Marketing

10 Tips for Executing a Cost-Effective Google Ads Bidding Strategy

Looking to utilize your budget for maximum ROI & executing a cost-effective Google Ads Bidding Strategy? Skim through this guide and you’ll know what to implement.

Archita Sharma Archita Sharma on August 4, 2020 • 23 minute read

Imagine having the right amount of budget to run your campaigns, yet all of it goes away in vain because you haven’t set up an optimized way to bid money.

Money wasted is simply money lost.

With a few tweaks & optimization to your Google ad campaigns though, you can set a cost-effective Google Bidding strategy that helps you utilize your budget efficiently and achieve a low CPC and maximum ROAS.

So, I’ll walk you through the best tips on executing smart & cost-effective Google ads bidding strategies according to what 40 PPC experts have shared with us in our latest report.

Here’s all that you’ll be learning in this guide:

Let’s start with understanding briefly what is Google Ads Bidding & what are the various ways in which you can set it up.  

What is Google Ads Bidding?

Simply put: Google Ads Bidding is an auction for a particular position on Google search ads that advertisers bid for. As an advertiser, you have to set up the keywords you want to bid for and the maximum amount you’re willing to spend. 

This is a way to tell your ad publisher (here: Google), the amount you can pay for an ad copy to appear & get clicked (for display & search ads respectively) in comparison to your competitors. 

Let’s also understand what is Maximum CPC Bid, a metric that we’ll be talking about frequently in this article. 

Maximum CPC Bid: The highest amount you’re willing to pay for a click on your ad. It determines the results and ROI of your ad campaigns.

How does Google Ads Bidding work?

Google lets you set your campaign goals aligned to what matters to your business the most – clicks, impressions, or conversions. Based on these goals, your Google Ads bidding strategy is supposed to be set. 

If you go for optimizing for maximum clicks, depending on your CPC bid (the maximum you can spend for a particular keyword) and quality score (metric for relevancy & usefulness of your ad), your ad rank is decided. And, in turn, your actual position of the ad copy.

What is an Ad Rank?

Ad Rank = CPC Bid * Quality Score

The higher the ad rank, the better the position of the ad. 

This clearly shows that your ad position doesn’t just depend on the bid. So if your competitor is bidding a higher price but has a poor ad with low quality score, you win with a lower bid and maximum clicks at a lower CPC.

Based on what your campaign goals are, there are different types of Google Ads bidding that you can choose:

  • Manual CPC ( based on clicks)
  • Manual CPM (based on impressions)
  • Enhanced CPC
  • Smart Bidding
  • Automated Bidding

From our extensive survey, we’ve seen that more than 20% of respondents focus on either Target CPA or maximize for conversions while setting a bid for their Google Ads Campaign.

How do you select a bid strategy?

  • After you sign in to your Google Ads Account, create a new campaign, and set a campaign goal & type.
google-ads-bidding-new campaign

Here, I selected the goal as the Website Traffic for a Google Search Ad Campaign.

  • After selection, click on the ‘CONTINUE’ button. You’ll land on the “Select Campaign Settings” page, where you can select a bid strategy under the “Bidding” section.
google-ads-budget-and-bidding

Since I had selected Website Traffic as my goal, the recommended strategy is ‘Maximize Conversions’.

Let’s move to get to learn more about the bidding methods.

What is Automated Bidding in Google Ads?

Automated Bidding is a method wherein the bids are adjusted & set automatically based on your campaign goals & chances to get clicked or get conversions. In short, you don’t have to specify bids for ad groups, unlike manual bidding.

For marketers who have their ad campaigns with thousands of keywords, managing bidding manually for each of them can get tedious. That’s where Google offers an automated bidding option to understand your past data and optimize your bids for keywords based on that.

Below are the types of Automated Bidding based on different campaign goals: 

  1. Maximize Clicks: Bid strategy for increasing website visitors.
  2. Target Impression Share: Obvious reason, this is for increasing the visibility of your ad.
  3. Target CPA: To increase the conversions as per the target cost-per-action you’ve set.
  4. Target ROAS: Maximize conversion value as per the target ROAS you’ve set.
  5. Maximize Conversions: For maximum conversions possible within the set budget.
  6. Maximize Conversion Value: For maximum conversion value while spending the budget.

What is Smart Bidding in Google Ads?

Smart Bidding is another Google ads bidding strategy (a subset of Automated bidding) that runs on Machine Learning, wherein your goal of the campaign is conversions. 

If you want users to take a particular action on the page you’re redirecting them to from the ad, and have set up conversion tracking, this bidding method is for you.

