Google ad accounts for years, and the impact Google bidding strategies have on specific campaigns and accounts varies dramatically. Sometimes I make the correct call, other times I have to fall back on the prior bid strategy. The platform is about testing and trying to push accounts to the limit. I want to outline the four most prevalent bid strategies in accounts I manage to this day.
Maximize Conversions
Maximize conversions cares about finding conversions. It doesn’t care about how much each of those conversions cost in terms of ad spend, just that it can find the campaign conversions. Campaigns using this bidding strategy tend to see higher CPCs, higher CPAs, and regularly daily budgets that go over the allocated spend (that is not to say that Google will not decrease spend on other days to balance out for the month). This is a good baseline bidding strategy for those campaigns whose goal it is to gain as many conversions as possible.
Maximize Conversion Value
Maximize conversion value cares about finding conversion value. It doesn’t care about finding a certain amount of conversions. It is not rare to see lower conversions in campaigns using this bidding strategy than those using a maximize conversions bidding strategy. Campaigns using this bidding strategy will also devalue lower priced conversions. For example, if the account has multiple conversion actions in it, one conversion has a higher value associated with it than another, Google Ads will naturally choose to bid towards the conversion action that has a higher value associated with it. Makes sense right? After all, that is what you are telling the algorithm to seek out when it is looking at user signals.
Target Cost Per Acquisition
Target cost per acquisition cares about finding a conversion at an acceptable cost for the campaign. In essence a campaign is telling Google’s algorithm how much it is willing to pay for the conversion. This is also called cost capping. This bidding strategy, along with the next one, are the most sophisticated in Google’s ad platform, so a campaign cannot deploy this bidding strategy without a large amount of data already existing in the campaign that the strategy will be deployed to. If a campaign is set to use tCPA as a bidding strategy and the tCPA is set too low, or the campaign does not have enough conversions to learn from, the risk of decreased performance is substantial. On Google’s support page (linked above), it does not outline a specific conversion threshold to hit before switching to this bidding strategy, but from experience, this is the case. My recommendation is to have at least 20-30 consistent conversions over the course of the last 30 days before switching to this bidding strategy. Of course, even more is better and gives Google more user signals to tap into when finding the best user, at the right time, for the right price. This is one of the best bidding strategies to use in Google Ads, however, it takes time in a campaign to populate data before this should be deployed. A general rule of thumb, a campaign should have a tCPA lower than the value of one closed sale/lead times the business percentage of closed leads (break even= One closed sale * close rate). Following this rule of thumbs makes the ad spend profitable, spending more per conversion than this makes the campaign unprofitable.
Target Return on Ad Spend
Target return on ad spend cares about finding conversion value at the set return ratio. It doesn’t care about a certain number of conversions. If a campaign has a tROAS of 500%, this means that for every $1 that is spent in the campaign, it expects $5 in return. This is the bidding strategy of choice for ecommerce Google Ads accounts, and one of my personal favorite bidding strategies. This bidding strategy also comes with threshold requirements to deploy to campaigns. Directly from Google, a campaign should have at least 15 conversions in the last 30 days to use this bidding strategy. I would advocate for holding off switching to this strategy for even a bit longer-around 25-35 is a good threshold in my experience. For campaigns using this bidding strategy to be profitable, the tROAS needs to be set higher than the profit margin of goods sold. If the ROAS for the campaign is lower than the profit margin, money is lost with every ad dollar spent. This bidding strategy is the best for a mature, well optimized revenue based campaign, and will take the revenue based campaign to the next level.
My Personal Take
Each of these main bidding strategies in Google Ads has a place in an account. The main goal of an account should be to reach the conversion data needed to deploy either tCPA or tROAS depending on the account goal. tCPA should be used for a lead generation ad account, and tROAS should be used for an ecommerce ad account. One of the biggest issues I come across while managing accounts is too low of a budget to share enough user and conversion signals with Google to reach tCPA or tROAS thresholds. This should not be an issue- Google Ads is a pay to show platform, and it takes time to reach thresholds the algorithm needs to learn. Once deployed properly, and with enough user/conversion data, these are by far the best bidding strategies available to marketers in Google Ads- it is worth the time and investment to reach these.
The other two bidding strategies, maximize conversions and maximize conversion value are the lower levels of both of these more sophisticated strategies. Think of maximize conversions as the baseline for tCPA, and maximize conversion value as the baseline for tROAS. Use maximize conversions first for campaigns ultimately looking to move to tCPA, and maximize conversion value first for campaigns ultimately looking to move to tROAS.
There are other bidding strategies available in Google Ads that I don’t focus on here, like maximize clicks, manual cost per click (CPC), enhanced CPC, among others. I personally don’t like to use these as much unless the company goal calls for it to be deployed to the digital marketing platform. One thing to note is that if an account or campaign is not well funded, yet needs to gain conversions, one way to do that is to start with eCPC rather than maximize conversions or maximize conversion value to keep costs in check. By nature, it will take longer to reach those thresholds that should be followed to transition to tROAS or tCPA, but it can keep costs in check while working up towards acceptable user and conversion data thresholds.
If you have any questions about my take on these bid strategies, or are curious about how your account is performing, fill out that contact form, I am happy to chat about your account.