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What Are Bidding Strategies in Google Ads and Why Are They Important?

A bidding strategy is how you want to participate in auctions to achieve an important advertising goal you have set. Depending on what your advertising goal is—clicks, conversions, ad impressions, or views—you need to choose the most suitable bidding strategy to achieve the best results for your objectives.

Google Ads has a very intelligent machine learning AI system that can help you identify the most potential customers to bring in the best results for your advertising goals. Therefore, choosing the right bidding strategy will help Google’s AI system understand what you expect from your advertising campaign, and it will strive to find the most potential customers to achieve optimal results for your campaign.

Among the types of bidding strategies designed by Google Ads, they are divided into three main groups:

1. Manual Bidding Strategies

Manual bidding strategies give you complete control over the costs for each click on your ad, each 1,000 ad impressions, or each view of your video ad. The bidding strategies in this group include:

Manual CPC (Cost Per Click)

Manual CPC allows you to fully adjust the cost you want to pay for each click on your ad. You can adjust the CPC you want for each keyword or individual location. For example, if you notice that certain keywords can bring more profit, you can use manual bidding to allocate more advertising budget to those keywords.

Considerations When Using Manual CPC Bidding Strategy:

• You can manually adjust your bids for each ad group, keyword, location, and different devices.
• You will need to adjust your bids based on the actual auction times. If you set your CPC bid too low compared to the auction time, your ad will not qualify for activation.

Maximum CPV (Cost Per View)

The CPV bidding strategy is the default method for setting the amount you will pay for your TrueView video ads. When setting a CPV bid, you will pay for video views and other interactions (such as clicking on a call-to-action button, card, or accompanying banner).

Considerations When Using CPV Bidding Strategy:

• This bidding strategy can only be used for video campaigns.
• You need to set a suitable maximum CPV bid for your campaign. If your maximum CPV is set too low compared to the market, your ad will not be activated.

tCPM (Target Cost Per 1000 Impressions) is a bidding method where you set the average amount you can pay for every 1,000 ad impressions (this amount is the target CPM). Google Ads will optimize the bid using your target CPM (tCPM) to help you achieve the broadest unique reach possible. Some impressions may cost more or less than your tCPM, but Google Ads will try to keep the average CPM of the campaign at or below the tCPM you set.

You can use target CPM for video campaigns in Google Ads. For sequential video ad campaigns, tCPM will optimize for the number of sequential completions (meaning this strategy will optimize to maximize the number of users watching the entire sequence) instead of unique reach.

Considerations When Using tCPM Bidding Strategy:

• This bidding strategy can only be used for video campaigns.
• You will pay for every 1,000 times your ad is displayed.

vCPM (Viewable CPM)

vCPM stands for “Viewable Cost Per 1000 Impressions.” Advertisers running vCPM ads will set the price they want to pay for every 1,000 impressions that are displayed and viewed by customers (without the need to click). This bidding strategy is only applicable to Google Display Network campaigns.

Many advertisers hope viewers will click on their ads, but this is not always the main goal. You may just want more people to see your ads. In that case, you should use the viewable cost per 1,000 impressions (vCPM) bidding strategy.

Considerations When Using vCPM Bidding Strategy:

• This bidding strategy can only be used for Google Display Network campaigns.
• You will pay for every 1,000 times your ad is displayed and viewed, not when someone clicks on the ad.

Cost Per Engagement (CPE)

CPE stands for “Cost Per Engagement.” With this bidding strategy, advertisers only pay when users actively interact with the ad. This means you will pay for the ad when a user chooses to engage with it, for example, by hovering over a lightbox ad for two seconds to expand it.

This bidding strategy only applies to lightbox ads (a type of expandable ad).

Considerations When Using CPE Bidding Strategy:

• This bidding strategy can only be used for Google Display Network campaigns with the goal of lead generation.
• The only supported ad type is lightbox ads.

2.Automated Bidding Strategy

Automated bidding strategies simplify the bidding process, reducing guesswork, allowing you to achieve your performance goals. Each type of automated bidding strategy is designed to help you reach a specific goal for your business.

Maximize Clicks

Maximizing clicks is the simplest strategy you can use to bid for the highest number of clicks possible within your budget. You just need to set a budget, and Google Ads will do the rest. You do not need to choose a specific bid amount for ad groups, keywords, or placements.

With the Maximize Clicks strategy, once you set your daily budget, the Google Ads system automatically sets the maximum cost per click (CPC) on your behalf to help you get as many clicks as possible within that budget.