Most of the smart bidding options are similar to that of automated bidding. But there’s one interesting type of Smart Bidding – Enhanced cost per click (ECPC). In this method, you can combine with manual CPC bidding to automatically adjust your manual bids for maximum conversions. 

Time to dig into the expert advice of 40 PPC marketers on how to execute a Cost-Effective Google Ads Bidding Strategy.

10 Tips for Managing a Cost-Effective Google Ads Bidding Strategy

We’ve put down the most effective and impactful tips to execute a Google Ads Bidding strategy:

  1. Align Bidding Strategy to the goal of the campaign
  2. Opt for Manual Google Ads Bidding
  3. Understand how & when to choose Automated Bidding
  4. Target lower positions to optimize cost & achieve lower CPC
  5. Target CPA bidding for Higher Conversions
  6. Use Enhanced CPC Bid Strategy for Maximum Conversions
  7. Utilize Outranking Search Position Bidding Strategy
  8. Split your budget, pptimize location & ad schedule
  9. Perform in-Depth keyword research for Google Ads Bidding
  10. Optimize ad Copy & Landing page for better conversion rate

1. Align the Bidding Strategy to the goal of the campaign

Well, any experiment or strategy works the best if you are clear about your end goal. The same goes for opting for the bid strategies, that’s based on your campaign goal. 

Pouria from Lake One Digital also agrees, “If I could only give one tip, I would say to keep in mind the business model, their business goals, and what is most important. With this knowledge, the advertiser is better equipped to choose which type of bidding strategy to use that will be the most cost-effective for the business.”

John Howard of COUPON LAW states the same about choosing a bidding strategy. “To execute a cost-effective Google Ads bidding strategy is to identify your goal and choose a bidding strategy that is appropriate with your goal.”

Ask yourself, what is that you’re trying to achieve through this ad campaign.

Chris Gadek from AdQuick breaks it down this way: “For more clicks, go with a Cost Per Click strategy, and for more awareness, opt for a strategy solidly based on impressions.” 

And if you’ve got a campaign starting, Blake Sherman of SL Development, suggests, “When first starting off with a new campaign with no data or no value, I choose to start off with maximizing clicks.”

Similarly, Oliver Andrews of OA Design Services points out: “If the primary goal of the campaign is to drive conversions, selecting the target CPA bids will focus on trying to convert users at a specific acquisition cost. With this method, Google Ads will automatically establish your offers in each campaign based on your CPA. While some conversions may cost more, others may cost less to match and align with your acquisition costs.”

Pritha Bose from Automate.io also suggests to list down & understand the end goal of your campaign. “Whether it is to generate leads, boost a brand recall, find ROI of your ad spend or increase sales – you should have your goal set before you bid.”, says, Bose.

What about E-Commerce businesses? 

Michelle Douglas of Green Goo, explains their strategy for their e-commerce store, “Since we are an e-commerce store, the most cost-effective Google Ads bidding strategy is to maximize product sales, so we chose to maximize Conversions as our bidding strategy. Google’s machine automation is so advanced, they automatically run our bidding for us so we get the most conversions for our money.”

Ultimately, it all boils down to one thing. Understand what your business model and goals are and in-turn ties them up to the relevant Google Ads Bidding strategy.  

Editor’s Note: Looking to track the most important metrics for measuring the cost-effectiveness of your Google AdWords Campaign? Download this free Google AdWords Campaign Performance template to view all your important metrics like CPC, CTR, Avg. Position, Conversions & Conversion Rate.

2. Opt for Manual Google Ads Bidding

Overshooting your campaign budget due to unexpected changes in bids & keyword trends can give you chills down the spine. So, relying on Manual Bidding can save you from such nightmares.

And this happens not just for smaller accounts but may happen with larger running campaign accounts as well.

For such scenarios, Tyler Tafelsky of Yisoo, suggests – “For smaller accounts, seldomly do we rely on automated bidding strategies with Google Ads. Although it’s ‘not recommended,’ we prefer taking a manual approach to ensure we’re not under- or over-bidding, or that our CPCs remain in check. Unless you’re dealing with hundreds of keywords, managing this is not as overwhelming at seems.”

How does manual bidding help you?

By utilizing a manual bid strategy you’re able to control how much you pay per click. You’re able to prioritize your highest converting keywords by bidding higher while keeping costs low on your middle and low converters.” says, Alan Gruntz of BarkleyREI.

Mia Liang of Upgrow agrees – “I suggest using Manual CPC, you will gain more control and the ability to fully optimize your ads, by setting up each keyword or ad group bid to precisely what you want. This way you guarantee that you are not overspending and you can ensure you get something from your budget.”

Though manual bidding comes along with its own cons, the benefits make us put the cons on the back-burner. 

AskUsForAnything’s Sanju Ganglani says, “Though manual bidding is more labour-intensive, it allows for you to keep an eye on your investment and ensure its constantly performing.”

3. Understand how & when to choose Automated Bidding

As discussed above, we know the al Bidding strategy works like a charm. But that’s not the case always. Scenarios, where you have multiple campaigns running, managing them via manual bidding, go for a toss. 

Lexi Sheehy of MediaCrossing, explains how automated bidding helps. “Automated rules can be set up to automatically pause keywords that are high cost, low conversion; pause campaigns when they reach projected budget threshold; adjust high-performance keyword bids automatically to increase return on ad spend or ROAS.”

Starting your campaigns on Automated Bidding without any previous data is like hitting a blank wall. 

“Once you are getting a decent level of conversions (30+ per month), consider switching to ECPC or an automated strategy like maximize conversions, but be prepared for a jump in your CPCs!” suggests Reva Cutting from Cutting Edge Digital.

SEO Works’ Rob Drummond agrees, “Switch to automated bidding (usually CPA or ROAS) once you have 30+ conversions a month in a campaign. Below that stick to manual bidding with eCPC turned off”.

Ryan Moothart from Portent points out a different angle to Automated Bidding Strategy. 

“When creating a new campaign in your Google Ads account, start out with Maximize Clicks automated bidding and set a maximum CPC bid threshold you know will likely not result in you over-spending on this campaign. This will allow you to kick start this campaign effectively and drive traffic quickly.

Once you get enough click data and conversion data to see what the average cost per conversion actually is, then change your campaign’s bid setting to Target CPA or Maximize Conversions” says Moothart.

4. Target lower positions to optimize cost & achieve lower CPC

While setting up your Google Ads bidding, it’s obvious that you’ ll wish to target the #1 ad position. 

But what here’s the thing. Let’s consider two scenarios:

1) Bidding & spending the cost for the #1 position and receiving X clicks.
2) Spending a lower cost for the #2 and further down positions, and yet receiving the same no. of clicks.

The cost-effective option would be the latter, right?

Rentround’s Rajdeep Dosanjh explains this strategy. “For some keywords, the bids to be in the first position are twice or three times as high as the second or third position. Avoiding bidding for the first position can lower your cost per click and therefore cost per conversion.

Of course, you may not get as many clicks as the first position would provide you. However, your cost per conversion is likely to be lower.”

Whenever a user is searching on Google, it’s a human tendency to automatically click on the first SERP (be it organic or paid).

Dosanjh clearly breaks down this strategy for us: “In addition, it’s often an instinct for users to just click on the first result, when it may not be what is exactly being looked for. This is why first positions can have lower conversion rates than lower-paid ad positions. This again helps capture a better conversion rate, at a lower price.

Another point is if your ad is being clicked on with a high conversion rate and low page bounce rate (people leaving the site without visiting other pages), Google starts to recognise your page as relevant for the searched terms.

This can lead to Google placing your ads in a higher position than you’re actually bidding for. The reward is then you may be getting your ad in the first position, while not paying the price.” says Dosanjh.

This bidding strategy is one of the simplest and easiest ways to optimize your cost & lower CPC. 

5) Target CPA bidding for higher conversions

After running your campaigns on manual bidding for a while and gathering some ad data, smart bidding strategies like Target CPA are preferred for higher conversions.

If you’re just starting out on Google Ads, don’t jump to Target CPA bidding strategy right away. 

Ashish Gupta of CodeLathe (FileCloud) suggests following a routine to get to Target CPA Bidding. 

For a new campaign, start with maximize clicks and find the average cost per lead for your campaigns, after 2-4 weeks, depending on the number of conversions in the account, optimize for Maximize conversions and after another 2 weeks, move to a target cost per acquisition,” says Gupta.

Jasmine Hippe of Augurian, agrees, “Target CPA bidding is my go-to bidding strategy when a lead gen client needs to wrangle in costs in Google Ads. After implementing target CPA bidding, be sure to adjust CPA targets by ad group based on historic data in order to drive further cost-savings and conversion gains.”

There’s a tip to ensure you have the maximum data to get the most of this strategy too. UnAgency’s Adam Ostapinski explains this clearly, “The success of this kind of campaign depends on how much conversion data you send to Google Ads. As a default, you track completed purchases, completed lead forms, etc. This is not enough.

Let’s take a step back and focus on micro-conversions, like some on-page engagements, email address click, button-clicks to start a lead form or just AddToCart/AddToWishlist button-clicks. This will provide campaigns with a way more data (from my experience it will be 4-5x more conversions).”