Considerations when using the Maximize Clicks bidding strategy:

• The system will automatically bid for you in every real-time auction to attract as many clicks as possible within your budget.
• You will not be able to adjust bids for individual ad groups, keywords, placements, or devices.
• To ensure that the maximum CPC the system bids for you is not too high, you can set a maximum CPC that you are willing to accept for the campaign, ensuring the system does not bid beyond your acceptable level.

Maximize Conversions

The Maximize Conversions strategy will automatically set bids to help you achieve the highest number of conversions for your campaign within your budget. This strategy uses advanced machine learning capabilities to automatically optimize bids and will adjust bids for each auction.

With this type of bidding strategy, Google’s machine learning system only participates in auctions and shows your ads to users it deems likely to convert. Additionally, this bidding strategy will automatically adjust bids at auction time to optimize the bid for every auction, helping you get conversions at the lowest possible cost within your budget.

Considerations when using the Maximize Conversions bidding strategy:

• You need to set up conversion events for your Google Ads account beforehand.
• Your Google Ads account must have a certain number of conversions in the last 30 days.
• The system will automatically bid for you in every real-time auction.
• You will not be able to adjust bids for individual ad groups, keywords, placements, or devices.
• The system may spend your daily budget entirely or even double it, but total ad spending will not exceed the total budget for 30.4 days (For example, if your daily budget is 100,000 VND/day and your total budget is 3,000,000 VND/month, there will be days when the system spends up to 200,000 VND/day, but the total actual spending for the month will not exceed 3,040,000 VND).

Target CPA

CPA stands for “Cost Per Acquisition.” Target CPA is Google Ads’ smart bidding strategy. This strategy sets bids to help you achieve as many conversions as possible at or below your target cost per acquisition (CPA). The Target CPA strategy uses advanced machine learning technology to automatically optimize bids and provides real-time bidding to adjust bids for each auction.

For app campaigns, Target CPA is equivalent to the target cost for each installation or the target cost for each in-app action, depending on the type of campaign. Installations and in-app actions (engagements) are the target actions of users for the “App – Install” and “App – Engagement” campaigns.

Considerations when using the Target CPA bidding strategy:

• You need to set up conversion events for your Google Ads account beforehand.
• Your Google Ads account must have a certain number of conversions in the last 30 days.
• The system will automatically bid for you in every real-time auction.
• You will not be able to adjust bids for individual ad groups, keywords, placements, or devices.
• You will pay for each conversion of the campaign, not per click.
• You should rely on the cost/conversion of your Google Ads account or campaigns that ran in the past 14 – 30 days to set an appropriate Target CPA amount you want to pay for each conversion.
• If you set your Target CPA too low, the ad campaign may not function.
• You should set your daily budget to be 5 – 10 times your Target CPA to help the system quickly complete the learning phase and operate stably to generate the highest number of conversions at or below your Target CPA.

Maximize Conversion Value

You can use the Maximize Conversion Value bidding strategy to maximize the total conversion value of your campaign within the set budget. This bidding strategy uses advanced machine learning technology to automatically optimize and set bids. It also provides real-time bidding capabilities to adjust bids for each auction.

You must define the value for each conversion action in your Google Ads account so the system knows which conversion events to prioritize to maximize total conversion value within the budget you set.

Considerations when using the Maximize Conversion Value bidding strategy:

• You need to set up conversion events and conversion values for your Google Ads account beforehand.
• Your Google Ads account must have a certain number of conversions in the last 30 days.
• The system will automatically bid for you in every real-time auction.
• You will not be able to adjust bids for individual ad groups, keywords, placements, or devices.

Target ROAS

The ROAS bidding strategy stands for “Returns On Ads Spent.” This smart bidding strategy from Google Ads helps you achieve higher conversion values or revenue with a target return on ad spend (ROAS) that you set. Bids are automatically optimized at auction time, allowing you to adjust bids for each auction.

Before you start using this Target ROAS bidding strategy, you need to calculate the target return on investment from ad spending that you want your Google Ads campaign to bring to your business.

The formula for calculating Target ROAS is:

ROAS (%) = Revenue from Ads / Advertising Cost × 100

Where the unit of measurement for Target ROAS is %.

For example, in the last 30 days, if you spent 100 million VND on advertising and earned 2 billion VND in sales revenue, to calculate ROAS, you would take the revenue from sales (2 billion VND) divided by the advertising cost (100 million VND) and multiply by 100, giving you a Target ROAS of 2000%.