And while implementing Target CPA bid strategy, there are certain adjustments & specifications you need to make to avoid any red flags. 

“You need to remember to adjust Target CPA bids accordingly. You need to decrease them to 30% of your initial setting. Otherwise, your campaign will be permanently limited by budget” flags and Google will overspend daily budget.” shares Ostapinski.

6. Use enhanced CPC bid strategy for maximum conversions 

Enhanced CPC bid strategy (ECPC) helps you maximize conversions & conversion value by adjusting your CPC. It is a bidding strategy that involves manual bidding + smart bidding (like Target CPA or Target ROAS).

But when should you prefer enhanced CPC bid strategy? Jus Chall of Skein breaks it down for us. “As the name suggests, you will only pay whenever someone clicks on your page and I think that the most cost-effective strategy that you can avail with Google.

Google has the right to change your bid amount based on the performance of your website. When the search is too competitive and Cost Per Click is high, Google will offer a lower bid because of the lower chance of generating leads.” says Chall.

Michael Anderson of SIGNAL+POWER, explains how enhanced CPC bid strategy works best. 

“Although Google strongly encourages advertisers to select an automated bidding strategy and relinquish control of their keyword’s cost per click, I prefer to use enhanced CPC and to manually raise and lower keyword bids.

One tip that helps me do this is to customize the columns in order to view Google Analytics data in addition to the standard metrics. This additional data includes keyword bounce rate, average pages per session, and average session duration, all of which are very important.

After you’ve reviewed these additional metrics and identified keywords that are not driving engagement, you can manually reduce the bids in order to divert budget towards higher performing keywords. This additional data is essential in analyzing the performance of any given keyword as it gives you more insight into the user’s journey after clicking on your ad.” explains Michael.

Using manual CPC with enhanced CPC bid strategy works best for maximizing ROAS and minimizing the cost spent. How?

Bailey Hahn of Summit Digital Marketing, explains: “You can manually adjust keyword bids above the first position CPC for each individual keyword. This means if you have particular keywords that are converting at an extremely higher level than the rest of your account, you can make sure this keyword is #1 in search rankings each and every search.”

“You can also cost-control the keywords that seem to not be as efficient, therefore, maximizing ad spend and ROAS.” adds Hahn.

Editor’s Note: Want to check out how to track conversions per day metric for your campaign? Download this free Google Ads Report template and a visual dashboard of all your conversion metrics. 

7. Utilize outranking search position bidding strategy

As the name suggests, in this bid strategy, Google Ads automatically raises or lowers your bid to outrank your ads from your competitors’.

When does this strategy come in hand?

Morgan Bachemin of Online Optimism, neatly explains, “For this method, you need to have a budget that is going to allow you to appear at the position you want in whatever vertical, especially if it is a competitive one. The algorithm will try to maximize your budget as much as possible to gain those positions you are seeking. And if it isn’t there, you’re going to be spending without much to show for it.”

Adding to that, there’s one limitation to this strategy. You can only set one domain that you wish to outrank per bid strategy.

8. Split your budget, optimize location & ad schedule

This tip isn’t a specific type of bidding strategy but focuses on minor tweaks and optimizations to be made on top of your selected bidding strategy.

Splitting your budget makes sense to be on the safer side. You wouldn’t want to assign the entire budget to one particular location or ad group and end up exhausting it without any significant results.

Noelle Del Grippo says, “Improve your bidding strategy by optimizing both locations and ad schedule. I recommend splitting up your locations, rather than having the whole United States targeted, break the locations out by state. This way you can see what state is performing better and adjust bids based on the metrics each state is showing. 

The same applies to ad schedules. “Rather than having all hours grouped together, break them out into 3-hour chunks so you can start to identify which are performing better and allocate the budget where it makes sense,” says Grippo.

9. Perform in-depth keyword research for Google Ads Bidding

Selecting the right Google Ads bidding method clubbed with choosing the right set of keywords, is like a match made in heaven for a high ROI.

In the above section, we’ve extensively gone through the type of bidding methods, now let’s look at a few tips for keywords.

i. Choose keywords that have medium search volume and low CPC 

It’s obvious that the higher the search volume of a keyword, the higher the CPC and ad spend.

Alejandro Rioja of So Influential explains, “Chasing high volume keywords with high CPC will result in more ad spend. If you find a few keywords with high search volume and low CPC, utilize those in your campaign as they will be extremely cost-effective. 

Rioja further adds, “To run a cost-effective ad campaign, maximizing conversions and the enhanced cost per click are the two strategies you can rely on.”

ii. Use SKAGs (Single-Keyword Ad Groups) strategy

With just one keyword in an ad group, Single Keyword Ad Groups is a lesser-known & unique strategy for cost-effective Google Ads bidding. 

Bonus point: this also increases your Quality Score metric for Google Ads. Research by WordStream says, this, in turn, results in a 16% decrease in your cost per conversion.

Tamara Marie Johnson of Smallpdf explains, “To get the most bang for your advertising buck, try structuring your Google Ads into single-keyword ad groups or SKAGs. With SKAGs, you’ll see your CTR and Quality Score go up and your CPC and CPA go down. In other words, your ads will perform well on a tight budget!”

So when on a tight budget, head to this complete guide by CXL Institute on the SKAGs that can help you get the most out of this strategy.

iii. Research negative keywords to eliminate intent mismatch

While implementing a bid strategy, researching your negative keywords gives you an edge by eliminating the loopholes where money can be wasted.

David Tumbull of TX Training, walks us through this, “When setting our Google Ads bidding strategy we first research every negative keyword we can think of. We then start the campaign with a low budget of $10 per day and look for other negative keywords. You don’t want to spend $10,000 showing your ads to people who are searching for an unrelated solution.”

Imagine losing money to such scenarios. “Offering luxury cars to someone looking for a station wagon. It’s still a car but not what they are looking for”, adds Tumbull.

iv. Target long-tail exact match keywords to maximize your ads budget

Long-tail keywords are the gold mine opportunities in a Google Ads campaign. Why?

They are less competitive and in-turn give you a better ROAS (Return on Ad Spend) and utilize your budget efficiently. 

David Waiter of Direction explains this, “A smart way to maximize your Google Ads budget is to target long-tail exact match keywords with a quality score of 10 and over, that are in the form of a question… Question-based search queries are quite common and are frequently ignored by big companies with large Google Ads budgets. This allows your company to avoid highly competitive keywords that may be cluttered with businesses with more resources than you. 

It’s important to target keywords with a solid quality score so you don’t waste money on something with minimal revenue potential. This is a savvy strategy for any business vying for organic traffic against competitors with larger budgets.”

So, implement this tip by getting your keyword research on long-tail keywords ready and see how your ROAS metric shoots up.

10. Optimize ad copy & landing page for better conversion rate

After all the efforts that you put in segregating your keywords and assigning bids, you’ll end up messing up with your budget if your keywords, ad copies, and landing page are not in sync. 

This might not be a direct tip for Google Ads Bidding strategy, but definitely among the one that affects your budget and ad spend. 

How? 

Here’s what Jonathan Aufray of Growth Hackers Agency, clearly states the reason for low conversion rate, “Too many marketers bring traffic to a homepage, a page that isn’t optimized for conversions or even a page that is unrelated with the ad itself.”

Michael Alexis of TeamBuilding shares an effective tip, “My preferred bidding strategy on Google Ads is to optimize for conversions. With this bidding strategy, one way you can measurably improve your results is by improving your conversion rates.”

For optimizing for conversions, various experiments like CTR experiment for Ads, tweaking your landing page copy, and design elements.

“I’ve found that reducing the vertical height of landing pages consistently improves their performance. You can also provide clearer messaging, ratings, and reviews and similar to build trust,” said Alexis.

How to track Google AdWords Metrics in Databox?

Woah. We’ve almost come to an end of all the tips for the Google Ads Bidding strategies. And in the due course, we’ve come across quite some metrics, tracking which will be essential for you to optimize your bidding strategies. 

Databox works like a breeze for pulling out these metrics from your Google AdWords account & presenting it in a visualized dashboard for FREE.

Here are some of the metrics you can track with Databox visualizations:

  • Avg.Cost per Click: Average amount of Cost-per-click (CPC) paid for your Ads divided by your total Clicks during the specified Date Range. This metric will help you understand how much(on an average) are you paying to gain a click.
  • Cost per Conversion: Cost divided by your Conversions during the specified Date Range. This helps you in understanding how much you’d be spending to gain one successful conversion.

Looking to effectively track all your AdWords Metrics at one place? Sign up for Databox for free and start visualizing your data.

Reduce your spend & optimize for maximum conversions

Follow the above tips and select the right Google Ads Bidding strategy for your campaigns. Understand your campaign goals and select the right tips by our PPC experts to execute a cost-effective bidding plan. And if you’ve just started our, select Manual Bidding to rescue yourselves from over-spending.

About the author
Archita Sharma
Archita Sharma Archita helps B2B SaaS businesses with marketing (with a focus on content). She is happiest while helping founders unleash the power of content marketing and telling stories about her weekend artistic cafe visits!
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