Considerations when using the Target ROAS bidding strategy:

• To use the target return on ad spend (Target ROAS) bidding strategy, most campaign types need to have at least 15 conversions in the last 30 days. Specific requirements are as follows:
  • Display campaigns: At least 15 conversions (with valid conversion values) in the last 30 days across all your campaigns.
  • App advertising campaigns: At least 10 conversions per day (or 300 conversions in 30 days).
  • Discovery campaigns: At least 75 conversions in the last 30 days (10 of which must occur within the last 7 days).
• Typically, this strategy will perform better if you have fewer campaigns, larger campaign sizes, and more conversions.
• If your campaign or account is on the allowed list, you will automatically qualify to use Target ROAS.
• You need to set up conversion events and the value of the conversion event for your Google Ads account beforehand.
• You need to set an appropriate ROAS based on your expectations combined with the actual profit/cost metrics of your Google Ads account over the last 30 days.
• If you set your Target ROAS too low, your campaign may not function.
• The system will automatically bid for you in every real-time auction.
• You will not be able to adjust bids for individual ad groups, keywords, placements, or devices.

Target Impression Share

Target Impression Share is a smart bidding strategy that helps you automatically set bids with the goal of showing your ads in the top position on the page, at the top of the page, or any position on Google’s search results page. Target Impression Share is available as a standard strategy in a campaign or as a portfolio strategy across multiple campaigns.

Considerations when using the Target Impression Share bidding strategy:

• You need to set the percentage you want your ads to appear on Google’s search results page.
• Determine the position where you want your ads to appear on the Google search results page (any position on the search results page, top of the search results page, or absolute top of the search results).
• Set the maximum CPC that you can afford for each click to ensure the system does not bid too high compared to the maximum CPC you want to pay.

3.Group of Automated Bidding Strategies

This type of bidding combines manual adjustments with partial automation to optimize your campaign for more conversions or increased conversion value on your website. In this group of bidding strategies, there is only one type of bid, which is:

eCPC (Enhanced CPC)

eCPC stands for “Enhanced Cost Per Click.” It is a bidding strategy that helps you get more conversions from your manual bidding strategy. eCPC works by automatically adjusting your manual bids for clicks that seem likely to lead to sales or conversions on your website. For example, if you set your CPC at 5,000 VND, Google’s AI system may increase your maximum CPC to 6,500 VND if it assesses that this user’s search session is highly likely to generate conversions for you. Conversely, if user B is evaluated by the system as unlikely to create conversions on your website, it will lower the CPC bid to 3,500 VND.

Unlike target CPA (Cost Per Action) and target ROAS (Return On Ad Spend) bidding strategies, which automatically adjust bids based on the target cost per conversion and profit on ad spend, eCPC will try to keep your average CPC below the maximum CPC you set.

You can also set eCPC to optimize for conversion value, allowing you to prioritize high-value conversions and appropriately price different conversion actions. You can optimize for conversion value with eCPC on Search and Shopping campaigns.

Notes When Using the eCPC Bidding Strategy

• You must set up conversions and/or value for conversions in your Google Ads account.
• You can still manually set a maximum CPC for each ad group, keyword, location, or individual device.
• The system will automatically increase or decrease the CPC for each auction session based on whether it deems that search user has potential or not. Therefore, the actual CPC you pay may be higher than the maximum CPC you set.

Case Studies for Each Bidding Type

To select the right bidding strategy for your advertising campaign, you need to identify the primary goal of running the ads. Depending on your advertising goals, you will have to use different types of bids for Google’s AI machine learning system to work more effectively in optimizing the campaign and achieving the results you aim for. Below, Buybm365 will share real case studies to help you visualize and flexibly apply different bidding types in Google Ads.

Advertising Goals for Conversion Actions on the Website

If you want your advertising campaign to yield more conversion results on your website, such as purchase transactions, leads, or maximizing online sales revenue from ads, you need to use the following types of bids:

• Maximize Conversions
• Maximize Conversion Value
• Target CPA
• Enhanced CPC (eCPC)
• Target ROAS

Advertising Goals for Increasing Website Traffic

If you want to use ads to attract more clicks to increase website traffic (Traffic) to introduce a new product/service, you should use the following types of bids:

• Manual CPC
• Maximize Clicks

Advertising Goals for Increasing Ad Visibility

If you want to do brand marketing, create coverage for the launch of a new product/service online, or attract more people to learn about your products/services, you should use the following bidding strategies:

• Target Impression Share
• vCPM
• Target CPM

Advertising Goals for More Views and Interactions

If you want to receive more views of your video ads or interactions with your ads to entice customers to explore more about your products/services, you should use the following bidding strategies:

• CPV
• CPE

Conclusion

Bidding strategies are among the most crucial factors in optimizing your advertising campaign for the goals you expect to achieve. Therefore, make sure you know what your advertising goals are and choose the right bidding strategy to maximize the effectiveness of your Google Ads.

You can also explore more in-depth and systematic ways to run effective Google Ads campaigns in Buybm365’s Google Ads course.

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